February 16, 2005: China Replacing the United States as World's Leading Consumer (printable)

February 16, 2005-1

Copyright © 2005 Earth Policy Institute

CHINA REPLACING THE UNITED STATES AS WORLD'S LEADING CONSUMER

Lester R. Brown

Although the United States has long consumed the lion’s share of the world’s resources, this situation is changing fast as the Chinese economy surges ahead, overtaking the United States in the consumption of one resource after another.

Among the five basic food, energy, and industrial commodities—grain and meat, oil and coal, and steel—consumption in China has already eclipsed that of the United States in all but oil. China has opened a wide lead with grain: 382 million tons to 278 million tons for the United States last year. Among the big three grains, the world’s most populous country leads in the consumption of both wheat and rice, and trails the United States only in corn use.

Although eating hamburgers is a defining element of the U.S. lifestyle, China’s 2004 intake of 63 million tons of meat has climbed far above the 37 million tons consumed in the United States. While U.S. meat intake is rather evenly distributed between beef, pork, and poultry, in China pork totally dominates. Indeed, half the world’s pigs are found in China.

With steel, a key indicator of industrial development, use in China has soared and is now more than twice that of the United States: 258 million tons to 104 million tons in 2003. As China’s population urbanizes and as the country has moved into the construction phase of development, building hundreds of thousands of factories and high-rise apartment and office buildings, steel consumption has climbed to levels not seen in any other country. (See .)

With oil, the United States is still solidly in the lead with consumption triple that of China’s—20.4 million barrels per day to 6.5 million barrels in 2004. But while oil use in the United States expanded by only 15 percent from 1994 to 2004, use in the new industrial giant more than doubled. Having recently eclipsed Japan as an oil consumer, China is now second only to the United States.

Looking at energy use in China means also considering coal, which supplies nearly two thirds of energy demand. Here China’s burning of 800 million tons easily exceeds the 574 million tons burned in the United States. With its coal use far exceeding that of the United States and with its oil and natural gas use climbing fast, it is only a matter of time until China will also be the world’s top emitter of carbon. Soon the world may have two major climate disrupters.

In addition to steel, China also leads in the use of other metals, such as aluminum and copper. Not only has China overtaken the United States in use of these materials, but it is widening the gap, leaving the United States in a distant second place.

In another key area, fertilizer—essentially nitrates, phosphates, and potash—China’s use is double that of the United States, 41.2 million tons to 19.2 million tons in 2004. In the use of the nutrients that feed our crops, China is now far and away the world leader.

In China’s consumer economy, sales of almost everything from electronic goods to automobiles are soaring. Nowhere is the explosive growth more visible than in the electronics sector. In 1996 China had 7 million cell phones and the United States had 44 million. By 2003 China had rocketed to 269 million versus 159 million in the United States. In effect, China is leapfrogging the traditional land-line telephone stage of communications development, going directly to mobile phones.

The use of personal computers is now also taking off in China. After a late start, the number of personal computers jumped to 36 million in 2002 compared with 190 million in the United States. But with the number of computers in use doubling every 28 months, it will only be a matter of time before China, a country of 1.3 billion people, overtakes the United States, which has a population of 297 million.

With household appliances, such as television sets and refrigerators, China has long since moved ahead of the United States. By 2000, for example, TV sets in China outnumbered those in the United States by 374 million to 243 million. With refrigerators, perhaps the most costly household appliance, production in China overtook that of the United States in 2000.

Among the leading consumer products, China trails the United States only in automobiles. By 2003, it had 24 million motor vehicles, scarcely one tenth the 226 million on U.S. roads. But with car sales doubling over the last two years, China’s fleet is growing fast.

And the race is far from over. With a per capita annual income in 2004 of $5,300, one seventh the $38,000 in the United States, China has a long way to go to reach U.S. per capita consumption levels. For example, despite China’s wide lead in total meat intake, the meat consumed per person is only 49 kilograms (108 pounds) a year compared with 127 kilograms (279 pounds) in the United States. As Chinese incomes rise at a world record pace, use of foodstuffs, energy, raw materials, and sales of consumer goods are continuing to climb.

China is now importing vast quantities of grain, soybeans, iron ore, aluminum, copper, platinum, potash, oil and natural gas, forest products for lumber and paper, and the cotton needed for its world-dominating textile industry. These massive imports have put China at the center of the world raw materials economy. Its voracious appetite for materials is driving up not only commodity prices but ocean shipping rates as well.

The new industrial giant’s need for access to raw materials and energy is shaping its foreign policy and security planning. Strategic relationships with resource-rich countries such as Brazil, Kazakhstan, Russia, Indonesia, and Australia are built around long-term supply contracts for products such as oil, natural gas, iron ore, bauxite, and timber. These strategic ties it is forming are welcomed in countries like Brazil as a counterweight to U.S. influence.

China’s eclipse of the United States as a consumer nation should be seen as another milestone along the path of its evolution as a world economic leader. Its record-high domestic savings and its huge trade surplus with the United States are but two of the more visible manifestations of its economic strength. It is now China, along with Japan, that is buying the U.S. treasury securities that enable the United States to run the largest fiscal deficit in history.

The United States, the world’s leading debtor nation, is now heavily dependent on Chinese capital to underwrite its fast-growing debt. If China ever decides to divert this capital surplus elsewhere, either to internal investment or to the development of oil, gas, and mineral resources elsewhere in the world, the U.S. economy will be in trouble.

China is no longer just a developing country. It is an emerging economic superpower, one that is writing economic history. If the last century was the American century, this one looks to be the Chinese century.

See following Eco-Economy Update: Lester R. Brown, “ LEARNING FROM CHINA: Why the Western Economic Model Will not Work for the World,” Eco-Economy Update, 9 March 2005.

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FOR ADDITIONAL INFORMATION

From Earth Policy Institute

Lester R. Brown, Outgrowing the Earth (New York: W.W. Norton & Company, 2005).

Lester R. Brown, Plan B: Rescuing a Planet Under Stress and a Civilization in Trouble (New York: W.W. Norton & Company, 2003).

Lester R. Brown, Janet Larsen, and Bernie Fischlowitz-Roberts, The Earth Policy Reader (New York: W.W. Norton & Company, 2002).

Lester R. Brown, Eco-Economy: Building an Economy for the Earth (New York: W.W. Norton & Company, 2001).

Lester R. Brown, “World Food Prices Rising,” Eco-Economy Update, 28 April 2004.

From Other Sources

BP, Statistical Review of World Energy 2004 (London: Group Media & Publishing, June 2004).

Energy Information Administration, “World Oil Demand,” International Petroleum Monthly.

International Monetary Fund, World Economic Outlook: The Global Demographic Transition (Washington, DC: September 2004).

International Iron and Steel Institute, Steel Statistical Yearbook 2004 (Brussels, 2004).

LINKS

International Fertilizer Industry Association http:/www.fertilizer.org

International Monetary Fund http:/www.imf.org

International Telecommunication Union http:/www.itu.int

Iron and Steel Statistics Bureau
http:/www.issb.co.uk

United Nations Food and Agriculture Organization
http:/www.fao.org

United Nations Statistics Division http:/unstats.un.org/unsd

United States Department of Agriculture http:/www.usda.gov

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