China Is Replacing US as World's Leading Consumer

LESTER R. BROWN founded the Worldwatch Institute and is presently president of the Earth Policy Institute. His latest book is Outgrowing the Earth: The Food Security Challenge in an Age of Falling Water Tables and Rising Temperatures.

Washington - 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 US 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 US in all but oil.

China has opened a wide lead with grain: 382 million tons to 278 million tons for the US 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 US only in corn use.

Although eating hamburgers is a defining element of the US lifestyle, China's 2004 intake of 63 million tons of meat was far above the 37 million tons consumed in the US. While US meat intake is rather evenly distributed among 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 US: 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.

With oil, the US is still solidly in the lead with consumption triple that of China-an estimated 20.4 million barrels per day to 6.5 million barrels in 2004. But while oil use in the US 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 US.

Looking at energy use in China means also considering coal, which supplies nearly two-thirds of energy demand. China's burning of 800 million tons of coal in 2003 easily exceeded the 574 million tons burned in the US. With its coal use far exceeding that of the US 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 US in use of these materials, but it is widening the gap, leaving the US in a distant second place.

In another key area, fertilizer (essentially nitrates, phosphates and potash), China's use is double that of the US-an estimated 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 US 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 US. But with the number of computers in China doubling every 28 months, it will only be a matter of time before the country of 1.3 billion people overtakes the US, which has a population of 296 million.

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

Among the leading consumer products, China trails the US only in motor vehicles. By 2003, it had 24 million motor vehicles, scarcely one-tenth of the 226 million on US roads. But with car sales doubling over the last two years, China's ?eet 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 US, China has a long way to go to reach US 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 US. As Chinese incomes rise at a world-record pace, use of foodstuffs, energy and 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 US in?uence.

China's eclipse of the US 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 US are but two of the more visible manifestations of its economic strength. It is now China, along with Japan, that is buying the US treasury securities that enable the US to run the largest ?scal de?cit in history.

The US, 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 US 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.

•

CHINA'S AMERICAN DREAM | The American dream in China could become a nightmare for the world. For China's 1.3 billion people, the American dream is fast becoming the Chinese dream. As I've noted, millions of Chinese are already living like Americans-eating more meat, driving cars, traveling abroad and otherwise spending their fast-rising incomes much as Americans do. Although these US-style consumers are only a small fraction of the population, China's claims on earth's resources are already becoming highly visible.

What if consumption per person of these resources in China one day reaches the current US level? And, closely related, how long will it take for China's annual income per person of $5,300 to reach the 2004 US figure of $38,000?

During the 27 years since the far-reaching economic reforms of 1978, China's economy has been growing at a breakneck pace of 9.5 percent a year. If it were now to grow at 8 percent per year, doubling every nine years, income per person in 2031 for China's projected population of 1.45 billion would reach $38,000. (At a more conservative 6 percent annual growth rate, the economy would double every 12 years, overtaking the current US income per person in 2040.)

For this exercise we will assume an 8 percent annual economic growth rate. If the Chinese consume resources in 2031 as voraciously as Americans do now, grain consumption per person there would climb from 291 kilograms today to the 935 kilograms needed to sustain a US-style diet rich in meat, milk and eggs. In 2031 China would consume 1,352 million tons of grain, far above the 382 million tons used in 2004. This is equal to two-thirds of the entire 2004 world grain harvest of just over 2 billion tons.

Given the limited potential for further raising the productivity of the world's existing cropland, producing an additional 1 billion tons of grain for consumption in China would require converting a large part of Brazil's remaining rainforests to grain production. This assumes, of course, that once they are cleared these soils could sustain crop production.

To reach the US 2004 meat intake of 125 kilograms per person, China's meat consumption would rise from the current 64 million tons to 181 million tons in 2031, or roughly four-fifths of current world meat production of 239 million tons.

With energy, the numbers are even more startling. If the Chinese use oil at the same rate as Americans now do, by 2031 China would need 99 million barrels of oil a day. The world currently produces 79 million barrels per day and may never produce much more than that.

Similarly with coal. If China's coal burning were to reach the current US level of 2 tons per person, the country would use 2.8 billion tons annually-more than the current world production of 2.5 billion tons.

Apart from the unbreathable air that such coal burning would create, carbon emissions from fossil-fuel burning in China alone would rival those of the entire world today. Climate change could spiral out of control, undermining food security and inundating coastal cities.

If steel consumption per person in China were to climb to the US level, it would mean that China's aggregate steel use would jump from 258 million tons today to 511 million tons, a quantity equal to the current consumption of the entire Western industrialized world.

Or consider the use of paper, another hallmark of modernization. If China's meager annual consumption of 27 kilograms of paper per person were to rise in 2031 to the current US level of 210 kilograms, China would need 303 million tons of paper, roughly double the current world production of 157 million tons. There go the world's forests.

And what about cars? If automobile ownership in China were to reach the US level of 0.77 cars per person (three cars for every four people), China would have a fleet of 1.1 billion cars in 2031-well beyond the current world fleet of 795 million. The paving of land for roads, highways and parking lots for such a fleet would approach the area now planted to rice in China. The competition between automobile owners and farmers for productive cropland would be intense.

The point of this exercise of projections is not to blame China for consuming so much, but rather to learn what happens when a large segment of humanity moves quickly up the global economic ladder. What we learn is that the economic model that evolved in the West-the fossil-fuel-based, auto-centered, throwaway economy-will not work for China simply because there are not enough resources.

If it does not work for China, it will not work for India, which has an economy growing at 7 percent per year and a population projected to surpass China's by 2030. Nor will it work for the other 3 billion people in the developing world who are also dreaming the American dream. Perhaps most important, in an increasingly integrated global economy where all countries are competing for the same dwindling resources it will not continue to work for the 1.2 billion who currently live in the affluent industrial societies either.

The sooner we recognize that our existing economic model cannot sustain economic progress, the better it will be for the entire world. The claims on the earth by the existing model at current consumption levels are such that we are fast depleting the energy and mineral resources on which our modern industrial economy depends. We are also consuming well beyond the sustainable yield of earth's natural systems. As we overcut, overplow, overpump, overgraze and overfish, we are consuming not only the interest from our natural endowment, we are devouring the endowment itself. In ecology, as in economics, this leads to bankruptcy.

China is teaching us that we need a new economic model, one that is based not on fossil fuels but that instead harnesses renewable sources of energy, including wind power, hydropower, geothermal energy, solar cells, solar thermal power plants and biofuels. In the search for new energy, wind meteorologists will replace petroleum geologists. Energy architects will be centrally involved in the design of buildings.

In the new economy, the transport system will be designed to maximize mobility rather than automobile use. This new economy comprehensively reuses and recycles materials of all kinds. The goal in designing industrial processes and products is zero emissions and zero waste.

Plan A, business as usual, is no longer a viable option. We need to turn quickly to Plan B before the geopolitics of oil, grain and raw-material scarcity lead to economic instability, political conflict and disruption of the social order on which economic progress depends.