Post #9 – When Should I Start Learning Mandarin in Preparation for My Chinese Overlords’ Arrival? Pt. 1

You’ve probably all heard that the 19th century was the ‘British century’ and the 20th was the ‘American century’ – but who gets to call dibs on the 21st century? China is the front-runner, but I’m here to explain why you don’t have to start learning Mandarin in anticipation of your eastern overlords juuuust yet. With the Chinese economy expected to eclipse that of the world’s sole superpower – America – possibly as early as next year, China seems like a safe bet at the moment to kick arse this century. But to equate current bullish economic growth and substantial international political sway with a direct association to a ‘Chinese Century’ would mean you’re ignoring a key proponent of their current position in the world – resources. So unlike the British Empire of the 19th century and the American domination of the 20th century, I’m willing to argue that the 21st century will not belong to China. That’s right – you’ve heard it here first ladies and gentlemen! I believe the battle of resources in a world of dwindling supplies will be China’s ‘Achilles heel’ and will eventually lead to them conceding that not only does this century not belong to them – but that it won’t really belong to anybody. To prove my point, I’m going to look at China’s heavy reliance on non-renewable resources such as coal, oil and uranium. I’m also going to argue that China’s ability to manage human ‘resources’ and geopolitical relations in an increasingly hostile region of the world is probably all going to go to shit sometime soonish. China’s capacity to deal with the natural resources of water and food will also be explored in this era of climate change, pollution and decreasing biodiversity. Lastly, I’m going to show my lovely readers (that’s you… yes you!) that all these issues presented will lead to China – the world’s largest exporter of goods – decreasing their output to the rest of the world, thereby reinforcing a vicious feedback loop of diminishing returns and turmoil at home. This will inevitably result in a decrease in relative economic and political power and thus cut the balls off any argument that this is truly China’s century.

Over the last few years, China’s economy has been growing at eight percent or more per year; that means it is more than doubling in size every eight years. That’s pretty damn impressive. In stark contrast, the economies of Europe and America have seen stagnation, contractions and patchy economic growth – particularly since the Global Financial Crisis of 2007-8. If there was ever a chance for China to proclaim their dominance in world political, economic and militaristic affairs, the ensuing decade would be the opportune time to do this. However, the resources China consumes and depends on for their current good fortune will inevitably act as an obstruction to further greatness. Currently, China’s appetite for resources and raw materials is driving up worldwide prices of a wide range of commodities including oil, iron, copper, cotton, cement and soybeans. So in a nutshell, if you can’t afford tofu – blame the Chinese. But overall, for the Chinese economy, the single most important resource is coal. China currently relies on coal for 80% of its electricity and 70% of its total energy – coal also supports China’s steel industry, the world’s largest. The author of The End of Growth (2010), Mr Heinberg goes so far as to state “altogether, China is one of the most coal-dependent nations in the world.” Unlike the U.S.A (which prides itself as being the ‘Saudi Arabia of coal’), China does not have vast deposits of surface-minable coal; over 90% of China’s coal comes from underground mines up to 1,000m deep – and extraction in China is peaking, meaning mining faces increasing engineering challenges and therefore a higher extraction cost. And guess what? Not only are Chinese coal reserves peaking now, but the peak of world coal production was in fact in 2011. China is fast running out of this most precious of resources, with current trends leading them to become increasingly reliant on foreign, low-grade and scarce coal beyond its own borders. China has few options for reducing its reliance on coal, since the fuel is used in an abundance of ways. In addition to powering the electricity and steel sectors of the economy, coal provides winter heat to hundreds of millions of Chinese in the north; it is also used in the cement, metal and chemical industries.

Although China is rapidly expanding its supply of natural gas, according to Mr Heinberg to replace “just the coal used for heating would double total gas consumption”. I’d therefore go so far as saying that China’s reliance on coal cannot be significantly reduced (despite what they say) as long as its demand for electrical power continues to grow at anything like current rates. This leaves China in a very vulnerable and precarious position and threatens any claim they may have to attaining sole economic domination in the years ahead. In any assessment of resources in a country like China, alternative sources such as wind, solar and nuclear must be given consideration. So how is the new green, hippy, tree-hugging version of China looking? China aims to have 100 gigawatts (GW) of wind power capacity by 2020 and the country’s leaders plan to expand installed solar capacity to 20GW during the same period.  However, the issue is if China continues with a ‘conservative’ 7% growth per year they will need approximately 1800GW by 2020 – their electricity generation capacity is currently 900GW. Wind and solar, even with such optimistic goals, can only supply no more than 7% of that. So as Mr Heinberg sums it up best, the only action that would be likely to boost that percentage “would be a dramatic reduction in growth of energy demand to, say, 2% annually”. Given the economic implications of such reductions, it is unfeasible that renewable sources of energy can compensate for China’s insatiable appetite for electricity consumption. In the instance of renewable resources, the battle may be domestic, but will ultimately force China to look elsewhere into increasingly hostile and turbulent environments to power their growing economy.

Well what about nuclear power I hear you say? Ahhh yes, because that worked out so well in Fukushima and Chernobyl. Nuclear power is another avenue from which China can diversify their resource dependence, but ultimately leaves them hostage to global price increases (mostly from us Aussies) and (after the Fukushima disaster) growing public backlash and higher overhead costs. Already China’s pursuit of uranium has led to record prices and involvement with questionable suppliers to secure future uranium. As the economist Don Miller puts it

Uranium has its own version of peak oil. Virtually all the cheap and easy uranium deposits have been tapped. What’s left are the hard and dangerous deposits located in politically unstable parts of the world, like Kazakhstan and Niger.

As China is driven abroad by its core national interest – economic survival – who China ends up dealing with in the hunt for resources is merely an afterthought. As Kaplan states, “China can be defined as an uber-realist power” in this respect; however in an environment of growing instability and further power struggles, China ultimately depending on inconsistent trading partners for key resources could prove costly to any claims of Chinese hegemony. Now – take a little breather… rather than lose you in a lengthy debate on China, part two will be along shortly. In part two the focus will shift to the people. THE PEOPLE!

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