If you feel the price of commodities are getting out of control, you may be able to pin the blame on China, according to a new analysis of how the booming economy of the Red Giant gobbles up many of the world’s resources.
China represents 10% of the world’s economic output. Yet Barron’s reports that the country eats up more than half of all the cement on the Earth as it builds everything all at once. Likewise, nearly half of the world’s iron, steel and lead is also being consumed by the Chinese. Here are some other eye-opening stats from Barron’s:
- 40% of the world’s supply of aluminum, zinc and copper are used in China
- China consumes 40% of the world’s eggs
- 30% of the world’s rice is eaten by the Chinese
- 25% of the world’s soybeans are used in China
- Only 10% of the world’s oil is used in China, which is right on pace with their 10% share of world economic output
While many commodities prices are driven by the Chinese, it’s no secret that their economy is overheated. As a result of that, I’m guessing we’ll see the prices of many commodities decline over the next year or at least moderate.
I have been to China three times over a 20-year period. When I first went in 1983, everybody was either on foot or on a bike, except for the Red Army who drove around in vehicles. Then when I went back 2 years ago with my team for a staff trip, there were cars everywhere in the cities, but not so much in the rural areas. (Today China is the largest auto market in the world, so I’m betting even those lonely freeways in rural areas are seeing more vehicular traffic now.)
But the extraordinary growth may all be too fast, too soon.
I also want to note that I’ve been wrong on repeatedly saying we here in America have no control over what we pay for the price of oil and gasoline. Barron’s stats prove me wrong. China simply isn’t consuming that much oil to be a driving force.
We here at home represent 4% of the world’s population, yet we’re using a quarter of the world’s oil. So we’re still in position to be a game changer if we become more fuel efficient with our vehicles. By doing that, we can reduce how much money we send overseas to those oil-producing nations who would love to destroy us.