Seven Reasons Why We Should Not Depend on Imported Goods from China

It seems to me that the situation in China is far different from what most people think it is. Even if we would like to depend on China, we really cannot.

Reason 1. When we depend on goods from China, an amazingly large share of the world’s industrial activity gets concentrated in China.

The five largest users of energy in the world are China, the United States, India, Russia, and Japan. The International Energy Agency shows total energy consumption as follows for the year 2016:

Figure 1. IEA’s estimate of energy consumption (total fuel consumed, or TFC) by sector in 2016 for the top five energy consuming nations. Mtoe is million tons oil equivalent. Source: IEA. Non-energy use is the use of fossil fuels as a material to create end products that are not burned. Examples include medicines, plastics, fertilizers, asphalt, and fabrics.

When these countries are compared, restricting our analysis to the portion of energy used by industry, we find the rather disconcerting result shown in Figure 2:

Figure 2. Chart by the International Energy Agency showing total fuel consumed (TFC) by industry, for the top five fuel consuming nations of the world.

China consumes more fuel for industrial production than the next four countries listed (United States, India, Russia, and Japan) combined. Of course, we don’t know exactly the corresponding amounts for other countries of the world, but we can observe that if a country is concerned about its CO2 emissions, the easiest way to reduce these emissions is to send heavy industry elsewhere, such as to China or India. There are likely many countries that are primarily service economies, thanks to the option of outsourcing most industry to other countries.

Much of the discussion I have read regarding sending industry elsewhere has been in the direction of, “As advanced as our economy is, we don’t need heavy industry; service jobs will substitute. Industry can be developed at lower cost elsewhere. Everyone will be better off with this arrangement. The invisible hand will provide jobs and goods and services for everyone.” In addition, corporations saw the possibility of adding customers from around the world. Not too many thought about the real-world problems that might result.

Clearly there is a problem with the jobs being lost to China and other Emerging Markets. When new service jobs are added, they often do not pay as well the industrial jobs they replaced. In fact, there might not be enough jobs in total, if automation plays an important role as well.

Another issue is that the level of industrial concentration can be a problem. We are now depending on China and perhaps a few other countries to provide for a large share of the “stuff” we use. Even if China is not the only provider, it is often an important part of the supply chain. If something should go wrong (for example, widespread riots in China), we don’t have a Plan B.

Reason 2. China needs energy products to make the goods it uses for itself and for the goods it exports. China’s own energy supply is faltering. Because of China’s huge size, it is becoming increasingly difficult to keep China’s energy consumption rising sufficiently rapidly using imported energy.

China’s own energy production is shown in Figure 3. (Note: Hot off the press! New BP report released this week.)

Figure 3. China energy production by fuel, based on 2019 BP Statistical Review of World Energy data. “Other Ren” stands for “Renewables other than hydroelectric.” This category includes wind, solar, and other miscellaneous types, such as sawdust burned for electricity.

It is easy to see that China’s coal production hit its highest point in 2013 and has stayed at a lower level since that date. Also, China’s highest oil production occurred in 2015, with lower production since that date. China’s total energy production has been rising recently, but only with great effort. Total energy production is only 8.9% higher in 2018 than it was in 2012, implying an increase of less than 1.5% per year, relative to 2012 amounts.

A standard workaround for inadequate energy production growth is imported energy products. Even with these imports, it has been impossible to keep total energy consumption rising as rapidly as it rose in the 2002 to 2007 period. The cost with imports is greater, also.

Figure 4. China energy production by fuel, plus line showing its total energy consumption (including imports), based on BP 2019 Statistical Review of World Energy data.

In 2018, China imported 71% of its petroleum (either as crude or as products), and 43% of its natural gas. It was the largest importer in the world with respect to both of these fuels.

In 2018, China’s coal imports shrank as its own coal production surged. This was almost certainly a change planned by China. China would much prefer producing its own coal (and keeping the jobs within the country) to importing coal from elsewhere. China imported 4% of its coal from elsewhere in 2018.

Reason 3. The commodity demand from China is so huge that, to a significant extent, it determines world commodity price levels. Where regional energy prices exist, China’s choice regarding whether or not to import from a country can influence local price levels.

Chile is the largest copper producer in the world. A recent article regarding problems associated with lower copper prices notes that the demand for Chilean copper has been driven “almost entirely by the expanding Chinese economy over the last three decades.” For many commodities, China consumes over half of the world’s commodity supply. If China’s industrial demand is growing, prices will tend to rise, allowing more of the mineral to be extracted. Higher commodity prices tend to be needed over time because the ores of highest concentration (and otherwise easiest to extract ores) tend to be extracted first. Ores extracted later tend to be more expensive to extract, so higher prices are required for extraction to be profitable.

This situation of China playing an extremely large role in commodity prices holds for a very large number of commodities. If China is building widgets or any other product, using a particular commodity, China’s need to buy this commodity in the world market will tend to hold up world prices for the commodity. This situation holds even for fossil fuel prices.

Reason 4. Over the next few years, China’s coal supply is likely to fall significantly because of depletion. This lower fuel supply is likely to lead to a shrinkage of China’s industrial capability, and, indirectly, falling world commodity prices of all kinds.

The problem that China is encountering in Figure 3 is “peak coal.” This is a similar problem to that encountered by the United Kingdom immediately before World War I, and to that Germany encountered just before World War II.

Figure 5. The timing of the peaks is peculiar, relative to wars.

Coal tends to be the industrial fuel of choice because it is cheap. Goods made with coal tend to be inexpensive, especially if wages paid to workers are low and if the company making the goods does not spend much money on pollution prevention. Hydroelectric can be an adequate substitute for coal, if the water flow can be depended upon. Wind and solar are too intermittent and not sufficiently inexpensive to be adequate substitutes for coal. Wind and solar (included in “Other Ren” on Figure 3) are also far smaller in quantity than coal.

Outsourcing a large share of the world’s manufacturing to China seemed like a great idea back when it was started, often in the early 2000s. If, at some point, China cannot really handle the responsibility it has taken on, outsourcing gets to be a huge problem.

The reason why coal prices cannot rise very high is because if they do, the prices of finished goods will need to rise as well. Wages of workers around the world will not rise at the same time because the higher cost of production takes place due to something that is equivalent to “growing inefficiency.” The coal mined is of lower quality, or in thinner seams, or needs to be transported further. This means that more workers and more fuel is needed for each ton of coal extracted. This leaves fewer workers and less fuel for other industrial tasks, so that, in total, the economy can manufacture fewer goods and services. Because of these issues, countries experiencing peak coal are pushed toward contraction of their economies.

Unfortunately, rather than leading to high prices (to compensate for the higher extraction costs), running short of inexpensive-to-extract fuel tends to lead to war, or to tariff fights. Countries whose coal is depleting will try to maintain their own supply as long as possible. They will invent excuses to stop importing coal. Back in September 2018, the Financial Review reported, “China has introduced unofficial restrictions on coal imports in a bid to prop up domestic prices by slowing down customs approvals at key ports.” China needed higher internal prices to make it profitable to extract coal from its depleting coal mines.

Figure 6. Chart showing prices of Brent Oil, China Qinhuangdao Spot Coal price, and Asian Marker Coal, all in US$ of the day. Amounts from BP 2019 Statistical Review of World Energy. Note also that the units of coal (ton) are much larger than the units of oil (barrel) used on this chart. Thus, the same number of dollars of buys a much larger quantity of coal than of oil; coal is cheaper.

If higher coal prices really were possible over the long term, it would make it possible to open new mines in more distant locations. The location of coal mines is important because transport costs by rail or truck tend to be high. China built the large ghost city of Ordos, Inner Mongolia, on the expectation that coal prices would rise, making development of coal in the area profitable. Unfortunately, coal prices fell, making the project not economic. I visited the area in 2015, after teaching a short course on Energy Economics in Beijing. There was a large almost empty airport, and few vehicles were using nearby multi-lane roads.

Reason 5. All of the concern about future tariffs artificially raised China’s 2018 industrial production and commodity prices. Because production was brought forward into 2018, China’s production and world commodity prices can be expected to be lower in 2019 and in future years.

Manufacturers wanted to front-run tariffs, so they tended to ramp up production in advance of the tariff implementation date. This higher production in turn tended to raise commodity production and prices around the world. Note on Figure 6, above, that coal and oil prices are both higher in 2018 than in 2017. Prices in 2019, not shown, are tending to trend downward again.

China badly needed higher coal prices in order to help its coal extraction. Thus, part of the reason that China was able to continue to function as well as it did in 2018 was because of all of the discussion about future tariffs. If this discussion had not taken place, employment in China would likely have been lower. With this lower employment, sales of automobiles and smartphones would have been lower as well.

Note, too, that even with the demand brought forward into 2018, China’s economy was not functioning very well in 2018. Private passenger automobile sales for the year fell by 4%. Smartphone sales fell by a worrisome 15.5%. Clearly, workers were having difficulty buying the kinds of goods a person would expect a growing economy to be selling. I would attribute these problems to the peak coal problem mentioned earlier, making it increasingly difficult to increase the amount of industrial operations provided by China’s economy.

Reason 6. The Chinese economy has been gradually changing and adapting to hide its energy problems. Even more changes will be needed in the future, potentially affecting the world economy, with or without tariffs.

The Chinese economy reports carefully massaged GDP numbers, which many analysts consider to be inflated in recent years. Its debt level keeps rising to try to keep all of its operations going.

We know that China discontinued one major industry at the beginning of 2018: recycling plastic and other types of low-valued recycling. With low oil and natural gas prices, this type of recycling cannot be profitable. Of course, discontinuing a major industry can be expected to lead to a loss of jobs within China. But, on the positive side, it frees up coal and other energy resources in China for other industries that can (perhaps) make more profitable use of them.

On a world basis, the loss of the plastic recycling industry becomes a problem. If rich countries are willing to subsidize the cost of sending plastic recycling to China, this subsidy allows containers that bring goods to rich countries to be sent back to China with a paid load inside. Thus, operating the plastic recycling industry helps keep the cost of shipment of goods from China to the US or Europe down because the shipping costs only need to cover the one-way cost of transit, rather than also covering the cost of shipping the empty container back. Without the subsidy to pay the freight of the plastic recycling, costs for the shipping industry rise, making international trade more expensive. Eliminating the subsidy that rich countries are paying to ship otherwise-empty containers back full of mixed trash is part of what pushes the world economy to contraction.

Other countries are not taking over very much of China’s role in recycling plastic, either. The net effect is that the loss of recycling is one of the things pushing the world toward contraction.

China has no doubt been cutting back in other ways as well. It is likely that it is not building as many uninhabited cities and roads that are really not needed. Ugo Bardi recently posted this chart showing global cement production.

Figure 7. World Cement Production by Ugo Bardi from a blog post on January 19, 2019.

China produces over half of the world’s cement; part of the reduction we are seeing relates to China’s falling use of concrete in new buildings and roads.

In some cases, China is moving in the direction of being a service economy. A recent video states that of the $237.45 cost of producing an iPhone in China, Chinese workers only provide assembly services, worth $8.46. The US contributes $68.69 of the cost, mostly in the design and distribution phases. The parts are generally outsourced from other parts of the world.

One way of looking at what is happening in China’s economy is to analyze the country’s oil consumption in terms of the relative amounts of diesel (used primarily by industry) and gasoline (often used by private passenger vehicles).

Figure 8. Gasoline and diesel consumption for China, based on data from 2019 BP Statistical Review of World Energy.

Based on Figure 8, it appears that China’s industrial growth suddenly leveled off about 2012. This, not by coincidence, is about the time that China’s coal problems were becoming apparent in China. China’s gasoline consumption has continued to rise, however. It appears that once it became apparent that its coal supplies were starting to seriously deplete, China began to “grow” China’s economy more as a service economy. After 2012, most growth seems to have come in the non-industrial sectors of China.

Reason 7. A major concern should be a financial collapse, far worse than 2008, both in China and for the world as a whole.

The world needs growing energy supply to support the world economy. China is increasingly having difficulty with its energy supply. When China has trouble with its energy supplies, the world as a whole has a problem with its growth in energy supplies.

A few months ago, I showed the role China has played in the world economy is this chart:

Figure 9. Ten year growth in world energy consumption, divided between the blue portion associated with rising population, and the red portion associated with higher energy consumption per capita, which I have called “Living Std.”, meaning “Higher Living Standards.”

China added a little bump in GDP growth at the end of the nearly 200-year time period shown, after it joined the World Trade Association in December 2001. The energy added by China (mostly in the form of coal) allowed the world economy to continue to grow, when it otherwise would have been up against limits.

Now we are reaching a situation where China’s energy production is likely to flatten or fall because of the depleted state of its coal mines, and the fact that coal prices can’t rise high enough, for long enough, to open new mines. The world economy, over the period shown, has always had rising energy consumption. In most cases, energy consumption rose faster than population growth, allowing some growth in the standard of living over time.

Changing to a situation of shrinking energy consumption per capita would likely be extraordinarily traumatic. Population would likely fall. Commodity prices would drop to low levels. Debt would tend to default; prices of shares of stock would fall. Many governments would fail. If shrinking energy consumption per capita starts in one country (whether China or elsewhere), it could easily spread to other countries around the world.

We don’t know what is ahead, but we know that the low points on Figure 9 were very bad times, even though energy consumption in total was not contracting. The decade of 1860 to 1870 was the decade of the US Civil War. The decade of the 1930s was the decade of the Great Depression. The decade of the 1990s was the decade of the collapse of the central government of the Soviet Union.

We also know that world energy consumption and GDP growth tend to be highly correlated.

Figure 10. World GDP Growth versus Energy Consumption Growth, based on data of 2018 BP Statistical Review of World Energy and GDP data in 2010$ amounts, from the World Bank.

This is as we would expect, because energy consumption is required for the many aspects of GDP growth. Transportation, heating and/or cooling, and electricity all require energy consumption, for example.

The recent divergence between GDP and energy consumption on Figure 10 may be the result of overstated GDP amounts by China, India, and other countries. If a country wants to appear inviting for new investment, there is a temptation to overstate GDP since other countries seem to be doing so, without penalty.

Back during the Great Recession of 2008-2009, our problem was with homeowners who took out loans that were far higher than they could really afford. Today, we have whole economies taking on more debt than properly stated GDP reports would suggest they are able to handle. We go from one version of optimism regarding debt levels to another.

Conclusion. If a person doesn’t understand how badly the energy situation is working out for China, or how important energy consumption is, it is easy to think that the problems China is facing are primarily tariff-related. In fact, China’s situation is a very worrisome one, with or without tariffs being added.

To fix the situation, China would need a very cheap, non-intermittent, locally produced, non-polluting additional energy source. This energy source would also need to be rapidly scalable. Such an energy resource doesn’t appear to be available.







About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
This entry was posted in Financial Implications and tagged , , , . Bookmark the permalink.

890 Responses to Seven Reasons Why We Should Not Depend on Imported Goods from China

  1. the Chinese seem determined to make themselves the go-to source for everything the world needs.

    And we, of course, will go along with that, because we cannot imagine any situation other than the outpouring of cheap consumer goods.

    It is in some respects an inflated version of the ”cargo cult” mentality when we see a source of desirable goods pouring out of a seemingly inexhaustible storehouse.
    So we hang about waiting for the next container ship to arrive, while we unconsciously outsource our toxicity to those Asian people making all we need.

    So they enjoy the myth of 8% growth while having no air to breathe, denying the simple arithmetic that *8% growth will require energy consumption to double by late 2020s. As will 8% growth in India and Africa.

    So we are back to that late 2020s date again. Somehow whenever I write on that subject. it is a date that flags itself up without any help from me

    It is just there.
    It keeps flagging up as a road block ahead, whichever route you take.

    It flags up because if China doesnt sustain its growth rate, their entire house of cards will come down, and they know it. Already I think they have to find a million new jobs a year at least.

    By 2030, if China has sucked in enough energy to double its current production output, there will be no surplus energy levels in the commercial infrastructure of the world by which the rest of us will have any surplus left which we might use to buy Chinese goods at all.

    So in theory, Chinese goods will stack up with nowhere to go.

    Chinese wages will collapse, and so will the Chinese notion of ”economic systems”

    still it was a good idea at the time.

    • People have lived in much fancier homes, for quite a while.

      At one point, housing was mostly provided free by employers. This housing was simple, generally with a shared outhouse for bathroom facilities, and (in the early days, especially) no electricity. Heating (to the extent it was provided) was surplus heat, available from co-generation from nearby power plants. Coal-fired power plants were built in the middle of cities, for the purpose of being able to use the waste heat. Horrible from an air pollution point of view, but easy for workers to get to work, and lots of free heating for homes.

      • the housing arrangements you describe were the same here, cheap housing supplied almost free by the mine owners (they even had the collective term of ‘barracks’), shared outhouses, free coal and so on, basic hospitals schools. This was in the 1870s

      • a says:

        So do the smokestacks supply heat? If not, what aspect of a generating plant supplies the heat?

    • Mark says:

      I’m liking Derrek Jenson more these days because of his brevity. I remember him saying something to the effect of ‘the only sustainable way for humans to live is in the stone age.’

      Well, at least we won’t be surprised when this does end.

    • Tsubion says:

      I am still amazed as to why the America hasn’t ramped up their population to 1.3 billion souls over the years. It has obviously been working exceptionally well for China and India.

      In fact, America seems to be heading in the opposite direction. They appear to think they have too many people with a paltry 320 million. They are even turning newcomers away. What on earth are they thinking?

    • GBV says:

      So in theory, Chinese goods will stack up with nowhere to go.

      Chinese wages will collapse, and so will the Chinese notion of ”economic systems”

      Sounds to me like it’s China who’s got a 1930’s “Great Depression” heading their way, not North Americans. But I should probably find (and read) some history books (with minimal Western propaganda) on what things were like in Europe in the the 1930’s, as perhaps we’re in store for whatever they endured the last time around…


      • You should also understand that the US is 17% of the Chinese export economy. On the other hand Chinese imports represent 54% of US manufacturers raw materials and intermediate components. While the Trump tariffs on China are inconvenient – US imports from China continue to rise and its the US manufacturers and consumers that pay for the tariffs. Meanwhile, China still has 83% of the rest of its export economy intact. I’m not saying China is bullet proof, but it’s economic demise will be long after Trump’s Presidency ends – and will have little to do with anything Trump has done.

        • GBV says:

          “Meanwhile, China still has 83% of the rest of its export economy intact”

          Uhhh… I’m not sure that will be the case.

          The US is the “prettiest horse in the glue factory” – not to say it won’t or isn’t imploding economically, but the rest of the world seems to be sliding downwards just as quickly – or quicker – than the US. That rest of the world is the recipient of those 83% of Chinese exports, and as their fortunes fall so too does China’s.

          I’d also suggest that everything Trump does can potentially affect everyone – not because Trump is amazing or a disaster, or because I’m a Trump lover or hater, but because the world economy is so interconnected that virtually any meaningful action by someone as influential as the POTUS is likely to reverberate across the system.


        • wratfink says:

          I have read that China’s manufacturing is still around 5% growth annualized for last month. US manufacturing growth was less than 1%. The price of imports from China to the US fell. What causes the fall in import prices? Even with tariffs added? Could it be perhaps a devaluation in the yuan and/or the strengthening of the FRN? This could make imports cheaper, no? If so, this is not the outcome the president wants to bring jobs back.

  2. W. Yaeger says:

    The communist government of China has managed (with much help from the West) to control their population by continually raising the living standard. This has occurred contrary to the Wests beliefs that over time the rising living standard would result in the over throw of the Red Chinese government and adoption of democracy. Now that the proverbial rug has been pulled out from under the communists let us see just how well they can continue their dominance.

    • I think that the Chinese government picked out a higher standard of living for its people than the system could really support. Now the system is hiding the problems this creates with more and more debt.

      Democracy is a high energy form of government, because it requires a large number of elected representatives (or the people themselves) to gather at a single location to make decisions. A dictatorship by a single ruler is the cheapest form of government. There seems to be quite a large staff involved with the current Chinese government.

      I wonder if any of today’s governments can last for the long term, if energy supplies are much lower.

      • W. Yaeger says:

        I am afraid that your last sentence pretty much defines one of the main causes of war.

  3. Rodster says:

    The real culprit are the large US Corporations looking for cheaper labor so they can sell their goods for more profit like Apple. Walmart was another large corporation which put a stranglehold on small local businesses (my first job was at a small family business) went to China to buy their cheap trinkets to sell at their stores. So really, China was just a willing accomplice thanks to large US corps selling out their economy for a bigger buck.

    IBM was using Lenovo to build their IBM personal computers since at least the early to mid 90’s which they eventually sold to Lenovo.

  4. Harry McGibbs says:

    A terrific and comprehensive bit of analysis, for which many thanks, Gail.

    A couple of bits of relevant news:

    China’s car sales declined for a 12th consecutive month, a historic slump that’s left manufacturers reeling as trade tensions and economic worries weigh on consumer sentiment.”

  5. Xabier says:

    Thanks for such a strong article Gail; put together with Tim Morgan’s examination of the financial details -as far as they are available – it provides a fully-rounded view of this emerging debacle.

    The feeling that every day of apparent normality we have to enjoy is precious just grows…..

  6. Doug W. says:

    I have assumed that China could not maintain a leading role in the world and that environmental degradation and population pressures would be their undoing. Industrialization and the large role of coal has to be putting severe strain on water, air and soil, not to mention impacting public health.

    • China has its population pressure under control. Also, with its large population, if it loses a few percent of its population to environmental degradation, in some sense it still has enough population to carry on as before. In the US, we would get hysterical about 5% of 10% population loss to pollution, but with a much larger population, the economy could carry on fine with the lower population.

      Some issues get a lot of “play” in the US, because we have high standards for how things should be. It doesn’t necessarily make them very important, at this point, in the real world.

      US life expectancies are absolutely dreadful, compared to most developed countries. We don’t hear about this in the US. I believe the problem is the food we eat. Lack of exercise plays a role as well. We don’t hear about this though, just how terrible coal is.

      • DJ says:

        Life expectancy at birth strikes me as a funny measure. Who does the expecting?

        Average age at death would be a more transparent measure.

        • Live expectancies at birth are based on models, I believe, looking at what percentage of the population dies in each year of its life. Thus, they are trying to figure out what the life expectancy at birth would be if death patterns that held during a particular period continued to hold.

          Averge age at death would depend more on the age distribution of the population that you are looking at. If you are looking at a number of rural Japanese, they are likely nearly all very old. Their average age at death would be high. If you are looking at a very young population (perhaps people in sub-Saharan Africa), then the average age at death would likely to be quite low.

      • hkeithhenson says:

        Height is another measure of how well fed the population was. The US never had a famine by the European or Chinese definition, but in the decades preceding the civil war the height of men decreased by a substantial amount. The only thing this could have been was children not getting enough to eat.

        After three decades of discussion, the historians decided it was the indirect outcome of too much income being spent on housing and not enough on food for the children.

        I notice this does not load today. I captured a copy of it so if anyone really wants to read it, ask

        • The article loaded today. I read parts of it, but not all of it. I think that growing wage disparity likely had a lot to do with the falling heights, because wage disparity tends to be involved in issues such as this.

          One thing I didn’t focus on as I read parts of the article was the extent to which the article considered the North vs the South. The North was where most of the factories and there railroads were. The South had a lot of poor people, including many farmers who were not slave owners.

          One thing about the invention of the cotton gin (or any other invention) is that the economy gets to be more and more segregated into the “haves” and the have nots.” Those without the cotton gin were definitely behind those who have the cotton gin.

          I would have to spend more time on this to figure out what was going on.

      • Tsubion says:

        Smoking in China is prevalent, as the People’s Republic of China is the world’s largest consumer and producer of tobacco

        there are 350 million Chinese smokers

        China produces 42% of the world’s cigarettes

        The China National Tobacco Corporation is by sales the largest single manufacturer of tobacco products in the world and boasts a monopoly in Mainland China generating between 7 and 10% of government revenue

        Yang Gonghuan, deputy director of the National Center of Disease Control of China, said that progress on tobacco control is not moving quickly because the government derives large tax revenues from tobacco sales, and the industry employs a large workforce

        Nearly 60% of male Chinese doctors are smokers, which is the highest proportion in the world

        Smoking is a social custom in the PRC and giving cigarettes at any social interaction is a sign of respect and friendliness

        • I discovered that open windows are also a custom in China. People sit in business meetings, smoking with the windows wide open, when it is barely above freezing. Interesting!

          I did not have students smoking in the classroom at Petroleum University, however. In fact, I do not remember much smoking at the university at all.

  7. hkeithhenson says:

    In a sense and at the current level of technology, China and the US compliment each other.

    The US can export food and the Chinese export manufactured products. The question gets to be where economy of scale loses out to transport costs.

    • Good point. But, economies of scale in agriculture are not necessarily an advantage. Epidemics are a problem for animals, just as they are for humans. China especially is having a problem with this. Also, insect pests and crop disease proliferate, if farmers aren’t careful. It takes a lot of fossil fuel products to keep the problems in check. The US is ahead with use of the fossil fuel products.

      • hkeithhenson says:

        So to some extent, the US is shipping fossil fuel to China incorporated into the food we ship.

        It’s always been a problem to keep insects and crop diseases at bay. One of the costs of farming instead of being hunter-gatherers.

        But farming on a global scale has the advantage of keeping crop failures local. This requires transportation. I read somewhere that the railroad was the key to ending famine in Europe.

        • Railroad. Also, some way of providing of a lower bound on income. I think famines often occur because low wage people cannot afford the food that is available. The food is shipped elsewhere, where richer people are willing to pay more for it.

          • DJ says:

            “The food is shipped elsewhere”

            Yes, like the “famines” in Ireland and in Scandinavia (in the 1860s).

          • Xabier says:

            It seems to be very common. There was certainly one famine in medieval England, I think the 14th century, where the harvest was totally ruined in the South, so the merchants brought down grain from the North, only to find that no one had the money to pay for it.

            And I’ve just been reading something similar about Bengal in the 18th century.

            We simply can’t comprehend how fortunate we have been living without the menace of famine – imaginatively impossible to grasp.

            • GBV says:

              Come back, famine!
              Come baaaaaaack!!!

              Could be worse… could be a world without zinc!


        • Xabier says:

          I think Britain was one of the first countries to escape famine in the late 18th century, due to increased food production and the new canal network/ improved roads and harbours, etc.

          Although people later starved to death from sheer lack of money, of course.

          Italy was one of the last to experience famine, being so mountainous, without coal, canals, and industrialising so late.

          Even if they didn’t starve to death, being ‘always hungry’ was more common in Europe than we might think,until after WW2. It was certainly still the case in the Pyrenees when my grandmother was growing up there in the 1920’s: ‘miseria’.

          • We learned that in China, the traditional greeting (instead of “How are you?”) is, “Have you eaten?” This seems to have grown out of a history of chronic lack of adequate food supply. Now, it is interpreted to mean something more like, “Have you had the most recent expected meal?”

  8. hkeithhenson says:

    “Such an energy resource doesn’t appear to be available.”

    If you limit the resource being available to the next month or year, that’s the case. If you start taking a longer look, like 10-2030 years out it is possible that power satellites could be providing most of the energy.

  9. Neil says:

    Clearly the US war machine heavily relies on cheap energy
    US military is world’s ‘single largest producer’ of greenhouse gases – report

  10. Chrome Mags says:

    What path does electricity travel? The path of least resistance.
    What path do products make it to marketplace? The path of least resistance, which in most cases is china. They have become the worlds manuf., assembler.
    Now, on the surface it would seem China isn’t because of distances involved, but so much stuff can put on to a container ship the cost of shipping becomes smaller than more important cost considerations such as labor. Those people are working for slave wages, and I mean slave. There are apartment complexes with nets at the bottom to catch people trying to escape the hopelessness of their existence.
    If you drive down the highway, lanes with fewer cars fill up with vehicles changing lanes. Again path of least resistance. Humans are like ants in a colony acting with the hell bent determination of yeast.

    But that doesn’t mean we can’t meet limits along the path of least resistance.

Comments are closed.