Capturing the World's Natural Resources: China's Strategic Plan

As of today, China has only six car owners per 100 people. This ratio is quite small compared to the 90% car ownership in the US and 80% in the UK. What is important to realize from most comparative statistics between China and developed countries is the enormous potential for growth that is predicted from its rising middle class. Of key importance to manufacturing new products and constructing the housing for the migratory exodus of the middle class to urban centers is the absolute necessity of having sufficient natural resources to fuel this growth. Although the one-party state is still officially ruled by a communist party, China's ironically capitalistic thinking has succeeded in realizing that its ability to acquire natural resources will determine the sustainability of its rapid growth over time.

Looking at China on a per capita basis, the country is ranked approximately 100th in the world and is still vastly a developing country with low-income wages. In statistical terms, China does not have a critical impact on the world's economies. Yet, with the largest available labor force in the world, an abundance of resources, and a vast natural market-orientated economy, China has the ideal economic factors to become the super power of the century. After China opened up its economy in 1978 and abolished its centrally-planned Soviet style economic policies, it has averaged a 9.4% annual growth in GDP which has made it the fastest growing major nation in the world.

The outcome of China's economic reforms and extraordinary growth has had direct effects on its society. As real income increases on an annual basis, an influential emerging middle class comes as a by-product. With the largest population in world of 1.3 billion people, China will have a significant consumer market over the next 20 years. The logic behind this assumption is the following: as the growth per capita increases, the amount of real income increases, which creates a large urban middle class, and in effect the members of society now have more purchasing power to spend more money on goods besides food. No longer are foreign companies focusing on the urban elite as their target market, but are now aiming at the middle class Chinese workers. These consumers are beginning to discover what it is like to spend money on products that they may have never been able to purchase before, such as expensive jewelry as seen in this image to the left. As this emerging middle class develops new tastes and a consumer frenzy sets in, it is the corporations' duties to satisfy the needs of these consumers by supplying them with the products that they want. A few of the most desired products that are now in demand in China are cellular telephones, computers, TV sets, and cars, all of which will be produced more of as the middle class proliferates.

China has done a good job at strategically planning out its long term economic policies that are in response to its emerging middle class. The truth of the matter is that China is only in the early stages of its growth. With a GDP per capita below $3,000 USD, China has a long way to go before it fits its entire population with modern universal living standards. However, the leaders of this country have taken the rudimentary steps necessary to accommodate for the radical social changes in consumer behavior that await it. China has been taking proactive measures to secure the natural resources that support its manufacturing-based economy. While essential resources such as copper, iron, steel, tin, zinc, and energy have been available to produce its exported goods, China is now aggressively looking abroad to buy up the raw materials it needs for its own hungry middle class. In contrast to Japan's explosive growth after WWII in which economic initiatives focused on investing in hotels, tourism, and electronics, China's long term prosperity will be better insured with its wise decision to invest heavily overseas in factories, land, and shares in resource-based corporations. It is not uncommon to see news of China buying new state run oil facilities in Africa and portions of mining companies in Brazil. In fact, when I speak with my friend that lives in Brazil, he often discusses Chinese businessmen coming to Brazil to buy up large plots of agricultural land for producing soybeans. All this news about China stocking up on raw materials to be used for its manufacturing-based economy further supports the reality that China will soon become an economic superpower that is here to stay.

It is important to heed the immanence of China's rise to becoming a world power because it affects us in ways that may be not so obvious. Unfortunately, there is only a limited amount of natural resources on this world. Each year humans are depleting these resources as demand continues to increase due to higher standards of living across the world. As the developing BRICs grow at exponential rates, there is no doubt that the spending power of these rising middle classes will take a toll on the world's resources and mother nature. On a trip to Beijing this past summer, I was breath taken to see a thick gray layer of smog in the air every time I looked up, as the picture that I took to the right reveals. Although it is fascinating to witness China develop as a nation through its leverage on resources, the by-products of these raw materials is definitely leaving an ugly scar on earth's environment. China may have the right to say that it is its turn to take part in the industrial revolution, but the truth is that our planet cannot sustain the rate of resource depletion that is taking place worldwide. The US, China, and the rest of the world has to make the preservation of our environment a priority or else it will be nonexistent for future generations to appreciate.