Sunday, March 23, 2008

If China gets wealthy....

Layman gets a glimmer: A special report in The Economist on "China's Thirst for Resources" includes a piece on "The perils of abundance" that highlights the environmental dangers of China's rapid industrialization. That environmental risk, however, is flip side of the tremendous economic reward to humanity in China's rise. It was the latter that struck me here:
Last year, in a report funded by Rio Tinto, Ross Garnaut and Ligang Song of the Australian National University argued that in countries where income per person has passed $2,000, as it did in China in 2006, demand for natural resources begins to grow at a much faster pace than previously, and continues to do so until income per person reaches roughly $20,000. That pattern has been particularly pronounced in Japan and South Korea, they argue, because of high levels of investment, exports and urbanisation. China also has high and rising levels of all three, so the authors expect its consumption of natural resources to follow a similar path. “The increase in China's demand for metals during the next two decades may be comparable to the total demand from the industrialised world today,” they conclude.

Let's say there are a billion people living today in countries with per capita income over $20,000 -- a baseline, apparently, for first-world prosperity. China reaching that threshold will double the world's 'upper middle class.' That may be obvious to economists, but it was a bit of a lightbulb for me. And by the time China gets there, Russia, Brazil, India should have moved well along that path.

I realize that this is only a surface scratch of the enormously complex task of viewing the path of world development. The catastrophes that could sidetrack or distort pervert the swift increase in human prosperity are manifold. Still, the snapshot of the possible seemed worth registering.

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