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Jul 25, 2008

Going for the gold…and the oil and the soybeans.

By Alan Stoga

Our FLYPside editorial video this week explores the emerging and inevitable conflict between America and China over Olympic medals, food and energy sources, and global power.China and America are on a collision course. Sooner or later, the interests of the old imperial power and the new mercantilist are likely to conflict.

Like gunfighters in some dusty town of the old West, it is easy to imagine the Chinese and American presidents someday snarling at each other: this world’s not big enough for the both of us.

In the short run, the two countries will try to outdo each other on the playing fields of Beijing in the quest for Olympic glory and gold medals.

However, in the long run, the rivalry could extend to the battlefields of Africa or Latin America or the Middle East, as the voracious consumption habits of both countries demand more and more iron ore and steel and grain and other commodities to fuel their economic growth.

Consider some numbers. China’s oil use has doubled in ten years. If they eventually use oil at the same rate as the U.S. does now, China will need 100 million barrels of oil per day in 2030. Current world production is only 80 million barrels.

Instead, maybe the Chinese will choose to build mass transit. Food, however, is likely to be a different story.

Chinese diets are improving dramatically. If by 2030 the Chinese consume as much protein as Americans do today, they would need the equivalent of two-thirds of today’s entire global harvest. And, one recent study by the Chinese and British governments projects that a significant portion of increased Chinese demand will have to come from international markets, since domestic yields are more likely to fall than rise.

Indeed, if every Chinese person were to live like an American, the human environmental impact on the planet would double in less than 25 years.

Throughout its long history, China’s rulers have always been content to play defense, not offense, with the rest of the world. That is now changing fast due to the inevitable arithmetic of development and population. From Brazil to Sudan to Iran, Chinese diplomats, aid workers and businessmen are frantically scooping up the commodities needed by an economy on steroids.

Can Chinese soldiers be far behind?

Of course, where we see China driving up prices and sealing supply relationships with unsavory governments, the Chinese see runaway American consumption habits forged in an era of cheap energy and cheaper food. Don’t they have the same right to growth and prosperity that Americans have enjoyed for the past century?

Probably, yes. But, just as probably, it won’t happen without a fight.


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