The (Ex) Washington Realist

Sat in on a discussion at The Nixon Center on "China and the Global Resource Balance" featuring Ambassador Chas Freemen. The title for this blog posting comes from a comment at the beginning that China possesses half of the world's pig supply and is generally the leading consumer of most commodities.

Some points that either came up during the discussion or crossed my mind--

--China's industrial output is set to grow by 17 percent in 2007 alone, so there is an almost insatiable need for resources

--Are we truly isolating "rogue states"? Something Drew Thompson, director of China Studies at the Center, noted, that logs harvested in Burma (Myanmar) are bought by China, yes--and then turned into furniture sold in IKEAs all over the world. So in the end result we Western consumers are not isolating these states at all. It also reminded me of a remark Fareed Zakaria made at a Gramercy Round last year, about China in essence picking up the "scraps" of the commodities deals Western countries didn't want. So is one role China plays in the global economy being the processor of materials for the West that the West doesn't want to sully its morals by acquiring directly?

--China is spending 9 percent of its GDP to modernize its infrastructure; the United States is spending less than 1 percent on maintenance and modernization of its infrastructure.

--China's economy is increasingly being powered by domestic demand rather than by exports. This is also true increasingly for Russia. For me, it raises questions then about the loss of leverage the United States has. And China's demands for resources all over the world means that the U.S.--even with European backing--cannot impose meaningful sanctions on any country unless China (and India and Russia) also agree to take part and to enforce.

--How much more profitable recycling is set to become of all sorts of metals and minerals as new sources decline or become more expensive. And something that James Schlesinger noted in our pages last year about liquid energy, the same for other scarce commodities--the country that comes up with a workable substitute first (whether for gasoline or anything else) will have an immense economic advantage.