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December 2004 Articles You may also Download This Eidition in it's entirety using the Link Below Transatlantic Times: Covering All the Bases We live in a rapidly changing world where events in one region can trigger a totally new series of issues with increasingly significant impact elsewhere. For this reason, it appears as though the era has come for a magazine presenting views from both sides of the Atlantic. We at Transatlantic Times magazine saw the need to fill this void in global news reporting and analysis and are continually working toward that goal. Our objective, these past few months, has been to provide balanced reporting with views from the American perspective as well as the European perspective, so readers are exposed to both sides and may thus make intelligent decisions regarding what is fact or culturally biased opinion. In the shrunken world of today when Islamic extremists, for example, are able to put their opinions and rhetoric out for world wide perusal via satellite in a matter of minutes, and world elections are instantly analyzed from Afghanistan to Malawi, the world and its citizens find themselves increasingly paying the price for decisions made thousands of miles away. In this kind of world, it will be refreshing to find a medium that affords an opportunity to see a balanced view from all sides of the Atlantic.
China’s Tiger Economy As is widely known, there is a general economic slowdown worldwide, which at the time of this writing is just beginning to affect China. Nonetheless, the vast country with its 1.3 billion population, of which some 900 million are described as peasants, is still driving world trade. There is a two-tier economy in China with the thriving maritime coastal cities driving the economy, while the poorer inland cities and towns eke out a living off the land and in manufacturing.China is following in the footsteps of Japan, which became an Asian Tiger economy in the 1960s, followed by South Korea, Thailand, Malaysia and to a lesser extent, Taiwan. China is already the world’s sixth largest economy. The country’s GDP stands at a massive $1.4 trillion. Figures released for the third quarter of this year (2004) showed that China’s economy grew by an annualised 9.1%, a slight slowdown from the 9.6% registered during the second quarter and the 9.7% during the first quarter of this year. The annual growth figure for 2003 was another whopping 9.1%. Inflation registered only 2.8% in 2003. Forecasts indicate that the economic growth will fall to 8.2% by 2006, but rise again to 9% by 2008. Manufacturing is at the heart of these figures. However, to achieve the massive manufacturing output, China needs to import a huge amount of raw materials, such as oil, ores, steel and to a lesser extent coal. China’s effect on the world economy can be judged by the fact that she is one of the key drivers of the current oil price hike, as demand for crude oil and petroleum products has increased substantially, while supplies have not kept up with demand. To help alleviate this problem, China has embarked upon a period of oil exploration and production off its own coastline, especially in the Bohai Gulf region to the north of the vast country. Imports amounted to $412 billion in 2003, while its exports totalled $438 billion, of which $200 billion’s worth were accounted for by machinery and electrical appliances alone. During the same period, imports of crude oil totalled 91 million tonnes, oil products 28 million tonnes, steel 37 million tonnes, while ore and refined ores amounted to 148 million tonnes. In 2003, China consumed 36% of the world’s raw steel, 30% of the world’s coal and 55% of the world’s cement. The bilateral trade between US and China was alone worth $126 billion last year. According to the country’s own statistics, imports should reach $850 billion and exports $800 billion by 2008. Economists think that China will continue to boom for the next 10-20 years, despite a few ups and downs along the way. Taking domestic car sales as an example of China’s phenomenal growth potential, vehicle sales have doubled in a very short time frame as car ownership in China shows a 20% per year increase on year growth cycle. If this continues, forecasters say the country will overtake the US in car ownership by 2030. What that will do to the world’s environment doesn’t bear thinking about. As for this year, domestic car production is expected to top two million. Manufacturers are talking of having the capacity to build four to five million cars by the end of 2005. China’s transport sector in general is expected to account for two thirds of the 5.3% year on year growth in petroleum products use to 2025. In volume terms, refined oil imports are expected to match domestic output by 2011 and continue to grow. Chinese oil use expanded by 15% in 2003 and from January to September of this year, it has risen by another 18%, fuelling the world’s high crude oil prices. As the Chinese get a taste for cars, household goods, and air conditioning on the back of rising incomes, oil demand is set to explode. It is already the world’s second largest oil consumer. Crude oil imports averaged 2.4 million barrels per day thus far this year, while petroleum products imports averaged 670,000 million barrels per day. Crude oil imports are forecast to be at least 110 million tonnes this year, up from 91 million tonnes seen in 2003, which itself was 31% higher than in 2002, according to the ministry of commerce. China’s daily oil consumption is expected to rise from five million barrels per day to 11 million barrels per day by 2025, according to the US Energy Information Administration. However, these figures are now thought to be grossly under-estimated as China is more concerned with volume rather than price. This year’s Chinese coal production is running at nearly 20% ahead of last year and in a move described as a ‘first,’ a Chinese mining company has taken a stake in an Australian coking coal complex. There is pressure on the availability of coking coal in China, hence the investment, analysts say. Steam coal-based power output in China rose by nearly 15% between January and August this year, compared with the same period in 2003. In an effort to satisfy domestic demand, exports of steam coal fell by 10%. This year steel production is forecast to reach 270 million tonnes and in four year’s time this figure should hit at least 275 million tonnes. Earlier forecasts did not expect China to reach 270 million tonnes until 2010. Steel prices worldwide have gone up by 40% this year on the back of higher raw materials price and spiralling demand leading to a worldwide steel shortage. Because of the massive drive on imports and exports, domestic ports are choked with goods thanks to slow shipments by rail, road, or river in the vast hinterland. Costs of transport within China are still said to be higher than in developed countries. Another example of China’s phenomenal growth possibility is that by 2015-2016 China expects to be the leading shipbuilding nation in the world overtaking both South Korea and Japan. China is investing in new shipyards, catching up on technology and improving delivery times. Ships are a major source of US dollars to China as most the world’s shipping markets operate in dollars. This will undoubtedly have a knock-on affect on the world’s steel market. By 2020, China is also forecast to be the world’s top tourist destination, catering for up to 130 million tourists annually. According to the Madrid-based World Tourism Organisation (WTO), China is already the fifth most popular destination in the world, boosting the local economy. China’s economic and political reforms during the past 20 years have made the country attractive to those interested in history and culture. Twenty-four out of 31 provinces, municipalities and autonomous regions have designated tourism as a pillar of the local industry says the WTO. China could even become the world’s fourth largest exporter of tourists by 2020. Tourism should be boosted by the holding of the 2008 Olympic Games in Beijing. Sources in Beijing say the city is about 200 short of its target of 800 star-rated hotels. Beijing already has 4,000 non-rated hotels and guesthouses. Many international hotel chains are opening new facilities right across China. For example, Best Western claims it will have 100 hotels in China by the end of 2007. As of today, Best Western has only eight. Other boosts to local economies included the holding of the first Grand Prix in China at Shanghai, a bustling economic powerhouse of 20 million people. Shanghai is also the largest port in China and took just 20 years to reach number three in the world’s list of container handling ports, vital for both exports and imports as 95% of the world’s goods is still shipped by sea. Last year, this booming port handled 11.28 million container boxes. Indeed, port construction is high on the Chinese government’s agenda to handle both containers and raw materials, both for imports and exports. Shanghai recently unveiled what it claims is the world’s fastest train linking the downtown area to the airport at 270 miles per hour, taking just eight minutes for the journey. The cost for this project alone was estimated at $1.2 billion. There are some blips on the horizon, not the least of which is the escalating cost of raw materials and their spill-over effect into consumer and manufacturing industries. Energy supplies have struggled to keep up with the booming economy in some areas, hence the need for vast projects like the Three Gorges Dam. Once completed in 2009, this dam and its 400-kilometre reservoir will produce as much electricity as 10 nuclear power plants. This project alone is forecast to increase national output by 10%. Another problem is that despite the vast port building and upgrading programmes, goods are still held up because of severe congestion in the hinterland, which so far has not kept pace with the investment seen at the seaward end of the logistics chain. China’s entry into the World Trade Organisation (WTO) in December 2001 was expected to help speed up the opening of internal logistics chains, which is vital for the movement of goods and raw materials across this huge country. Both the rail and road infrastructure desperately need upgrading to cope with the increasing demand for freight movements. There is also the problem of the vast diversity of the Chinese people. The communist party acknowledges that the biggest threat to power comes from some of the 900 million strong peasants, many of whom are protesting against brutal and corrupt officials. Also the pernicious implementation of the ‘One Child’ policy is a cause for concern for the local population in some areas. The party magazine says three million peasants were involved in protests in 2003 against local police, many of which turned violent.
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