Dan Watson, Contributing Writer
Blairgowrie Associates; dwatson@aol.com
Recently, there has been a great deal of discussion in the financial community about the continuing shaky state of the global economy. In many of the current financial articles the status and role of the second largest economy
(i.e., the Chinese economy) has been called into question. We’ve
seen a flurry of articles about China’s slowdown and whether
the country has the ability to keep social order intact as things
slow down. During this “slow down” period we have
seen inflation happening inside China, we have
witnessed unemployment at levels never experienced by China. We have seen an exit of
wealthy Chinese who are escaping a China
that has become polluted (air, water, land).
At the same time we have listened to various
China experts and read numerous articles
proclaiming that China will surpass the U.S.
by 2016. Polls taken inside China indicate
that two out of three Chinese now predict
that their country will overtake the U.S., an
eight percentage point increase since 2008.
The number of Americans today who agree
has jumped 11 percentage points to 47 percent.
Let’s be honest, China has enjoyed an impressive run over the past three decades with real
annual gross domestic product (GDP) growth
averaging nearly 10 percent through 2012.
China is currently the world’s second-largest
economy, largest merchandise exporter, second-
largest merchandise importer, second-largest
destination of foreign direct investment (FDI),
largest manufacturer, and largest holder of for-
eign exchange reserves. All of this sounds great
but as the old saying goes, “all that glitters is
not gold.” China will also become the world’s largest importer
of crude oil in October, surpassing the U.S. for the first time
as the Asian giant’s rising consumer class of drivers grows in-
creasingly thirsty for fuel, or so the U.S. Energy Information
Administration is projecting.
China already is the largest importer of oil from the troubled
Middle East, taking away a distinction that
has plagued the U.S. since the 1970s.
Its move to being the world’s largest
importer, even as U.S. dependence
on Middle Eastern oil declines to
negligible levels, could transform
regional and world politics as
the focus of global defense ef-
forts for decades has been keep-
ing open the vital oil shipping
lanes leading from the Persian
Gulf to the US and Europe.
China’s emergence as the
world’s biggest oil importer has
been building for years, but grew
particularly rapidly this decade along
with record breaking car sales, which
surged to more than 19 million units last
year. China, with its increasingly prosper-
ous population of 1.3 billion, has been
the world’s largest market for autos since
2009. Oddly, most Americans are com-
pletely unaware of this fact.
This number one distinction is causing China’s consumption of oil to surge
by 13 percent to 11+ million barrels a day
between 2011 and 2014. Additionally,
China
WILL IT SURVIVE THE GLOBAL DOWNTURN?
