While much of the world is still struggling to recover from the great slump of
the past few years, nations and states that cater to China's enormous appetite
for energy, food, metals and other commodities have been doing swimmingly.
Take Iowa, for example, where Chinese Vice President Xi Jinping, the
country's presumed next leader, made a visit on Feb. 15. The good feelings
undoubtedly were mutual as the farm state is a major pork producer, and China
consumes nearly half the world's pork. Moreover, Iowa is the world's largest
producer of soybeans and China accounts for nearly a quarter of the world's
demand in that market as well.
"U.S. products have a wonderful image in China," said William Westman, a
vice president at the Meat Institute, enthusing over China's importance to
U.S. farmers and ranchers. "China is our largest market for ag exports in all
commodities, and our trade with the country is up more than 1,000 percent
since 2002."
Farm states aren't the only beneficiaries of China's hyper-charged growth
in recent years. States such as Montana, Utah, Washington and Idaho have
benefited from China's robust demand for coal, lumber and metals to feed its
busy factories and supply its enormous construction projects.
And oil-producing states like Texas and Alaska have profited from China's
fast-growing demand for fuel, which buoyed world oil prices even during the
recession.
In fact, a wide swath of the world economy has been thriving in the wake
of China's emergence as an economic superpower with big appetites in the last
decade.
Studies by the World Bank and others show that, with the world's largest
population of 1.3 billion, China now consumes more than half the world's
cement, and nearly half the world's iron ore, coal, steel and lead.
That has lifted the prospects for entire national economies from
Australia and New Zealand to Brazil and Russia, which depend significantly on
the production of commodities, creating a teeming subset of healthy state
economies within the larger, ailing global picture.
"Commodities demand has been driven over the last decade by the growth in
China, there is no doubt about that," said Evy Hambro, a commodities
investment expert at the BlackRock hedge fund. Global markets for everything
from copper and gold to oil and corn closely follow developments in China's
economy and react, sometime violently, to any hint that Chinese demand could
subside.
Other major emerging nations, such as India and Brazil, also are rapidly
increasing their wealth and consumption of raw materials and are driving up
prices too, but "aren't quite the scale of China" as yet, Mr. Hambro said.
Pressure on prices
China's perpetual-consumption machine does have a downside for consumers
in nations that compete for the world's resources. It has made life
particularly uncomfortable for American consumers, who would like to see
gasoline prices stay well south of $4 a gallon, where they threaten to surge
for a third straight year.
Moreover, as growth picks up in the U.S. and elsewhere, that puts further
pressure on prices for vital commodities like wheat, rice and oil, and could
eventually lead to a spiral in world food and fuel prices like the one that
resulted in shortages and food riots around the globe in 2008.
