It's interesting Steven states US will "weather" the storm better than other regions in the world ... but that is predominantly an economic focus. There is significant climate change and land degradation happening throughout the southern states, and traditional growing areas are in a similar state to our Murray region in VIC / SA.

The financial might of the States is undisputed, but without food, sustainable oil supplies and sufficient water how will they maintain superiority. Their are signs of implosion now.

While China are going strength to strength ... though also facing signficant issues over water quality and farmable land.

An interesting read for those who haven't seen it yet is "When the Rivers Run Dry" by Fred Pearce. Some fascinating statistics and facts about where we're at and where we are heading. (Has a follow up too that addresses critics of the 1st book).

Corri

The US is an open society. You read about and see their environmental woes.

China is becoming more open but the media don't report much of the goings on inside China.

This may help you understand some of China's environmental woes.

http://www.foreignaffairs.org/20070901faessay86503/elizabeth-c-economy/the-great-leap-backward.html

Quote:

>>China's environmental problems are mounting. Water pollution and water scarcity are burdening the economy, rising levels of air pollution are endangering the health of millions of Chinese, and much of the country's land is rapidly turning into desert.>>

By contrast North America, which includes Canada, has more than half the world's potable water supply. It will not run out of water.

There will certainly be disruptions as agriculture moves from some states that are over-heating and drying out (California for example) to more northerly states that are warming up and have adequate water. But the North American region as a whole will have water and food.

In fact crop yields in some northerly states are already on the up due to the, for them benign, effects of global warming.

Similar comments apply to Europe. In parts of Germany global warming has actually had a benign effect.

China going "from strength to strength" means nothing if they run out of water for their huge population. One fifth of humanity is crammed into a country with less arable land and water resources than North America or Europe.

Another quote:

>>Coal provides about 70 percent of China's energy needs: the country consumed some 2.4 billion tons in 2006 -- more than the United States, Japan, and the United Kingdom combined. In 2000, China anticipated doubling its coal consumption by 2020; it is now expected to have done so by the end of this year. Consumption in China is huge partly because it is inefficient: as one Chinese official told Der Spiegel in early 2006, "To produce goods worth $10,000 we need seven times the resources used by Japan, almost six times the resources used by the U.S. and -- a particular source of embarrassment -- almost three times the resources used by India.">>

Stevenmeyer,
On top of all that China has turned into a coal importer.
Until last year it was an exporter.
Peak Coal for the world is 2030 (EWG report on world coal).

There will be a problem with the buying of Australian coal companies
by China. What if they want to export it to China and not make it
available for us ?
They have already done this world wide with oil.
See Angola, Sudan, Chad and others.

Some perspectives on China

How big is China's economy?

International comparisons of GDP are fraught. The two most common measures are "exchange rate" and purchasing power parity (PPP).

The exchange rate method multiplies the local currency value of goods & services by the average exchange rate for the year. By this measure China's GDP is $2.6 trillion. That's a little more than half the size of Japan's economy.

The PPP method takes into account differences in prices between countries. By this measure China's GDP is $10.2 trillion. (In most developed countries the difference between the two measures is only of the order of 10-15%)

Which is the better measure?

To compare standards of living PPP is the better measure. What's important to a consumer in Shanghai is what he can buy for his remnimbi denominated paycheque.

However when assessing the importance of an economy on the world stage the exchange rate method is preferred. We trade in real dollars, not "PPP" dollars.

Except that the Chinese government keeps the remnimbi undervalued so $2.6 trillion is probably too low.

Most pundits guess the value of the remnimbi should rise 50%. Adding 50% to $2.6 trillion gives $3.9 trillion. Call it $4 trillion. On the global scale China's economy is slightly less important than Japan's. Of course it's growing faster. China is achieving somewhat better growth rates than Japan achieved back in the 1950s-1980s

The combined GDP of the US, Japan and UK is $20 trillion. So China uses more coal to produce one fifth by value the goods in these three countries.

Much of China's growth has been fueled by foreign investors from Japan, USA and EU using China as a manufacturing platform. "Chinese exports" are often actually European, US or Japanese exports manufactured in China. This will probably change over time.

If China can avoid an environmentally caused implosion, and that's VERY big if, it could emerge as a super-power albeit a rapidly aging one. China's fertility rate is well below replacement and the average age of the population is shooting up.

China perspective continued

Much of China's phenomenal growth has been driven by one simple process. The re-deployment of labour from inefficient state farms and factories to efficient private sector facilities. These are often facilities built by foreign companies.

Move someone from a state-run steel foundry to an efficient private sector one and his output is magnified tenfold or more in one day!

I don't want to minimise the Chinese achievement. It may be a simple process but many countries, notably African ones, fail to get it right. The Chinese, once they were free of Mao, did. And they continue to do it on a huge scale.

The redeployment process still has a way to run. I'm speculating here but I think it could result in the Chinese economy tripling in size by 2022. At that point it will be roughly the same size as the US economy today albeit with 4 times the population.

After that I think the easy part is over. You cannot forever grow by re-deployment. You need to innovate and to find better ways of becoming more efficient. And you have to do it with an aging population.

Will the Chinese be able to make the transition from "redeployment led growth" to "innovation led growth?"

My guess is yes. The Chinese Government is certainly aware of the need to encourage indigenous R&D – much more aware than any Australian government – and is doing what it can to build a world class scientific establishment.

However innovation led growth is a slower, more arduous process. Some time in the 2020s I expect Chinese growth rates to drop to those experienced by developed countries –ie 2 – 4% pa.

All this assumes China's environmental constraints can be overcome. That's a BIG assumption. I for one am skeptical. I think food and water constraints are going to hit them hard and soon. They will have to divert resources to improving the efficiency of agriculture and water use.

Bazz,

I doubt the Australian government would let domestic coal companies, no matter who owns them, deprive the local market.

Stevenmeyer said;
>Bazz,
>
>I doubt the Australian government would let domestic coal companies,
no >matter who owns them, deprive the local market.

I guess you are right, except it might be a very big elephant in the room. After all who was it that said;

"We will burn all our coal and then burn yours !"