As Xi Jinping starts his second five-year term, China shows no sign of slowing demand for the world’s raw materials.
Economic growth is obviously the main reason behind China’s insatiable appetite for commodities. The Chinese economy is expected to surpass government targets and grow by 6.8% for 2017.
Oil imports for 2017 were up by 10%, making China the world’s biggest buyer of crude oil, surpassing the US for the first time. Similarly, a booming construction industry is leading to a massive increase in copper, needed for wiring and piping.
However, rising Chinese consumption is not simply because of economic expansion. A conscious effort to lower levels of pollution has led to a huge upturn in iron ore imports. Compared to domestic ore, imported ore is often ‘cleaner’ and contains fewer impurities belched into the atmosphere by China’s goliath steel industry.
Similarly, rising living standards are leading to changing domestic consumption and higher demand for erstwhile luxury foods such as pork. Record-levels of soya imports are being crushed down to be used as a cheap feed to fatten pigs quickly and cheaply for the meat industry.
China shows no sign of giving up its mantle as the ‘workshop of the world’ but as it begins to feel the effects of its own success, transitions are inevitable. Increasing living standards, both in the diet of citizens and in the air they breathe, are the tip of the oncoming iceberg.
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