China’s Natural Resources: Bottleneck Despite Sheer Volume?

First and foremost, it is obviously impossible for a country the size of China not to have impressive natural resources. However, in light of the fact that out of the 7.7 billion people who inhabit this planet, over 1.4 billion (almost 1 of 5) are Chinese, it is just as obvious that the resource consumption is just as impressive… if not more so.

As such, it’s only wise to take a close look at the natural resource dimension of the Chinese equation, as follows:

1. Water, believe it or not, is an extremely important variable, with China boasting the world’s top hydroelectricity generators, including the Ertan Dam, Xiluodu Dam and Three Gorges Dam (with the Three Gorges Dam currently being the largest plant around, surpassing the previous leader from Brazil/Paraguay, the Itaipu Hyro Power Plant, as of 2012). Despite its impressive projects, China is still struggling with the relatively low productivity of its various plants and issues such as water level-related problems
2. Arable land, with over 10% of China’s territory being represented by just that. Furthermore, the fact that China accounts for approximately 7% of the world’s arable land may seem impressive but in light of the fact that almost 1 of 5 people out there are Chinese… let’s just say it makes the statistic less impressive. Prior to Deng Xiaoping’s post-1978 reforms, agriculture accounted for over 50% of the nation’s GDP but as the country was put and kept on a modernization course, we’re looking at less than 10% nowadays, 8.7% according to current figures to give a more precise estimate. In terms of representative products, China is of course the global leader when it comes to rice production and the same way, they are dominant when it comes to fishing outputs as well. Despite massive modernization efforts, many Chinese farmers are still using methods that are labor-intensive and as such, almost 300 million citizens are still involved in the agriculture sector. As time passes and mechanization kicks in to a larger and larger degree, that number will most likely go down considerably
3. Moving on to other resources, it is worth noting that China is the world’s #1 producer of coal, a status quo which still contributes to it being perceived as a pollution-oriented nation despite China also being the dominant player when it comes to solar and wind energy. Aside from coal, China is also a force to be reckoned with when it comes to lead, gold and aluminum production, with approximately 6 million people being employed by the mining sector, approximately 3.2% of China’s labor force. Export-wise, current estimates indicate that almost 2% of China’s exports are mining-related
4. Does China have oil and natural gas at its disposal? Once again, the answer is inevitably positive given its significant size. However, the overwhelming majority of what China produces in this area is consumed domestically and as such, to call China an exporter of oil and/or natural gas would be a bit of an overstatement

… this would be an overly-simplified snapshot of China’s current resource situation.

However, as economic thinkers have made clear since the days of Adam Smith, the number one resource of a nation isn’t arable land, precious metals or fossil fuels. It’s represented by… you’ve guessed it, the productive capacity of its people and therein lies the success story of pretty much any nation which is presented as a positive example at this point.

For example, does Japan have amazing resources at its disposal? Not exactly. Switzerland? No, not really. China? Sure, it does have quite a few resources worth mentioning but importance-wise, they pale in comparison to the potential of its 1.4+ billion population. Once the true potential of the average Chinese citizen started being unleashed as of 1978, China’s GDP Per Capita grew by a staggering 2,500% and even so, it still has quite a bit of catching up to do.

Despite having its share of natural resources, China is growing to such a degree that it is the world’s most massive importer in that respect. As time passes and the dynamic of China’s economic growth changes, the trend is likely to be affected as well but for the time being, China’s GDP success story primarily revolves around massive imports of natural resources that were put to use via record-breaking infrastructure investments, with China for example consuming more cement in two years than the United States needed throughout the 20th century… need we dwell on this more?