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Without Radical Change, China’s Current Development Has No Future

[Editor’s Note: In his analysis packed with numbers, Professor Zhou Tianyong of the Central Party School presented a disturbing forecast on China’s future. China’s growing and ageing population, overburdened land, scarce water resources, worsening pollution, and intense hunger for steel and oil are not exactly what the Chinese leaders want to hear. “Sustaining (China’s) current 2H1R (High energy consumption, High pollution, Resource depletion) development model,” writes Zhou, is “absolutely out of the question.”
The following report is translated from excerpts of his article.] [1]

1) The Crossroads: Over Population and a Botched Birth Control Policy

At the end of 2009, China’s population was 1.334 billion. By 2040, a conservative estimate puts the number at 1.55 billion. China’s current agriculture land, per capita, ranks sixth from the bottom of the world. Based on China’s agriculture population, its per capita arable land is the third lowest in the world, beating Bangladesh and Vietnam.

Only 5% of Chinese people live on 64% of the land in the West Part; the remaining 95% concentrate in the East Part, which has 32% of China’s total size. Based on the East Part alone, the population density is 364 people per square km. That’s number three in the world, behind Bangladesh (1102) and India (393).

Should China continue its current family planning policy? Or make adjustments? Or abolish it? It seems a Catch-22. If China abandons the one-child policy, its population may exceed 1.65 billion by 2040. That will create a huge burden on employment, resources and the environment. But with an ever expanding urban population and a long term one-child-per-family policy, China will have a big ageing problem associated with the high cost of care for senior citizens, which will reduce the country’s economic vitality. After 2040, the population will probably begin to contract. A shrinking and ageing society will result in a sharp and prolonged economic downturn, causing catastrophic consequences to the Chinese nation in the next thirty years (2041 – 2070). If that scenario comes true, China, after thirty years of rising, will plunge into a 30-year decline again.

2) Overburdened Natural Resources and Environment

China has 20% of the world’s population, but its land size is only 6.44% of the world. The majority of Chinese people live in the East Part. China has 1.74 million square kilometers of desert, or 18.12% of its total area. There is an additional 300,000 square kilometers of potential desert, which affects the life of 400 million people. Using international standards, China’s arable land is low grade in general. Only 6% of China’s farmland produces more than 1000 kg of grain per mu (666 square meters); a total of 3.57 million square kilometers of land suffer from water and soil erosion; more than 10% of the arable land is polluted by contaminated water, solid waste and heavy metal; a total 1.35 billion mu of grassland has become desert or wasteland.

The fresh water supply is insufficient and badly polluted. The agriculture water shortage is 30 to 50 billion cubic meters per year; the industrial water shortage averages 6 billion cubic meters, causing 200 billion yuan in economic losses; of China’s 667 cities, 420 cities experience a water shortage. The total city water shortage is 10.5 billion cubic meters.

Water pollution in the rural areas causes rapid deterioration. It is economically beyond salvage. Pollution by chemical fertilizers, pesticides and industrial waste water are commonplace. Irrigation with contaminated sewage, improper treatment of animal waste, and household garbage all directly contribute to the worsening environment. Nearly the entire rural population of 700 million people has drinking water that is substandard; about 190 million people’s drinking water contains hazardous chemicals that exceed the standard. Among the people with various health problems, 88% can blame their illness on dirty drinking water; and 33% of deaths are related to water contamination.

Garbage pollution in the cities and country is severe. China has 600 million urban residents. Using a conservative estimate, each person produces 200 kg of trash per year. Annually, Chinese cities and towns produce 120 million tons of trash. At least two-thirds of Chinese cities are surrounded by trash. Every year, 80% of the world’s electronic trash is shipped to Asia. Among that, at least 90% ends up in China.

3) A Severe Land Shortage

By 2040, the gap between land availability and demand will grow to between 856 million to 1.556 billion mu. Among that, urban development requires 132 million mu. Transportation and water conservation need 137 million mu. Counting reconstruction of old factories and mines which may create 30 million mu, the net increase of land demand for transportation and water conservation is 107 million mu.

Land usage in the country may be relaxed by policy. As a result, the villagers may take anywhere from 150 million to 358 million mu of land for homes. If the agriculture output is unchanged, the arable land shortage in China will reach 700 million mu by 2040.

4) The Fresh Water Shortage is a Hard Constraint

By 2040, the fresh water shortage will reach between 200 to 300 billion cubic meters. Using Japan’s water conservation model as a benchmark, China’s agriculture, industrial, living and ecological demand require 1.18 trillion cubic meters of water. That number approaches the total water resource for China. Even if we find 10% more fresh water, and increase our water supply to 880 to 990 billion cubic meters, our fresh water shortage is still between 191 to 301 billion cubic meters. Water is hard to import, and it will be a bottleneck for China’s development.

5) The Need to Import 10 to 18 Billion Tons of Steel over the Next 30 Years

Over the next 30 years, China’s demand for 55% grade iron core will be hit by a shortfall of 17.3 to 32.6 billion tons. Based on the author’s data, by the end of 2004, the global iron reserve was 80 billion tons. From the China National Bureau of Statistics Yearbook 2008, China’s total potential iron core reserve was 22.6 billion tons. Assuming a 35% grade, China’s maximum iron reserve is about 8 billion tons. If China’s economic development reaches the level of developed nations by 2040, it will need 22% to 33% of the world’s total iron reserve. Assuming China cannot find new iron mines before 2040, China will have exhausted all its iron reserves. In addition, it still needs to import 17.3 to 32.6 billion tons of 55% grade iron cores.

6) China will consume 50% of the World’s Energy

Using the modest energy consumption pattern of developed nations, by 2040, China is expected to consume 50% the world’s energy. In the next 31 years, using a modest plan, China will use 61.5 billion tons of crude oil and 25 trillion cubic meters of natural gas. Assume the world’s oil and natural gas reserve stay at 2008 level, then in the next 31 years, China will consume 26% to 40% of the world’s oil reserve; it will use about 2.3% to 8.1% of the global natural gas. Assume China’s population by 2040 is 1.55 billion, and China becomes a developed country, barring a major change in global energy output or China’s development model, China will need half of the world’s total energy.

According to the “China Statistical Yearbook 2009,” China’s current oil reserve is 2.89 billion tons; the natural gas reserve is 34 trillion cubic meters; the coal reserve is 326 billion tons. China’s oil and natural gas reserves per capita are below one tenth of the world average. Even as a coal rich nation, China’s per capita coal reserve is still less than 40% of the world average. Using the energy consumption rate in 2009, China’s oil reserve can last only 7.08 years; natural gas will last 39 years; and coal 108 years.

Due to China’s overpopulation, scarce resources, and environmental restrictions, sustaining the current 2H1R (High energy consumption, High pollution, Resource depleting) economic model is absolutely out of the question. Even if we reduce our energy consumption to a moderate or low level of the developed countries, it is still unlikely to succeed.

[1] Zhou Tianyong, Economics Times, July 16, 2010