What Milestone Will China Achieve Next?

Friday, February 3rd, 2012

The Economist put together a comprehensive dateline, charting which year China overtook or will overtake the U.S., using 21 indicators of consumption, GDP or spending.

It summarizes the significant milestones reached over the last decade or so, reminding us how far China has come. One significant milestone marking the road of economic growth began when China became the largest consumer of steel, then shortly after, copper and energy, as the government focused on its massive buildout of infrastructure projects to support expected urbanization growth and rising incomes.

By 2001, China was buying more mobile phones than the U.S. as Chinese consumers spent rising discretionary income on the latest technology. Spending in mobile computing has also continued, as China also has the largest number of Internet users, the biggest personal-computer market and the largest smartphone market.

Looking into the next decade, The Economist also plots an estimation of when China’s GDP will be larger than that of the U.S. Using the assumptions of an average real GDP growth of 7.75 percent in China and 2.5 percent in America, inflation averaging 4 percent and 1.5 percent in China and the U.S., respectively, and yuan appreciation of 3 percent per year, China stands to be the largest economy by 2018.

However, if China grows faster with all the other factors remaining the same, the country’s GDP could be larger than the U.S.’s GDP by 2017. The magazine lets you change these assumptions for yourself so you can see when China will be the world’s largest economy. Go there now.

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All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Tags: China Gdp, Chinese Consumers, Dateline, Discretionary Income, Estimation, GDP, GDP Growth, Incomes, Infrastructure Projects, Last Decade, Latest Technology, Milestone, Mobile Computing, Number Of Internet Users, Personal Computer Market, Real Gdp, Smartphone, U S Global Investors, urbanization, Yuan
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Can the World Hold 7 Billion?

Thursday, January 6th, 2011

Some time this year, there will be 7 billion people on the planet. If we all stood shoulder-to-shoulder, we would fit inside the city of Los Angeles.

National Geographic just kicked off its year-long series dedicated to this global milestone. Check out this video.

According to National Geographic, no human had lived through a doubling of the human population before the 20th Century. Now, there are people on this planet who have seen it triple. In fact, the world population hasn’t fallen since the Black Death wiped out nearly 60 percent of Europe’s population.

The problem with population isn’t space—we have plenty of it—it’s resources. Nearly 1 billion people go hungry every day and 20 years from now there will be 2 billion more mouths to feed.

If you’re analytical, you can think of it this way—the Earth has a finite number of resources but the demand and use of these resources are the variables. That demand not only depends on the number of people, but how intense their usage is.

Today, usage intensity is picking up in the emerging world—which happens to be home to the majority of the global population. As these people move, for example, from using bicycles to cars, or candles to electricity, the pressure on that finite amount of resources rises.

This, in a nutshell, is why we’re positive on natural resources—the supply of resources is limited while the demand is rising. Daily, monthly and even yearly fluctuations in demand or geopolitical events will cause volatility in prices, but the overall supply/demand fundamentals remain intact, and we believe these fundamentals lead to higher prices for these increasingly rare commodities.

Since this population theme is a cornerstone of the natural resources story, we’ll check back in on the National Geographic series as it progresses.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Tags: Bicycles, Black Death, Commodities, Cornerstone, Finite Number, Fluctuations, Geopolitical Events, Global Population, Human Population, Intensity, Milestone, Mouths, National Geographic, National Geographic Series, Natural Resources, Nutshell, Rare Commodities, Shoulder To Shoulder, Volatility, World Population
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