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The world needs a new economic growth model

Oct 18, 2011

By Ivan Zhang for FinanceAsia

 

The growing scarcity of the world’s natural resources is an obvious concern for China, India and other developing nations with fast-growing populations, triggering debate about how best to sustain economic development.

The World Bank has projected that demand for food will rise by 50% by 2030, while growth in average productivity will continue to fall, after dropping to 1.1% between 1990 to 2007, from 2% between 1970 and 1990. Global food production also lagged behind consumption in seven of the eight years between 2000 and 2008. This is of particular concern in much of the developing world.

“If Chinese begin eating chicken, the world is going to have a problem; if Chinese begin drinking red wine, the world is going to have a problem; if Chinese begin eating beef, both the Western world and the Chinese world will have a problem,” said Ronnie Chan, chairman of Hang Lung Group, speaking at the University of Southern California Global Conference last week.

Sharing Chan’s view, Chengyu Fu, chairman of China Petrochemical Corporation, Asia’s biggest refiner, said that the world lacks the resources to allow the 4 billion people in the developing world to consume as much as people in the West. “Emerging markets cannot go the same way as the OECD countries,” he said. “We have to learn to use new technologies that can help us produce more and consume less.”

The main challenge, according to Fu, is that around 4 billion people are going through a period of industrialisation that might not last 100 years, compared to just 1 billion people taking 200 years to go through the West’s industrialisation.

Gaoning Ning, chairman of Cofco Corporation, one of China’s state-owned foodstuffs firms, is nevertheless optimistic. “In the early-60s, when I was in high school, my teacher told me the world would run out of oil in 40 years, but today over 50 years [have passed]; we still have Mr Fu here,” he said. “The media worry too much.”

Ning said that the world has the capacity to cope with the food shortage. “Before China started to buy soy beans, Brazil and Argentina produced very little soy bean, but today when China buys more and more, they produce more and more, and they can triple the size,” he said, “Cheer up, don’t worry.”

On the other hand, P Chandran Nair, founder and chief executive officer of the Global Institute For Tomorrow (GIFT), highlighted that the ecological and geopolitical costs associated with the increase in food production should also be considered. “We can produce more food, but there is a huge cost to the way we produce food today,” he said. “In China, arable land productivity is going down rapidly, mainly because of the capitalisation of our food supply chain.”

“I would rather listen to the scientists than the economists about what is going on,” Nair added at the end of the discussion. “Somewhere in between we would find some of the solutions.”

 

© Haymarket Media Limited. All rights reserved.

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