Projections on growth for China that envisage a doomsday scenario for the rest of the world are both overblown and flawed.

China’s growth projections are always alarming. On some estimates China will, over the next few decades, bankrupt world food supplies, consume most of the world’s oil and put unskilled labour everywhere out of a job. Urbanisation will add 320 million square metres of housing to cities each year for the next 30 years and by 2010 there will 1200 cities with populations of 600 million.

These ideas are reminiscent of the scare stories that used to circulate about New York’s murder rate. At one point, if it kept on growing apace all the city’s inhabitants would be dead by 2000. Miraculously, the rate slowed down and several million New Yorkers escaped being snuffed out in the subway. And the infamous Club of Rome report in the 1970s predicted disaster for mankind if resources continued to be consumed at contemporary levels. The Club of Rome, and other doomsayers, follow a tradition that goes back to the 18th-century economist Thomas Malthus. He estimated mass famine as a result of population growth outstripping food production.

Bust on cards

But none of these dire scenarios ever came to pass. Why? Because straight line projections are always flawed and China’s case will be no different. China will not keep growing at the near 10% rate of last quarter 2003. Economists are predicting a slowdown to 7% but at some stage a bust cannot be ruled out, causing a couple of years stagnation. Then everyone will have to revise their predictions.

Not even China, with its partially protected economy, can defy the laws of gravity for ever. At some point the edifice will come crashing down and have to be rebuilt.

Sensible forecasts

Working not with a crash scenario – but generally assuming slower growth as well as increases in domestic production – more sensible forecasts have been arrived at. These place China’s share of world oil demand at only 10% by 2020, according to the International Energy Agency, while the International Food Policy Research Institute estimates that grain imports will increase to 27 million metric tons in 2010, level off at 25 million by 2020, with domestic grain production increasing 33% over the same period.

A combination of all these factors will allow China to keep developing without destroying the rest of the world.

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