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USA vs. China – Going for the Gold


I have been enjoying the Olympics the last couple of weeks. Like many, I complain about all the "personal interest stories" that litter television coverage in the United States. However, I do occasionally find myself sucked in to caring about how somebody I knew nothing about five minutes prior will run, swim, tumble, or paddle, when all we have in common is that we are both fortunate enough to be citizens of the same country. Indeed, a large part of the success of the modern Olympics is the capacity to tap into an acceptable form of nationalism. I like France, I like their energy policy, their childcare and healthcare policies, their food, and the amount of vacation businesses provide employees. That said, I like it when Americans I don't know and probably have little common with win at sport against people from France who I don't know and probably have little in common with.

Every evening, a table of medal winners flashes across the screen, and despite my intellectual posture of thinking that sports might be a little too important in America, I find myself pleased to see the United States atop the ranking, trailed by our top challenger: China.

As of the evening of 2012.8.10, the U.S. had 94 medals to China's 81. (For full results and head-to-head comparisons between countries, see http://www.london2012.com/medals/medal-count/). By this aggregate measure alone, it looks like the U.S. and China are strong competitors, but when you compare the medal count to the underlying population, a different picture emerges. China's population is roughly four times larger than the U.S, so the measure of U.S. medals per capita is more than 4 times higher. (By the same metric, Jamaica is kicking some serious butt, India is the worst sporting country in the world, and the U.S. is pretty average overall. See http://www.medalspercapita.com/ for more, but also realize that the stricture of limiting the number of teams to one per country and further limits on individual athletes hurts a country like the U.S. whose B-team might win a silver medal in a sport like basketball were it allowed to place two teams in competition.)

Just as with sport, when it comes to environmental issues, global business concerns, and pulp and paper strategy, we sometimes focus on China as an aggregate, not on a per-capita basis. According to the CIA Factbook (https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html), China has the following superlatives:

Largest Electricity Producer: (4.604 trillion kWh - 2011)

Larges Current account balance: ($280.6 billion - 2011 est.)

Largest Exporter: ($1.898 trillion - 2011 est.)

Largest Reserves of foreign exchange and gold: ($3.236 trillion - 31 December 2011 est.)

Much like a medal count, these aggregate statistics make China appear a juggernaut, but on a per capita basis, China still lags behind the United States and many other countries in key areas, including per capita income – China: $8,500, ranked 121; U.S.: $49,000, ranked 11.

China is essentially one of the largest rich countries, one of the largest middle-class countries, and one of the largest poor countries in the world, all within the same borders (you could say the same about India as well). If China were to become as rich as the U.S. on a per capital basis in, say, the next 25 years, the market for certain pulp and paper products would shoot through the roof, but so would global energy prices, and, most likely, carbon emissions.

A couple of weeks ago TAII CEO Jim Thompson commented on environmental protests in China http://www.nipimpressions.com/news.php?viewStory=2064, noting that Asian forest product companies are starting to come under the types of pressure that Western businesses have experienced for decades. I am not as convinced that the demonstrations in Nantong, China of the OJI papermill wastewater pipe reflect a nascent environmental movement. Ethnic rivalries (OJI is a Japanese company) and anger over government corruption also play a role in such protests. But if Jim is right, the future is a lot brighter for anyone who worries about using the atmosphere as a sink for human carbon emissions. On a per capita basis, China is still a relatively poor country, and poor countries do not usually put off economic growth in favor of ecological responsibility. If the burgeoning environmental movement in China does take off, that will be reflect a significant paradigm shift, and will only increase the need for pulp and paper firms to get ahead of the curve on energy and ecological issues.

[If you haven't already, listen to Jim's take on the future of coal at http://www.blogtalkradio.com/pulp--paper-radio-international/2012/08/07/the-coming-problem-with-coal .]

***

Travis holds a Ph.D. in public policy from the Lyndon B. Johson School of Public Affairs, University of Texas, Austin, Texas, USA.  He resides in Golden, Colorado, USA.


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