The potential for China to realize sustainable use of natural resources and the opportunities ahead

China’s economy has achieved fast growth since the start of Reform and Opening Up, and levels of science and technology in the country have risen considerably along with overall economic strength. Profound changes have occurred in both the economy and society such that the depth and breadth of resource allocation far exceed what had been the case prior to Reform and Opening Up. All this has established a firm foundation for achieving the sustainable use of resources.

Economies of scale and economies of scope in the use of resources

As the second-largest economy in the world, China’s GDP totaled USD 11.22 trillion in 2016, calculated at current exchange rates. This puts it at 60.4% of the U.S. economy and at 227% of the Japanese economy, which is the world’s third-largest economy. Calculated in terms of purchasing power parity, however, China’s economy comes to USD 21.29 trillion, which is USD 2.7 trillion more than the U.S. economy and four times the economy of Japan. The scale of China’s manufacturing industry overtook that of the United States in 2010 and now stands as first in the world (calculated at current exchange rates). Among the 500 major categories of industrial products, China’s output ranks first worldwide in more than 220 categories. Clearly, China is the globe’s number one manufacturer. The ultra-large scale of manufacturing in the country has two different implications in terms of resource use. On one hand, a large economy, and particularly manufacturing sector, means that more resources are used up. On the other hand, the ultra-large scale of production and the diversified kinds of production mean that China enjoys incomparable opportunities in terms of economies of scale and economies of scope. This helps improve efficiencies in resource utilization and helps lower the per unit resource requirements in production.

Rapid technological progress

Given ongoing investment in science, technology, and education, China has experienced rapid technological progress. In2016, more than 7.5 million young people graduated from colleges or universities, 51 times the number who had graduated in 1980. Among these graduates, 40% had degrees in science, technology, engineering, and math (STEM) - the number of these STEM graduates totaled eight times the STEM graduates in the United States. Scientific research has benefited not only in terms of the quantity of graduates but also in terms of the quality, which has risen swiftly. An analysis by the Nature Publishing Group, which tracks the affiliations of high-quality disseitations, shows that China became the second- largest contributor in the world of such disseitations in 2015. The ‘Nature Index’ also shows that China’s contributions are increasing at a rate of more than 10% per year. China’s explosive rate of increase in technological innovations has been enabled by improved educational levels and the country’s massive cultivation of scientific expertise. The country' is rapidly catching up with the U.S. and Japan in this regard. According to data from the World Intellectual Property Organization, China filed more than 43,000 international patent applications in 2016, a figure that was up 45% over the previous year. In contrast, Japan, ranked second after the United States, filed more than 45,000 applications, which was up just 3% over the previous year. In terms of patent applications, China is expected to overtake Japan in the near future. It is undeniable that China’s levels of education and scientific research remain at levels that could be improved, and it is also true that the country’s ability' to transform science into results is not what it should be, but the trends are moving in the right direction. In the future, this will provide the necessary engine for sustained improvement in the efficient use of resources.

Global resource allocation

In 2013, the total value of all goods imported into China and exported out of China came to USD 4.16 trillion,21 and China thereby overtook the United States as the world’s largest trading nation in tenns of the trade in goods. By now, China is the largest trading partner of more than 120 economies around the globe. In recent years, demand has softened around the world given the effects of the global financial crisis, and economic globalization has encountered some headwinds, but China has continued to make notable accomplishments, and its percentage of global trade has continued to increase. In 2016, its share of world trade reached 14%. As a large, open economy, China’s resource requirements can have a decisive effect on the prices of global resources, to the extent that prices often rise when China buys and they fall when China sells. Moreover, through the influence of price signals, China can even remold the composition of trade and the industrial structures of some countries. On the other hand, as a large, open economy, China has not only been able to ameliorate its own resource constraints through participating in global resource allocation through the use of trade and investment, but it also has been able to make use of its own ultra-large production systems to lift the efficiency of global resource allocation and thereby stimulate global economic growth. Meanwhile, China’s manufactured goods, low priced but high quality, have contributed to improving the lives of people in the countries with which China trades.

 
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