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FUBAR II: China Must Import More Water Than The US Imports Oil

Tyler Durden's picture




 

Submitted by Simon Black of Sovereign Man blog,

In one of the most comprehensive studies ever conducted of China’s bubblicious property market, Professor Gan Li at Texas A&M University estimates that there are a whopping 49 million vacant homes in China right now.

As a percentage, this is twice the vacancy rate that the US housing market experienced at the peak of its recent bubble… suggesting that China has a rather painful housing collapse in store.

This should be a brutal blow to the economy given that housing comprised 15% of GDP last year. And the slowdown is already apparent.

In fact, China’s president Xi Jinping uncharacteristically announced a ‘new normal’ recently, declaring the heady days of 10% GDP growth to be over. His vision of China is moderate growth and less stimulus.

But I’ve identified a far greater problem for China… one that few people are talking about. And frankly I’m not sure they can fix it.

We discussed earlier that China does not have the capacity to feed itself. By the estimates of one state official, the country’s agricultural imports require more land to grow than the entire land mass of California.

The reasons are simple. For one, China doesn’t have enough fertile land in production to support its population’s growing food demand.

Theoretically this is fixable. With a bit of time, patience, and technology, barren soil can be rehabilitated In other words, China doesn’t have enough enough productive land capacity to support its population.

But the far greater issue is China’s massive freshwater deficiency.

Chief Economist Qian Keming of China’s Agriculture Ministry summed it up by telling the audience at the Third China International Agribusiness Forum:

“Fresh water resources are only 2100 cubic meters per capita, which is only 28% of the world’s average level.”

 

and

 

“The shortage of [water for agricultural irrigation] each year is about 30 billion cubic meters. China imported about 148.6 billion cubic meters of water in 2013, which was equivalent to 38% of China’s agricultural water.”

Here’s that number in perspective: China water imports of 148.6 billion cubic meters last year handily exceeded the 569 MILLION (0.569 billion) cubic meters of oil that the United States imported.

Water is THE critical resource in agriculture. Without it, you’re not producing. This makes China’s deficiency a long-term headwind to their food production dilemma.

It’s not something they can import their way out of either, because all of this comes at a time of flat (and even declining) yields, particularly from the world’s largest food exporter… which just happens to be the United States of America.

After decades of growth, grain yields in the US have topped out. Farmers have managed to extract all that the earth is capable of providing.

Many developing markets are no help either. Most people don’t realize that Africa, despite its legendary agricultural potential, is actually a net importer of food.

So between the supply constraints and the constantly growing demand, it’s clear where this trend is going.

The BEST possible scenario to unfold is rising food prices. The worst case could be shortages.

All of this is potentially destabilizing. History shows that while human beings will put up with a lot of sacrifices at the behest of their governments, starvation is not one of them.

This approaching ‘food crunch’ is the reason why agriculture is THE investment for the next decade and beyond.

But more importantly, it’s another gigantic nail in the coffin for the status quo. And there are plenty more.

Nearly every ‘developed’ western nation is bankrupt. Most major central banks are insolvent… and they’ve created bubbles everywhere. The century-old monetary experiment is starting to draw to a hasty, inevitable conclusion.

Meanwhile apathy is at high tide. You can see it in voting booths and streetside revolutions around the world– people are sick and tired of the status quo… of thieving politicians… of war… of getting spied on… of being told what they can/cannot put in their bodies.

They’re finally now starting to wake up and demand real changes– not just changing the players in charge, but changing the game itself.

Politicians will fight with every resource they have to maintain the status quo. But in conjunction with the fundamentals of food, the confluence of all these forces together is more than any system can possibly withstand.

It might not be today. It might not be this decade. But at some point in our future, there will be a complete reset in the way society organizes and governs itself.

Just make sure you’re wearing your seat belt.

 

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Wed, 06/18/2014 - 14:34 | 4870425 stopthejunk1
stopthejunk1's picture

"Shortage... bullshit... consumer... corporation... Fuck you China and fuck you USA....!!!!"

 

...he hammered angrily on his iPlastic iChina consumerist iToy, sitting in his productivity cubicle at his corporate air-conditioned service industry job. 

 

lol!  That's rich.

Wed, 06/18/2014 - 14:39 | 4870469 The Most Intere...
The Most Interesting Frog in the World's picture

It's a corner office ;)

Wed, 06/18/2014 - 13:29 | 4870094 Tachyon5321
Tachyon5321's picture

 

 

Don't hold your breath on this technology.  That said, here is the link for those technical inclined: http://arxiv.org/pdf/1406.0133v1.pdf

Wed, 06/18/2014 - 13:13 | 4870007 dearth vader
dearth vader's picture

Seat belts will be the next thing to invest in.

Wed, 06/18/2014 - 13:22 | 4870045 NoWayJose
NoWayJose's picture

Pretty easy to be the world's biggest manufacturer when you pay your workers low wages and no bennies - then dispose of your dead pigs and other waste right into your rivers, or into your air without any pollution controls. More of those darned unintended consequences.

Wed, 06/18/2014 - 13:25 | 4870063 orangegeek
orangegeek's picture

Now here's a country that is easy to invade.

 

Cut off their water supply.  The country dies in about a week.

Wed, 06/18/2014 - 13:34 | 4870118 firstdivision
firstdivision's picture

Those that are leaving the US in droves and renouncing their US citizenship may want to pay attention, as once the protectionst economies kick in globally, the US will not be that bad of a place to be.

Wed, 06/18/2014 - 13:49 | 4870136 Hongcha
Hongcha's picture

Last time I was in Beijing a very uncomfortable feeling settled over me.  I got sick within hours of arriving, stayed that way and was a month fully recovering back in the U.S.  I had the feeling I could not get away from it, whatever 'it' is ... which is true.  If the air, water and soil are poisoned you have no recourse.

To my frustration, nothing tasted right.  By the end of the visit I was actively fantasizing bowls of Greek yogurt with fresh raspberries on top.  And this is in a city where I have had wonderful culinary experiences ... fantastic dinners, roast duck and Sichuan, Xinjiang cumin lamb, and what have you.

It does not matter how much $$ you have in those circumstances.  My Beijing wife's generation ~50 years of age - has seen many falling to various cancers by the time they reached their forties.  And they are doing pretty well financially as a cohort.

The middle-aged generation there is 'used' to it but their scion, who are learning english and coming over here for school, are also going to learn how fucked their country is and either insist on change or stay over here permanently.  They will leave the Lao Bai Shin to do the dirty work and live well off the proceeds in SF, Hongcouver and LA.  Hence my favoring using the ELYSIUM metaphor when describing the exodus of the upper class from mainland China.

Btw, Hong Kong is noticeably, instantly and substantially cleaner than, say, Shenzhen.  The difference is clear as a bell, much like crossing from TJ over to San Diego.  Some good was done by the Brits and raising the standards of cleanliness would be one.

 

Thu, 06/19/2014 - 05:04 | 4872707 Lin S
Lin S's picture

They'll stay permanently while arrogantly lecturing their American college classmates all about how "China is the country of the future!" while liberally using mommy and daddy's bank account to go to Vegas, gamble, get drunk, and get laid.

The Abercrombie and Fitch generation is a joke.

Wed, 06/18/2014 - 13:43 | 4870155 luckylogger
luckylogger's picture

Where do they import water from?

I would gladly sell them some....

I have an awsome well....

Wed, 06/18/2014 - 13:59 | 4870224 forensicator
forensicator's picture

Its ok, China will just use the excess treasuries to by water from the great lakes... http://endoftheamericandream.com/archives/obama-allows-great-lakes-water...

Wed, 06/18/2014 - 14:14 | 4870319 Duffy
Duffy's picture

Siberia has lots of water....

Wed, 06/18/2014 - 14:29 | 4870394 stopthejunk1
stopthejunk1's picture

Los Angeles imports 95% of its water.

 

In a global economy, water is a commodity just like anything else, and can be bought and sold.

 

By the way, why compare water with oil?  That's arbitrary.  Is it because they're both liquids?  Why not compare it with saffron?

 

I can barely stifle my yawns at all the doomsday predictions, especially the ones with no timeline, like this one, that essentially predict that someday, there will be an apocalypse.  What this really means is that the author cannot envision a solution to the problem, and he therefore concludes that, since he's smarter than everyone else, no one else will be able to devise a solution either.  

 

How's that for an ego!  No wonder you don't get laid.

 

 

Wed, 06/18/2014 - 14:59 | 4870578 Mr.Kowalski
Mr.Kowalski's picture

If the Chinese are serious enough about water, they can simply build desalination plants and the nuclear power plants to power them. The Saudis did this. Solved !! 

Wed, 06/18/2014 - 15:20 | 4870662 Rudolph Steiner
Rudolph Steiner's picture

A little dated, but you can infer a trend.

 

http://www.waterworld.com/articles/wwi/print/volume-25/issue-6/regional-...

 

Wed, 06/18/2014 - 15:52 | 4870822 IndianaJohn
IndianaJohn's picture

Only White Men can work a large scale agriculture. Any short drive past the fields of the US Corn Belt will prove this.

Wed, 06/18/2014 - 16:05 | 4870881 falconflight
falconflight's picture

Very interesting article.  Providing for over a billion is and will always be a 'hand to mouth' operation for the PRC.

Wed, 06/18/2014 - 18:05 | 4871265 rgetty
rgetty's picture

If China can not feed itelf then why do they export so much food?

Wed, 06/18/2014 - 19:09 | 4871519 SweetDoug
SweetDoug's picture

'

'

'

Eggsellent!

 

Now we got the commie bastards!

 

They're importing our water?

 

Oh no they ain't!

 

Power on! :)

 

Power off! :(

 

Sucks to be Yu, China.

 

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