China: East of Eden

  Just before and during the Beijing 2008 Olympics, the Chinese government will be taking extraordinary steps to combat its perennial bugbear--pollution.

Phenomenal economic growth comes at an environmental price. Now the city's bigwigs are planning to take measures so the tourists and athletes who'll be in town for the world's greatest sporting event can enjoy some clear blue skies.

The games start on August 8, 2008, and for two months around this time factories, power plants and building sites will be closed down, car use restricted and a variety of other actions taken.

According to the British Guardian, "the number of cars on the streets would be almost halved to 1.85m. During the fortnight of the games, it will be cut to less than 1m. Officials are working on a system of punishments and incentives, including paid holidays and free public transport... Exhaust emissions are blamed as a major contributor to smog, which sometimes reaches levels hazardous to human health. A report by the European Space Agency last year concluded that Beijing and neighboring Chinese provinces had the planet's worst levels of nitrogen dioxide, which can cause fatal damage to the lungs."

The government is clearly serious in its intentions: "3,000 building sites will cease and many power plants and factories will be closed. To dampen down the particulate matter that builds up in the air, the city will also spray the roads several times a day and use planes and rockets to seed the clouds with silver iodine or liquid nitrogen, which induces precipitation."

Now that the entire world is watching, China can't afford to lose face. If the Olympic blue-sky campaign succeeds in creating a temporary paradise, it will be quite an achievement.

Because my home of Tianjin is situated 75 miles to the southeast of Beijing, the climate and problems here are very similar. It's exceptionally dry and summer temperatures can reach 40 C/104 F. This time of the year is the windy season--and desert sand (and city dirt) continually blows around, across and in. My apartment looks and feels as though somebody has lightly sprinkled a couple of buckets of sand all over the floor and furniture.

As in every big city around the world, high temperatures in the summertime can be downright murderous. The mixture of emissions, dirt, noise and people combines to a headache-inducing, eye-watering and throat-drying experience. Air-conditioning is a must, and the heat discharge from these machines makes the concrete jungle even worse. Life takes place in a cauldron, the streets in Tianjin are full of sellers napping in a siesta-style display as seen in Spain. It's just too hot to work.

Way down south in Hong Kong, it's so bad that some expatriates plan to leave. As Reuters reported, "For 87 days in 2004, the city's air exceeded 100 on the pollution index, up from 53 days in 2003, and people with heart and respiratory illnesses were urged to cut activities outdoors... The number of Americans, Australians, Britons and Canadians living and working in Hong Kong has plunged almost 26 percent to 79,190 by the end of 2005 from 106,740 in 2001, according to government figures."

Power supply can also be a problem. If this summer is a scorcher (as it was last year), the city's authorities will occasionally shut down the electricity to stop the mass usage of air-conditioning. Sometimes I'd sit at my computer at night, typing away, and the next minute I'd be plunged into darkness. The authorities are under pressure to preserve resources, so they arbitrarily turn off the power for large parts of the city. Thankfully it is rare and the blackout only lasts a few hours. But sometimes I do wonder what will happen in the future if energy demand spirals out of control.

In contrast, during the bitterly cold winter, the heating in my apartment is turned on in mid-November... not by me, but by the authorities. Individual choice is not an option. It's turned on in November and turned off in March. I have no control over the temperature or duration. If it's cold, tough--the power will go off anyway.

China's growing demand for energy resources is well known. The country is already the world's biggest consumer of many commodities, such as aluminum, steel, copper and coal, and the second-biggest consumer of oil after the U.S.

A November 2003 article in the China Daily predicted that by 2020, the demand of coal will have doubled and natural gas demand quintupled. Oil demand will have risen to 450 million tons of oil equivalent. High time to find some solutions.

On May 20, 2006, the monstrous Three Gorges Dam was completed after 13 years of construction and 1.3 million evictions. The world's largest hydroelectric plant on the Yangtze River in central China is a prestige-enhancing display of engineering. By 2008, the dam will generate enough electricity to power 28 cities of one million people each.

It's clear that China has a lot on its hands. Due to the rapid melting of the Tibetan plateau with its 46,298 glaciers and other environmental hazards, a tide of desertification has begun to sweep the country, and these deserts are creeping ever closer to civilization.

"Sandstorms, blowing in from the degraded land, are already plaguing the country," reported The Independent in April. "So far this year, 13 of them have hit northern China, including Beijing. Three weeks ago one storm swept across an eighth of the vast country and even reached Korea and Japan. On the way, it dumped a mind-boggling 336,000 tons of dust on the capital, causing dangerous air pollution."

What's worse is that the melting may disrupt water supplies. "In China alone, 300 million people depend on water from the glaciers for their survival ... Already 400 cities are short of water; in 100 of them--including Beijing--the shortages are becoming critical."

In February of this year, the government announced a five-year campaign to plant 12 billion trees to try and halt this trend. In a country this big, you have to think big to survive.



The dizzying speed of China's economic expansion is taxing natural resources around the globe. As an example, 1,000 new cars hit the country's streets each day... and there is no end in sight. As China's appetite for wealth and progress grows, its demand for power will accelerate the ever-worsening energy shortage, perhaps by an order of magnitude.

It is evident that within the next few years, prices will go to the moon. Which means now is the time to invest in energy stocks. And you'll be hard pressed to find a more experienced natural resource advisor than Doug Casey and his research team.

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Posted 05-30-2006 1:07 PM by AntonyPeyton
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