The Materials In Some Sector China is the world’s largest producer and consumer of many raw materials. This massive size and growth has meant the Chinese materials sector has had to evolve over time.
Over the past few decades, state-owned enterprises that dominated Chinese materials have been reformed, stringent price controls were gradually relaxed and private enterprises were introduced into the mix. Materials In Some Sector
Raw Materials – Materials In Some Sector
China is one of the world’s largest consumers of raw materials. Its demand for metals such as copper and aluminum is a big contributor to the global growth in this area. It consumes 54% of the world’s supply of aluminum, 48% of the supply of copper and 50% of the supply of nickel. Materials In Some Sector
Those materials are essential for the production of many other products, including smartphones and electric vehicles. But a dwindling supply of some critical raw materials is making them more expensive in China, threatening to slow the economy. Materials In Some Sector
For example, a coronavirus is putting the brakes on mining operations in Chile and Peru, major suppliers of copper and zinc concentrate to China. Meanwhile, the ongoing emergency lockdown in South Africa, which accounted for 83% of Chinese chrome ore last year, is also placing pressure on supply chains.
Other countries – such as Indonesia – are also facing pressure to increase output to keep up with demand, which has been declining as a result of the coronavirus outbreak and China’s slowing industrial growth. And a global shortage of some critical raw materials – including antimony, bismuth and rare earth elements – has already led to price hikes. Materials In Some Sector
This is a worrying situation for global industry. A World Trade Organisation (W.T.O.) panel recently ruled that China’s export restrictions on some of these raw materials violated the W.T.O.’s rules and GATT agreements.
The panel ruled that China’s quotas, export duties and license requirements imposed discriminatory treatment of industrial raw materials – such as coke, zinc and bauxite – used by steel, aluminum and chemicals industries. The panel said these measures were inconsistent with China’s obligations under its WTO accession Protocol and with the GATT rules. Materials In Some Sector
Industrials
During the past several decades, Chinese production of energy-intensive industries has risen significantly. But this has come at the cost of high levels of air, water and soil pollution. Materials In Some Sector
In response to this, China’s communist government instituted economic reform in 1978. It reoriented the country’s economy away from state-owned enterprises and opened it up to foreign investment.
Since then, a variety of privately owned and foreign joint-venture industrial enterprises have grown in China. They produce a wide range of products, including agriculture machinery, chemical fertilizers, insecticides, transportation equipment, and building materials. Materials In Some Sector
This new mix of industrials has created a dynamic juxtaposition of diversified economic elements. It has spurred rapid growth in a number of interior provinces and along the coast, where it has reshaped economic patterns. Materials In Some Sector
The most notable change has been the move from a heavy reliance on state-owned enterprises to a much greater share of industrial output coming from private and foreign-invested companies. This change has been a major driver of the nation’s economic boom, which is now its largest in modern history.
These shifts have also helped to boost the global competitiveness of the Chinese economy. In turn, this has contributed to the nation’s rapid rise as a world power. Materials In Some Sector
In addition to this, the reforms have also brought about a dramatic decline in the amount of state control over prices and production in China. This has helped to free up the country’s vast workforce and has resulted in a more stable domestic economy. Materials In Some Sector
It will take many years, if not decades, to achieve this rebalance, but it could have positive environmental effects on the global market. For example, a rebalance would reduce the environmental costs of producing energy-intensive goods and help to reduce global greenhouse gas emissions. Materials In Some Sector
Infrastructure
In the past few decades, China has made significant improvements to its infrastructure. Its road networks, electricity access, rails and telecommunications are now of comparable quality to those of more developed nations.
Nevertheless, Chinese businesses remain worried about their country’s transport infrastructure. A survey carried out by Grant Thornton found that nearly a quarter of the business leaders (23%) cited it as a constraint on their growth.
As a result, it’s no surprise that China is investing heavily in its infrastructure. Its government spends around 9% of its GDP on it.
The main reason for this is that Chinese businesses need to transport their products to different parts of the country to sell them, which requires high-quality infrastructure. In addition, the government is using these projects to boost economic development and employment rates.
While this might seem like a good thing, many people have argued that China’s infrastructure spending is actually under-invested. This means that it creates a drag on growth and exacerbates the problem of secular stagnation.
This is a view that is supported by McKinsey’s research, which finds that underinvestment in infrastructure has a negative impact on productivity. Moreover, the lack of infrastructure can lead to higher energy and resource costs, reducing the productivity of businesses in the long run.
It’s also no surprise that China’s infrastructure investments are often undertaken for political reasons. Especially during times of recession, the government will resort to infrastructure projects as a way to stimulate economic growth.
Rare Earths
China has a near monopoly on the production and processing of rare earth elements (REE), but other nations have sought to diversify their supply sources. Japan, the US and EU have all made moves to reduce their reliance on Chinese REE.
The US, in particular, has focused on developing domestic rare earths. It passed legislation in 2022 that seeks to address gaps in its domestic REE supply chains. It is also funding a $30 million initiative to help develop the U.S.’s own REE mining and separation technology.
There are a number of other potential alternative sources of REE, including the continents of Africa and Australia. However, there are a number of challenges to establishing a successful rare earths ecosystem in Africa or Australia.
One challenge is securing raw materials to produce new products that can be used to replace REE in existing products. Another challenge is ensuring that the rare earth products do not damage the environment, which can be difficult to do in countries where REE are produced and processed.
Despite these challenges, it is important to remember that REE are not in short supply. In fact, the global demand for rare earths is growing rapidly as governments and firms continue to invest in renewable energy and electric vehicles.
In addition, demand for REE is increasing because of emerging technologies, such as advanced ballistic systems and industrial machinery. Other uses of REE are in semiconductors and in power generation.
Regardless of the specific applications, the demand for REE is rising and governments must redouble their efforts to diversify their sources. Until this happens, REE supply will remain vulnerable to disruptions caused by geopolitical tensions and trade disputes.
Energy
The energy sector is a vital part of any country’s economy. It is necessary for economic growth and the production of commodities, but it also has an impact on the environment.
The Chinese government has a strong interest in energy matters, because they want to ensure long-term economic stability and protect the environment. They are aware that if the environment is damaged, it will affect future economic growth (Sternfeld 2017).
While the government has set aggressive goals for renewable energy, such as a target of 25% of electricity being generated from renewable sources by 2021, China is still heavily reliant on coal and nuclear power to fuel its economy. This is particularly true of manufacturing, which accounts for two-thirds of total energy consumption.
However, new extraction techniques have made natural gas a viable alternative to coal. This has helped to reduce the amount of coal used for heating homes in China, which is a major source of carbon emissions.
As a result, the Chinese government is taking measures to transition away from coal as quickly as possible. It is focusing on reducing coal production and replacing it with cheaper, cleaner sources of energy such as natural gas.
In a recent report, the World Bank said that the global shift to clean energy will require investment from both public and private sectors. The private sector will be required to invest in infrastructure and other areas that can help to develop renewable technology, while the public sector will need to fund research and development.
The Chinese government is also trying to promote alternative forms of transport, such as electric vehicles. It is aiming to make electric vehicles more popular in China and has a plan to double the number of battery-electric, plug-in hybrid and fuel cell vehicles by 2022.
