JOHN CRISP: U.S. commodities heading to China
The Chinese are fond of pork. In fact, last week Shuanghui International Holdings, the owner of China’s largest meatpacker, agreed to spend $4.7 billion to purchase Virginia-based Smithfield Foods Inc., the world’s largest pork producer.
This calls for context, ably described by The Los Angeles Times: As China’s economy and its middle class continue to grow and as Chinese consumers become more acquainted with Western ways of eating, meat consumption in China has grown rapidly.
In 1978 all of China ate about a third as much meat as U.S. consumers; now 1.3 billion Chinese consume twice as much as Americans. Domestic producers can’t keep up with the demand. In the last five years, Chinese purchases of American pork have gone up 154 percent.
As the Chinese economy grows, demand for other commodities is growing, as well, and the trend is toward purchasing not just the commodity but also the means of production itself.
I wrote recently about a proposal to mine an additional 48 million tons of coal in Montana and Wyoming, transport the coal via rail to a new export terminal on the West Coast, and then ship it overseas to China’s coal-fueled power plants. American companies will make a lot of money out of this transaction.
But as it turns out, China is using the same tactic with coal that it’s using with pork, buying the means of production rather than the product.
According to MarketWatch, recently the Guizhou Guochuang Energy Holding Company announced that it had raised $616 million for the acquisition of the mineral rights to 30,000 acres of Tennessee ridgelines. Guizhou Guochuang is the first, but other Chinese coal companies are interested in U.S. coal, as well.
The coal beneath the ridgelines in Tennessee will be extracted by mountaintop removal, an efficient method of coal mining that’s hard on the landscape. In an effort to save Tennessee’s mountains, Democratic state Rep. Gloria Johnson sponsored the Scenic Vistas Act, a law that would prohibit mountaintop removal above 2,000 feet.
In March, her bill died in committee. Johnson says, “Our irreplaceable mountains will be destroyed, the economic benefits will be shipped to China, and our multibillion-dollar tourism industry will be left in shambles.”
Should we be more concerned about this trend? I think so.
The history of colonialism is the story of one country living beyond its means at the expense of another. And it never turns out well for the exploited country.
Mexico is a good example. According to John Hart’s “Revolutionary Mexico,” in the last two decades of the 19th century American entrepreneurs acquired more than 27 percent of Mexico’s land surface, including some of its best agricultural property.
By 1910, 15,000 American colonists controlled vast tracts of land in central and northern Mexico.
They hired some of the locals at low wages, ejected the rest and devoted the land to large-scale agriculture, often for export to the U.S.
Around the same time, 17 of the 31 major mining companies in Mexico were owned by U.S. capitalists. Another 10 were held by the British. Again, most of the mined treasure left the country.
During the latter 19th century Mexico was industrialized and modernized, but the process led to a bloody revolution in 1910, from which the country has yet to entirely recover.
Of course, we’re not Mexico — yet. But the process that transfers resources from our country to China isn’t getting enough big-picture thinking.
It’s driven by the profit motive and American job preservation. American capitalists are making money, but what about the long-term impact of mining, shipping and burning in China a fuel that we’re finally figuring out is too dirty to burn over here?
Let’s face it: The Chinese don’t care any more about the mountaintops of Tennessee than we care about the air quality in Beijing. But if you want to see those lovely mountains, don’t wait too long: They’re on their way to China.