China's population growth and it's economic boom

An outline by A. A. Bennet



CHINA'S POPULATION GROWTH AND ITS ECONOMIC BOOM

I.  POPULATION GROWTH

	A. 1600 POPULATION = 200 MILLION
    	   1850 POPULATION = 450 MILLION
   	   QUESTION: WHY DOUBLING AT THIS TIME? 1950 POPULATION  = 550 MILLION
   	   QUESTION: WHY THE SLOW GROWTH AT THIS TIME? 1996 POPULATION = 1.2 BILLION
   	   QUESTION: WHY A DOUBLING IN 45 YEARS?

            INCREASE IS NOW 14 MILLION PER YEAR EQUAL TO A NEW
            AUSTRALIA EVERY YEAR.

            QUESTION: CAN CHINA TAKE CARE* OF THIS INCREASE?
            CAN THE WORLD TAKE CARE* OF THIS INCREASE?

  	   *CARE EQUALS FOOD, WATER, CLOTHES, HOUSING,
 	    EDUCATION AND MEDICAL FACILITIES

	B. WHAT HAS CHINA DONE ABOUT THEIR POPULATION GROWTH
           RECORD?
	
  	   NOTHING BETWEEN 1900 AND 1978.

           SINCE 1978 HAVE PURSUED VARIOUS POLICIES AIMED AT
           LIMITING THE NUMBER OF CHILDREN FAMILIES MAY HAVE
           3 CHILDREN, ONE CHILD AND TWO CHILDREN PER
           FAMILY PROGRAMS, WITH VARYING DEGREES OF
           SUCCESS--MORE SUCCESSFUL IN CITIES THAN
           IN RURAL CHINA (WHERE 80% OF THE PEOPLE
           LIVE)

II.  ECONOMIC GROWTH

  A. 1950-1978 APPROXIMATELY A 7 % GROWTH RATE PER YEAR
       BUT AIMED AT HEAVY INDUSTRIALIZATION PROJECTS
       UNDER STATE SPONSORSHIP AND A COLLECTIVIZED 
       ECONOMIC STRUCTURE, LITTLE EMPHASIS ON CONSUMER
       NEEDS OR GOODS

  B. SINCE 1978 GROWTH RATE AVERAGING 10%+ PER YEAR
       UNDER AN INCREASINGLY DECOLLECTIVIZED ECONOMIC
       MODEL (EXCEPT FOR HEAVY INDUSTRY), ALLOWING
       INDIVIDUAL FAMILY TO CONTRACT FOR LAND FOR
       FARMING PURPOSES AND VILLAGES/COUNTIES/INDIVIDUALS TO
       PURSUE MANUFACTURING.

           CHIEF GROWTH IS IN DECOLLECTIVIZED SECTOR
           ACCOUNTING FOR OVER 50% OF CHINA'S INDUSTRIAL
           OUTPUT IN 1995--1/3 IN 1993  (STATE SECTOR GREW ONLY
           2.2% IN 1994)

   C. RESULT IS RISING PER CAPITA INCOME IN CHINA AND
        HUGE DEMANDS FOR ENERGY, RAW MATERIALS, WATER,
        AND LAND

              NOW ESTIMATED THAT 10% OF CHINA'S POPULATION
              IS "MIDDLE CLASS"  THAT IS 100 MILLION PEOPLE

              IT IS THIS CLASS THAT ATTRACTS THE ATTENTION
              OF WESTERN FIRMS FROM COKE AND PEPSI, TO
              MOTOROLA, VOLKSWAGEN, CHRYSLER, ATT AND AVON

              AND IT IS THE DEMAND FOR ENERGY AND RAW MATERIALS 
              THAT ATTRACTS OTHERS (CATERPILLAR, BOEING, WESTINGHOUSE,
              GE) AS CHINA BUILDS NUCLEAR POWER PLANTS,  MASSIVE HYDROELECTRIC
              DAMS, ETC.

          THE ILLUSIVE CHINA MARKET OF THE l9TH AND FOR MOST OF
          THE 20TH CENTURY IS BECOMING REALITY--

             450 MILLION CHINESE CUSTOMERS WERE TOO POOR AND TOO
             PROUD TO BUY WESTERN PRODUCTS IN 1850 OR EVEN 1950;
             NOW THE POTENTIAL OF REACHING 100 MILLION (AND RISING)
             CUSTOMERS WITH SPARE CHANGE DRIVES THE NON-CHINESE AND 
             OVERSEAS CHINESE TO SEEK ACCESS TO THIS MARKET--NEVER MIND 
             HUMAN RIGHTS VIOLATIONS, INFRINGEMENT OF COPYRIGHT, OR
             BULLYING ON THE HIGH SEAS.

III.  IMPACT OF THIS ECONOMIC AND DEMOGRAPHIC JUGGERNAUT

     A.  DEMAND FOR ENERGY BY BOOMING ENERGY IS RUNNING AN
          ESTIMATED 25-30% BEHIND DEMAND

 	     HENCE:
  	       -MORE COAL FIRED GENERATION PLANTS WITH
 	        FEW IF ANY CLEANING TECHNOLOGIES (AND CHINA'S
    	        COAL IS HIGH SULPHUR CONTENT) ARE PLANNED
 	        TO PROVIDE 75~ OF CHINA'S ENERGY NEEDS
   	        DUE TO VAST COAL RESERVES

 	      -BUILDING MORE NUCLEAR POWER PLANTS TO
                PROVIDE BY 2020 6-7%0F TOTAL ELECTRICITY
                SUPPLY

 	      -BUILDING MASSIVE HYDROELECTRIC DAMS
                 e.g. THREE GORGES DAM ON YANGTZE RIVER
                 FOR AN ESTIMATED COST OF $30 BILLION.
	         DISPLACEMENT OF 1 MILLION CHINESE TO SAY
                 NOTHING OF FLORA AND FAUNA. 


 
      B. DEMAND BY POPULATION WITH RISING INCOME 
           FOR BETTER FOOD, HOUSING, CLOTHING, EDUCATION
           AND MEDICAL CARE AS WELL AS CONSUMER PRODUCTS
          (e. g. AUTOMOBILES, COSMETICS, TOBACCO)

   	    1.  ALL THESE DEMANDS REQUIRE LARGER ENERGY SOURCES
  	        TO SUPPLY THE MEANS TO MAKE THE PRODUCTS
   	        DESIRED

                FOR COMPARISON PURPOSES: EACH AMERICAN AT PRESENT
		USES THE SAME AMOUNT OF ENERGY AS 3 JAPANESE 38 INDIANS 
	        OR 531 ETHIOPIANS.  IN THE WORDS OF MAO ZE-TUNG
                "CAN THE WORLD AFFORD ANOTHER UNITED STATES?"


	   2.  EXAMPLE: NEED FOR FOOD AND CHANGING FOOD DEMANDS
   	       ARE THESE ONLY A CHINESE PROBLEM OR ALSO
               CAN CHINA FEED THEMSELF IN THE 21ST CENTURY?
               (Lester Brown, "Who Will Feed China?" World Watch, Sept/
                Oct. 1994 10-19; "Update" World Watch, Sept/Oct. 1995
                p 38)

I. Shrinking Cropland (initially only 7% of total area of country)

	A.  Rapid industrialization, housing, highway and railroad
	    construction

	B.  Diversion of irrigation water to non-farm use
            l. well water
	    2. drying up of aquifers (water table under Beijing
               sunk from 5 meters below surface to 50 meters
                below, 1950 to 1993)
	    3. Chinese Minister of Water Resources (1993) Niu
               Maosheng:
     	       "in rural areas, over 82 million people find it
    	       difficult to procure water.  In urban areas, the
               shortages are even worse.  More than 300 Chinese
               cities are short of water and 100 of them are very
               short."

	 C. Increasing demand for grain
	    l. population increase by 490 million by 2030
               to 1.6 billion
	    2. rising standard of living, due to economic boom
               in part facilitated by town-village enterprises
               --demand for grain to produce necessary beef, pork,
              poultry, fish, eggs, beer

II. Raise Land Productivity?  Difficult perhaps impossible.

	A. China faces a 1% drop in grain production/year (as did
   	   Japan, South Korea and Taiwan since 1960, 1977 and 1977
	    respectively)

	B. Plateauing of rice production/ha  (5 tons in Japan and
           4 tons in South Korea, Taiwan, and China)

	C. Technology fix in works?  No
           Chapman/Barker (Cornell) "the genetic yield potential
           of rice has not been increased significantly since
           release of high yielding varieties in 1966"
           Donald Duvick (Pioneer Hi-Bred): No breakthroughs are
           in sight.   Biotechnology, while essential to progress
	   will not produce sharp upward swing in yield potential
	   except for isolated crops in certain situations." 

	D. Fertilizer?
	   l.  use  plateaued  1993  at  29  million  tons  due  to
    	       diminishing returns
	   2.  need to develop new cereal crops capable of
               responding to heavier fertilizer use 

III.  Environmental Impacts--all negative?

	A. Soil erosion
	B. Water logging/salting
	C. Air pollution/acid rain
	D. Global Warming 

IV. Prospects

	A. Grain production will fall 1%/year; population will rise;
           grain cropland will fall

	B. Resulting deficits will be huge 
	   l.  1990 China imported 6 million tons  (produced 326
               million consumed 335 million tons) 
	   2. with projected 20% loss of cropland only, will result
              in a 216 million ton shortfall in 2030 (in excess
              of the 200 million tons on export market in 1993) 
	C. Rising standard living requires more grain

           l. if per capita consumption climbs modestly from under
              300 kg/person to 350 kg/person--demand rises to 568 million
              tons, import deficit of  305 million tons (56% of total grain
              demand compared with 1993 levels of 76% for Japan, SKorea, Taiwan-- 
              Japan imported 28 million tons) 2. if rises to 400 kg/person 
              (current level in Taiwan, 1/2  the US  level),  resulting  in
              importing  641 million tons and an import deficit of 378 million
              tons 

 	      Professor Zhou Guangzhao (head of Chinese Academy of  Sciences:    
              "if  the  nation  continues  to squander...  then China will 
               have to import 400 million tons of grain from world market. 
               And I am afraid in that case, the entire grain output of 
               the US could not meet China's needs."

	D. China could buy grain, with the foreign reserves it
           now possesses (surplus with US was $23 billion in 1993)

           l. at current $150/ton could buy 200-300 million tons
           2. cut into purchases of capital goods needs to sustain
              economic boom, which is the premise of the rising
              demand for improved living standards, loss of
              cropland and environmental pollution.

	E. Who will supply?  No one.

           l. since 1980 average grain exports around 200 million
              tons, one-half from US
	   2. US itself anticipates increase of 95 million by 2030
              plus loss of cropland and irrigation water
	   3. 100 other countries already on US export list and
              their demands expected to rise  e.g.
              Egypt 1990 8 million tons, 2030  21 million tons
              Mexico 1990 6 million tons, 2030 19 million tons
              Africa anticipates needing 250 millions tons by 2030
              Iran, Ethiopia, Nigeria all face deficit years

	F. A MORE OPTIMISTIC ASSESSMENT  (Vaclav Smil "Is There
           Enough Chinese Food?" New York Review  2/1/96 32-34
           reviewing Lester Brown's  Who Will Feed China which is
           now a book)

	   1. UNDERESTIMATION OF CHINA'S TOTAL CULTIVATED AREA

              -OFFICIALLY 237 MILLION ACRES; LANDSTAT SATELLITE IMAGES
	       INDICATE 371 MILLION ACRES
  
	   2. CHINA CAN INTENSIFY INPUTS:

             -WATER
                 NOW PAY ONLY 5-20% OF REAL COST; REALISTIC
                 PRICES SHOULD IMPROVE EFFICIENCY

                -MATCH CROPS WITH AVAILABLE MOISTURE: SORGHUM
                 FOR  CORN  AS  ANIMAL  FEED;  SUNFLOWERS  FOR
                 SOYBEANS

                -IRRIGATE EVERY OTHER FURROW--SAVES  1/3  OF
                 WATER

               -MICROELECTRIC SENSORS, CENTER PIVOT MACHINES

               -SEEPAGE AND EVAPORATION ACCOUNTS FOR LOSS OF
                 50-60% OF IRRIGATION WATER

               -FERTILIZATION
                -GAINS OF 25-30% OVER A 20 YEAR PERIOD
                POSSIBLE THROUGH IMPROVED EFFICIENCIES
                (SHUT DOWN SMALL PLANTS MAKING AMMONIUM
                BICARBONATE--REPLACE WITH UREA PLANTS)
      
              -WASTE

                -15% OF CROP YIELD LOST/YEAR IN HARVEST
                THRESHING, DRYING STORAGE, TRANSPORT, LOSSES
                IN MESSHALLS

                -CHANGING DIET TO MORE PORK + DIFFUSION OF
                DIARY PRODUCTS

               -IN CHINA THE AVERAGE SUPPLY OF MORE THAN 2700
               KILOCALORIES PER DAY/CAPITA IS SUFFICIENT
               (IN WEST AVERAGE IS 3500 BUT BEST SURVEYS
               OF ACTUAL FOOD CONSUMPTION SHOW DAILY MEAN
               (WEIGHTED FOR AGE/SEX) OF 2100-2200
               KILOCALORIES TO BE ADEQUATE (Smil)

Issue: how to bridge projected gap between China's rising food
     needs and inability of rest of the world to supply those
     needs; when China turns to world market on an on-going basis--
     its food scarcity due to shortages of cropland and water will
     be world's shortages.  Can China implement changes suggested
     under F and eliminate "bad policies" as Smil suggests?  It will 
     take strong leadership at the top to implement such
     policies and right now China is a government (and perhaps a system)
     in transition.  The chances of implementation appear slim.

Examine the projections for the year 2030 from all sources and
     write-up  your own scenario as to China's and the world's
     situation  regarding  availability  of  food  and  population
     density.  What is the connection to potential global warming
     (or do you only see a future of global warring over water and
     food)? 

(also see "The Food Crisis that Isn't--and One That Is"
in The Economist, 11-25-95, p 41) 


 ISSUE OF CHINA'S EFFORTS TO MODERNIZE VIA INDUSTRIALIZATION
   (DECENTRALIZATION, FREE MARKETS, RURAL INDUSTRIALIZATION,
   LACK OF RULES, GUIDELINES, LAWS) VS. PRESERVATION OF CHINA'S
   AND THE WORLD'S ENVIRONMENT WITH A CASE STUDY OF THE
   AUTOMOBILE INDUSTRY

I.  THE GENERAL PROBLEM:  CHINA AND THE ENVIRONMENT--PROBLEMS,
     CAUSES, AND RESPONSES

	A. PROBLEMS:
           1. SOIL   DETERIORATION:    EROSION,    ALKANIZATION,
              SALINIZATION, DESERTIFICATION

	   2. VEGETATION  DESTRUCTION,  ESPECIALLY  FORESTS  AND
              GRASSLANDS

	   3. AIR POLLUTION: DEMAND FOR ENERGY/PLANS FOR PRIVATE
              VEHICLES (see case study below)

	   4. DECLINING URBAN AND RURAL ENVIRONMENTS

	   5. WASTE DISPOSAL PROBLEMS

  	 B. CAUSES

            1. DEMOGRAPHIC PRESSURE ON LIMITED ARABLE LAND: MORE
               FOOD, HOUSING, CLOTHING, LUMBER, WATER, LAND
               REQUIREMENTS

	    2. PERSISTENT DRIVES FOR ECONOMIC GROWTH SINCE 1950,
               UNREGULATED

	    3. FAMILY CONTRACT SYSTEM SINCE 1978 PROMOTES EMPHASIS ON
               CASH  CROP,  DECLINE  OF  TRADITIONAL  RECYCLING
               APPROACH,   INCREASING   RELIANCE   ON   CHEMICALS
               (FERTILIZERS/PESTICIDES)

	    4. USE OF COAL AS PRIMARY SOURCE (76%) OF ENERGY: HIGH
               SULPHUR AND ASH CONTENT, 15% WASHED: RESULTS--
               ACID RAIN; MAJOR CITIES SUFFER HIGH INCIDENCE OF
               SUSPENDED PARTICLES AND NOXIOUS GASES

               --EMPHYSEMA (ALONG WITH STROKE) IS COMMONEST CAUSE
               OF DEATH IN MIDDLE AGED CHINESE

	    5. STATE CONTROL OF PRICING OF KEY INGREDIENTS: WATER,
               LUMBER, COAL AND OIL ALL PRICED UNDER COST

	    6. TOWN VILLAGE ENTERPRISE SYSTEM: PRODUCES 40% OF GNP
               IN 1992, EXPANDED AT ANNUAL RATE OF 30% A RUNAWAY
               LOCOMOTIVE WITHIN CHINA?


              -NO RULES, LAWS OR REGULATIONS FOLLOWED

	   7. SPECIAL ECONOMIC ZONES (SEZs) DEVELOPED TO 1986 IN
              UNREGULATED MANNER, THUS ATTRACTED RECOGNIZED
              POLLUTERS: SPONGE, GLUE, FOOD PROCESSING, TANNING,
              DYEING, PLASTIC MOULDING FIRMS

	C.  RESPONSES

            1. GOVERNMENT LAWS, REGULATIONS, POLICIES, TRAINING;
               INVOLVEMENT IN INTERNATIONAL CONFERENCES; CREATING
               ENFORCEMENT AGENCIES; SCIENTIFIC ASSOCIATIONS; NEW
               JOURNALS, ALL SINCE 1979 AND UNMATCHED IN ANY OTHER
               ASIAN COUNTRY OR DEVELOPING NATIONS

	    2. ECO-FARMING SINCE 1982

               U.N. RECOGNIZED FOUR VILLAGES IN CHINA IN 1987,
               1988, 1990 AND 1991 FOR ACHIEVEMENTS IN ECO-FARMING

	    3. STRICTER LAWS IN SEZs

	    4. SPONTANEOUS POPULAR RESPONSES TO LOCAL ENVIRONMENTAL
               PROBLEMS

	    5. SCIENTIFIC COMMUNITY RAISES CONCERN FOR DETERIORATING
               ENVIRONMENT

	    6. ENVIRONMENTAL EDUCATION PROGRAMS

	    7. OUTSIDE FINANCIAL AND TECHNICAL ASSISTANCE, e.g.
               U.N. AND WORLD BANK

	D. REALITIES

	   1. LACK OF ENFORCEMENT OF LEGAL PROVISIONS

           2. RELIANCE ON LOCAL AND PROVINCIAL GOVERNMENTS FOR
              REVENUE GENERATED BY TOWN VILLAGE ENTERPRISES,
              A PRIMARY POLLUTION SOURCE, THUS A RELUCTANCE TO
              REGULATE, CHECK OR POLICE

	  3. POOR TRAINING AND UNDERSTAFFING OF ENVIRONMENTAL
             AGENCIES

	  4.  LACK  OF  ENVIRONMENTAL  CONSCIOUSNESS  ON  PART  OF
              MANAGERS AND THE PUBLIC AT LARGE
   
	  5. OVERALL STRATEGY BEHIND EMPHASIS ON TOWN VILLAGE
             ENTERPRISES

	  6. INSUFFICIENT INVESTMENT ON THE PART OF THE STATE,
             PROVINCIAL AND LOCAL GOVERNMENTS IN ENVIRONMENTAL
             CONTROL


II   A  CASE  STUDY:  BUILDING  AN  AUTOMOBILE  INDUSTRY,  AN
                      ANACHRONISM?

	A. PRESENT TRENDS IN MOTOR VEHICLE USE ARE NON-SUSTAINABLE:

	   1. CONTINUED GROWTH IN EMISSIONS OF GREENHOUSE GASES FROM
              MOTOR VEHICLES CONTINUES TO PLACE THE EARTH'S CLIMATE 
              IN GREATER JEOPARDY  i.e. GLOBAL WARMING

              MOTOR VEHICLES ARE MAJOR DIRECT AND INDIRECT SOURCES
              OF GREENHOUSE GASES  WITH CARBON DIOXIDE BEING THE 
              LARGEST CONTRIBUTOR TO INCREASED WARMING WITH MOTOR
              VEHICLES ACCOUNTING FOR 15% OF GLOBAL FOSSIL FUEL EMISSIONS

             BETWEEN 1971 AND 1991 CARBON DIOXIDE EMISSIONS
             GREW BY ABOUT 17 MILLION TONS PER YEAR 
             (FROM 518 MILLION METRIC TONS OF CARBON TO
             900 MILLION METRIC TONS)

             ESTIMATED THAT IF GLOBAL FLEET CONTINUES TO GROW 
             FOLLOWING RECENT TRENDS, AND IF FUEL CONSUMED PER
             VEHICLE CONTINUES TO DECLINE AT 1.5%/YEAR TOTAL VEHICLE
             CARBON DIOXIDE EMISSIONS COULD INCREASE BY AN ADDITIONAL
             20 TO 50% (RELATIVE TO 1987) BY 2010.

             INCREASES OF THIS MAGNITUDE WOULD MAKE INT'L
             EFFORTS TO CONTROL GLOBAL WARMING DIFFICULT

             JUST TO STABILIZE ATMOSPHERIC CARBON DIOXIDE
             CONCENTRATIONS AT PRESENT LEVELS REQUIRES A REDUCTION
             IN EMISSIONS OF 60 TO 80% BELOW TODAY'S LEVELS (un intergovtl
             panel on climate change ipcc. cambridge univ. press. 1992)
             TREND IS IN OPPOSITE DIRECTION WITH SOME PREDICTIONS OF EVEN
             HIGHER EMISSIONS, IN THE RANGE OF 30-40% GREATER IN 2010 THAN
             IN 1990 (INTERNATIONAL ENERGY AGENCY  IEA 1995, 49)  IEA FORECASTS
             A 55 TO 62% INCREASE IN WORLDWIDE TRANSPORT CARBON DIOXIDE EMISSIONS 
             BY THE YEAR 2010 RELATIVE TO 1990--ALL THIS ENERGY DERIVED FROM OIL.
             THUS IF PRESENT TRENDS CONTINUE THE EARTH'S CLIMATE WILL BE PLACED 
             IN JEOPARDY..REQUIRING A FUNDAMENTAL CHANGE IN ENERGY TECHNOLOGIES
             --IF GOING TO EFFECTIVELY ADDRESS PROBLEM OF GLOBAL WARMING


	  2. GLOBAL OIL RESERVES ARE FINITE,  REQUIRING A MAJOR
             SHIFT FROM OIL TO OTHER ENERGY SOURCES WILL HAVE TO

             BEGIN SOON---i.e  BY YEAR 2010

             WHEN, NOT IF, THIS HAPPENS MAJOR NEW ENERGY SOURCES WILL
             HAVE TO BE INTRODUCED SINCE OIL IS USED TO MEET 40% OF
             OF GLOBAL (COMMERCIAL) ENERGY NEEDS. (See, "Mideast Oil
             Forever?" Atlantic Monthly, April 1996).

    	     MAJOR IMPLICATIONS FOR JAPAN AND USA--THE PRINCIPAL
     	     DEVELOPERS AND MANUFACTURERS OF MOTOR VEHICLES
             SINCE ALMOST ALL ARE POWERED BY OIL PRODUCTS

  	     MOTOR VEHICLES ACCOUNT FOR ABOUT 1/3 OF GLOBAL
	     OIL USE, 40% OF OIL USE IN THE OECD COUNTRIES,
	     AND ABOUT HALF OF OIL USE IN THE USA

	     ESTIMATED THAT WORLD HAS CONSUMED AT LEAST 30%
	     OF THE CRUDE OIL THAT WILL EVER BE RECOVERED

	     UNLESS GLOBAL DEMAND FOR OIL GROWS MUCH MORE
	     SLOWLY THAN ANTICIPATED, PRODUCTION WILL START
	     DECLINING IN A TIME PERIOD MEASURED IN DECADES
	     NOT CENTURIES

		former Shell CEO argued that oil production is
		projected to continue to grow in the near term
                at a rate of about 1%/yr to a peak of about 75 million
                barrels/day around year 2010  (Dec 1989)

	     ONLY BRIGHT SIGN IN THIS DECLINING OIL RESERVES
	     SAGA--IS THAT RECENTLY GEOCHEMISTS AT WOODS HOLE
	     OCEANOGRAPHIC INSTITUTE BELIEVE THAT OIL IS MOVING
	     FROM GREAT DEPTHS IN THE EARTH TO RESERVOIRS CLOSER
	     TO THE SURFACE.  UNPROVEN AT THE MOMENT BUT USING
 	     THE EXAMPLE OF A RESERVE IN THE GULF OF MEXICO
 	     (ONE OF THE WORLD'S MOST PRODUCTIVE OIL SOURCES
 	     YIELDING MORE THAN 1 BILLION BARRELS OR 42 MILLION
 	     GALLONS AND STILL GOING STRONG--) IN WHICH THE
	     RESERVES ARE DECLINING MUCH SLOWER THAN EXPERTS
             PREDICTED ON BASIS OF ITS PRODUCTION RATE

	     (PENNZOIL IS PUMPING OIL WHICH AT BEGINNING HAD
             THE SIGNATURE OF BEING FORMED IN THE PLEISTOCENE EPOCH,
             LESS THAN 2 MILLION YEARS AGO, OIL NOW BEING RECOVERED 
             HAS THE SIGNATURE OF OIL OF THE JURASSIC PERIOD, WHICH 
             ENDED MORE THAN 150 MILLION YEARS AGO-- THUS OLDER OIL
	     IS BURNING UPWARDS

             (NY times, 9/26/95, B5,8)


	  3. CONTINUED GROWTH IN AIR POLLUTION EMISSIONS--MUCH FROM
             MOTOR VEHICLES--WILL MAKE LIFE INTOLERABLE IN THE 
             WORLD'S MAJOR CITIES  i.e. AIR POLLUTION


	    -MOTOR VEHICLES CONSTITUTE THE PRINCIPAL SOURCE OF AIR]
            POLLUTION IN MAJOR CITIES:  WORLD BANK ESTIMATES THAT 
	    THE TRANSPORTATION SECTOR ACCOUNTS FOR THE GREAT BULK OF
    	    CO EMISSIONS (58-85% OF EMISSIONS IN THE OECD COUNTRIES,
            OVER 60% IN EASTERN EUROPE, OVER 90% IN THE MIDDLE EAST,
            AND 50-60% IN ASIA 

	    -IN THE U.S. VEHICLE RELATED AIR POLLUTION PROBLEMS PERSIST 
            DESPITE MORE THAN 25 YEARS OF REGULATION AIMED AT PRODUCING
            CLEANER VEHICLES.

	    -DESPITE BEST REGULATIONS AND PARTICIPATION BY OWNERS THE
            GROWTH IN THE NUMBER OF VEHICLES AND GROWTH IN NUMBER OF
            PERSONS EXPOSED TO POLLUTION CONTINUES TO INCREASE. IN 1970
            246 MILLION VEHICLES 1990  583 MILLION WITH A COMMENSURATE
            GROWTH IN TRAVEL AND FUEL USE.  IF PRESENT TRENDS CONTINUE 
            THERE COULD BE WELL OVER A BILLION VEHICLES ON THE ROAD BY 2010.
            MUCH OF THIS WILL BE IN DEVELOPING COUNTRIES THUS THE 
            CONTINUED GROWTH IN NUMBER OF SOURCES, COMBINED WITH THE LESS
            THAN ANTICIPATED REDUCTIONS FROM EMISSION CONTROLS--HAS
            OVERWHELMED MUCH OF THE TECHNOLOGICAL EFFORTS OF THE PAST 
            25 YEARS AIMED AT REDUCING MOTOR VEHICLE AIR POLLUTION 

	 4. WITHOUT IMPROVEMENTS IN TRAFFIC MANAGEMENT AND NEW
            FORMS OF PUBLIC TRANSPORT, VEHICLE CONGESTION AROUND
            THE WORLD WILL CONTINUE TO GROW--LEADING TO MASSIVE
            GRIDLOCK IN MANY METROPOLITAN AREAS 

	 5.  TECHNOLOGICAL  RESPONSES  OFFSETTING  THESE  LINKED
             THREATS: 
             a.  CHANGING  ENERGY  SOURCES  WILL  CONTROL  AIR
                 POLLUTION AND GREENHOUSE GASES 
                 ALTERNATIVE FUELS:
      
            METHANOL: M85 (85% METHANOL/15% GASOLINE) BUT OFFERS
            LITTLE GREENHOUSE WARMING BENEFIT IF DERIVED FROM FOSSIL FUELS

            COMPRESSED NATURAL GAS (CNG) WOULD DEFINITELY REDUCE OZONE 
            CONCENTRATIONS, 15% REDUCTION OF OVERALL GREENHOUSE GAS
            EMISSIONS IN LIGHT DUTY VEHICLES, 5% IN HEAVY DUTY DIESEL
            POWERED VEHICLES

            ETHANOL: WOULD INCREASE OZONE CONCENTRATIONS BY 6% 
            "the addition of ethanol to gasoline is generally counterproductive
            with respect to ozone formation.." 

            ALCOHOL FUELS FROM OTHER BIOMASS SOURCES ETHANOL AND METHANOL
            CAN BE PRODUCED FROM OTHER SOURCES OF BIOMASS  (PAPER, 
            SOLID WASTE, AG AND FORESTRY RESIDUES AND WASTES)

            EACH OF THESE SOURCES HAS SOME MERIT, BUT SMALL--
            ALL WOULD REDUCE CARBON MONOXIDE EMISSIONS RELATIVE TO
            CONVENTIONAL GASOLINE, WOULD REDUCE OZONE CONCENTRATIONS 
            IMPACT ON GLOBAL WARMING IS INSIGNIFICANT 
            ZERO EMISSION VEHICLES:  ELECTRIC AND HYDROGEN CARS

            ESTIMATED THAT IN NE USA ELECTRIC VEHICLES WOULD REDUCE
            CARBON MONOXIDE AND ORGANIC COMPOUND EMISSIONS BY 99% AND
            NITROGEN OXIDE EMISSIONS BY 70%--ASSUMING THE
            POWER PLANTS ARE REASONABLY CLEAN.  AND CUT THE EMISSIONS
            OF TOXIC SUBSTANCES  (BENZENE)  BY ABOUT  99%.   WOULD 
            HOWEVER BE INCREASED EMISSIONS OF SULFUR DIOXIDE--THUS ACID 
            PRECIPITATION IF HIGH SULFUR EMISSIONS RESULTED FROM 
            GENERATION OF ELECTRICITY  (BUT NOT IF SWITCH TO WIND
            TURBINES, PHOTOVOLTAIC CELLS, OR NUCLEAR PLANTS) 

            HYDROGEN POWER:  INTEREST IN THIS TECHNOLOGY HIGH IN
            EUROPE AND JAPAN ADVANTAGES NO CARBON DIOXIDE EMISSIONS,
            LONGER RANGE, FAST REFUELING, FACE LACK OF SUPPORTING
            INFRASTRUCTURE BUT WOULD BE USEFUL IN REDUCING OIL IMPORTS,
            ALLEVIATING TRADE DEFICITS AND CUT AIR POLLUTION AND GREENHOUSE
            GAS EMISSIONS

	    STIMULATED BY CALIFORNIA LAWS (2% OF NEW LIGHT DUTY 
            VEHICLES SOLD IN STATE MUST HAVE ZERO EMISSIONS
            BY 1998 AND 10% BY 2003--CAN ONLY BE MET BY ELECTRIC     
            VEHICLES--RECENTLY MODIFIED)

       b. OPTIONS  APPEARING  THAT  WILL  PROVIDE  MORE
          ATTRACTIVE AND AFFORDABLE FORMS OF TRANSPORT--
          ESPECIALLY FOR THE VERY YOUNG, ELDERLY, AND
          PHYSICALLY IMPAIRED. 

  	   PERSONAL RAPID TRANSIT (PRT) COULD OVERCOME ALL
           PROBLEMS CURRENTLY FACING PUBLIC TRANSPORT SYSTEMS   
  
           U OF MINNESOTA HAS DEVELOPED SUCH A SYSTEM OVER
           LAST 20 YEARS, AND A WORKING SYSTEM IS NOW BEING
           ENGINEERED BY RAYTHEON COMPANY, WITH A TEST VERSION 
           TO RUN IN MARLBOROUGH, MA IN 1996, AND COMMERCIAL
            SYSTEM TO BE CONSTRUCTED SHORTLY THEREAFTER IN
           ROSEMONT, IL, NEAR O'HARE INTL AIRPORT

	   SYSTEM:  SMALL, DEDICATED, COMPUTER OPERATED ELECTRIC
	   VEHICLES CARRYING 3-4 SEATED PASSENGERS POWERED BY ELECTRIC 
	   MOTORS, RIDE ON OWN ELEVATED GUIDEWAY, ALLOWING VEHICLE
	   TO TRAVEL AT HIGH SPEEDS SAFELY. DUE TO INDIVIDUAL CAR MODEL,
	   SYSTEM COSTS ARE EXPECTED TO BE MUCH LESS THAN THAT OF A HEAVY
	   RAIL SUBWAY--ALLOWING FOR SERVICES TO LOWER POPULATION DENSITY
	   (IDEALLY A PRT STATION WITHIN A 10 MINUTE WALK OF ANY POINT
	   IN A METROPOLITAN AREA).  NONSTOP TRIPS (AS STATIONS ARE OFF
	   MAIN LINES, NO NEED TO CHANGE FROM ONE TO ANOTHER VEHICLE. 
	   A SINGLE LINE OF GUIDEWAY WILL CARRY THE EQUIVALENT TRAFFIC
	   OF 4 LANES OF A MAJOR EXPRESSWAY.

           RAYTHEON SYSTEM HAS REDUNDANT SAFETY FEATURES:
           TWO ELECTRIC MOTORS/VEHICLE, TWO ON BOARD
           COMPUTERS, BACK UP POWER SYSTEMS, EMERGENCY
           COMMUNICATION SYSTEMS

	B. BUT CHINA WANTS TO BUILD FOSSIL FUELED AUTOS ANYWAY

	   1. CHINA'S LEADERS WHAT TO DOUBLE THE ANNUAL PRODUCTION
              TO 3 MILLION VEHICLES--1.5 MILLION OF THEM AUTOS
              BY  2000--WITH  INDIVIDUAL  CONSUMERS  THE  PRIMARY
              TARGET (SHIFTING FROM MINI-VANS)

              AUTO INDUSTRY IS ECONOMICALLY SIGNIFICANT BECAUSE IT
              IS A CAPITAL INTENSIVE AND HIGH VALUE ADDED INDUSTRY
              CAPABLE OF GENERATING A HIGH RATE OF RETURN ON
              INVESTMENT.  THE EXTENSIVE MULTIPLIER EFFECTS OF
              THIS INDUSTRY CREATED 11.3 % OF TOTAL EMPLOYMENT IN
              JAPAN IN 1989, AND 9.2% EMPLOYMENT IN CHINA

    	  AMERICAN, EUROPEAN AND JAPANESE FIRMS ARE COMPETING 
          TO PARTICIPATE IN WHAT IS SEEN AS THE NEXT (AND LAST?)
          BIG MARKET

	  "China offers the greatest potential market in the world
	  and that's why everyone is coming" Nissan's contact person
	  in China. Total vehicle production could reach 1.5 million 
	  this year (but only 700,000 out of 7 million are private),
	  but auto production growing at an annual rate of 17% since 
	  1979, in 1993 production jumped 22.8% outpacing overall economic 
	  growth of 13%, and supply is not keeping up with demand. China
	  estimates that annual demand will jump from an estimated
	  1.2-1.5 million in 2005 to 3 million in 2010; or an estimated
	  300 million potential car owners output value is estimated at 
 	  $49 billion with car makers expected to make a combined profit
	  of more than $123 billion, while paying taxes of $9.4 billion, 
	  creating 15 million jobs. Currently for every 1000 Chinese there
	  are 1.2 sedan cars, while world average is 90.9
          (china daily, 11/14/94, 2)

	  LI PENG, THE PREMIER, HAS FOCUSED ON THE AUTO INDUSTRY AS
	  ONE OF FOUR HEAVY INDUSTRIES WHOSE GROWTH CAN HELP SUSTAIN THE
	  COUNTRY'S RAPID ECONOMIC EXPANSION OVER NEXT TWO DECADES (other
	  three are telecommunications, computers, and petrochemicals)

	  LEADERS SEE THIS AS A MEANS TO CREATE A GIANT INTERNAL CONSUMER 
	  MARKET TO MOVE TO NEXT STAGE OF MATERIALS--ESP. SINCE NEW LEADERS
	  WILL NEED SUSTAINED ECONOMIC GROWTH TO LEGITIMATE THEMSELVES AS
	  DELIVERERS OF PROSPERITY TO THE MASSES

	  ALSO CONSOLIDATING THE 120 FIRMS MAKING VEHICLES IN CHINA 
	  INTO ABOUT 8, MANY WITH JOINT-VENTURE CONNECTIONS WITH JAPANESE,
	  EUROPEAN AND AMERICAN FIRMS--WITH THE ADVANTAGE TO THE FIRST
	  TWO SINCE HAVE BEEN IN ASIA AND CHINA LONGER

	  2. PROBLEM:

	     THE FOCUS IS ON PRODUCTION OF THE VEHICLES NOT
	      ON SUSTAINABILITY OF SUCH COMMODITIES IN CHINA
              DUE LACK OF OIL RESOURCES AVAILABLE TO DIVERT
              INTO SUCH AN INDUSTRY AND LACK OF INFRASTRUCTURE
              (ROADS, GAS STATIONS, TIRES, ETC)

             SOME CHINESE SEE THIS
             --"the problem is, they don't think about traffic or people's lives,
	     they just think about production, production, production" 
             Ding Jingping, an industrial economist at the Chinese Academy
             of Social Sciences, "this is one of the aspects of the centrally
             planned economy"  (NY times, 9/22/94)

	     --China Academy of Sciences argues that China is
   	     "too crowded to encourage people to own cars"
    	     and urges a development strategy that emphasizes
  	     more efficient use of land, water, energy and
  	     other resources--shortages of each make the
   	     family car impractical--rather China should
 	     invest in convenient and comprehensive public
	     transportation networks  (wsj 6/20/95)

	     SET ASIDE ALL ARGUMENTS REGARDING TRAFFIC, POLLUTION, AND
	     MASS TRANSIT--EVEN WITH OVERWHELMING EVIDENCE THAT CHINESE
	     CITIES ARE ALREADY CHOKING ON TRAFFIC, AIR POLLUTION, THAT
	     PRECIOUS FARMLAND IS DISAPPEARING, AND DISREGARD THE NEED FOR
	     HIGHWAYS, CONSIDER THE FACT THAT CHINA BECAME A NET OIL IMPORTER
	     IN 1993 AFTER NORTHERN FIELDS FAILED TO KEEP PACE WITH DEMAND
	     AND SOUTH CHINA FIELDS HAVE BEEN SLOW
             TO PRODUCE RESULTS

	     "40% of US energy consumption goes into private cars--and US
	     is importing 1/2 its crude oil.  If the Chinese try to model
	     themselves on US, Japan or SKorea--there is simply not enough 
	     crude oil on planet for them to import and thus such a pursuit
	     will speed up the arrival of the third oil crisis."  Vaclav Smil 
	     "the automobile cannot be extended to 1.2 billion Chinese-or even
	     100-200 million.  This is an insane route--there is not a single
	     Chinese city that does not suffer from qridlock already."

	     Quite recently 10-11-95 a FRENCH OIL COMPANY PULLED OUT OF
	     CHINA'S REFINERY PLAN...A HEAVY BLOW TO CHINA'S REFINING 
	     INDUSTRY, ALREADY RUNNING AT NEAR CAPACITY BUT UNABLE 
	     TO MEET SOARING DEMAND FOR DIESEL, FUEL OIL, AND OTHER
	     REFINED OIL PRODUCTS--FORCING CHINA TO IMPORT   WSJ  A 14

	     TO CREATE A TRUE AUTOMOTIVE INDUSTRY REQUIRES A HUGH INVESTMENT
	     IN ROADS AND HIGHWAYS IN CHINA WHICH TODAY HAS ABOUT 600,000
	     MILES OF PAVED ROADS (UP FROM 34,000 IN 1952) CLOSE TO LEVEL U.S.
	     POSSESSED AT END OF l9TH CENTURY

	     BUT AT A TIANJIN AUTOMOTIVE PLANT, THE DIRECTOR ARGUES THAT 
	     "THE CHINESE AUTO INDUSTRY IS JUST AT THE BEGINNING STAGE OF
	     DEVELOPMENT--THERE IS NO NECESSITY TO WORRY ABOUT SOME OF
	     THE PROBLEMS THAT WILL CROP UP IN THE FUTURE."
	     (NY times 9/22/95 c1,5)

	     MIGHT BE NOTED THAT THIS AUTOMOBILE PHENOMENA IS FOUND IN MOST
	     DEVELOPING ASIAN COUNTRIES AS WELL FROM SOUTHEAST ASIA, TO
	     INDIA--ALL FACE THE SAME ISSUES OF SCARCITY OF RESOURCES

  	     INDIA MAKES A CHEAP CAR ($6000) SO WESTERN FIRMS
 	     ARE ENTERING WITH HIGH COST MODELS EVEN THOUGH FEW
             INDIANS CAN AFFORD THEM,


	    BUT FOREIGN FIRMS BELIEVE  MUST BE IN THE MARKET "UNLESS
	    I GET A FOOTHOLD IN INDIA AND CHINA,  I CAN'T  RETAIN  MY 
 	    NAME  AS  ONE  OF  THE  TOP  CAR PRODUCERS IN THE WORLD"  10-11-95 
            FORD REP 


	3. WHY ISN'T THERE CONCERN IN CHINA WITH THE DOWNSIDE OF THE
           AUTOMOBILE ESPECIALLY GIVEN THE PROBLEM OF OIL AND LAND SCARCITY?

           -STATUS AND PRESTIGE OF HAVING A WORLD CLASS
           AUTOMOBILE SECTOR

           -AVAILABILITY OF TECHNOLOGICAL AND CAPITAL SUPPORT
           FROM SUCCESSFUL FOREIGN FIRMS EAGER TO BE PLAYERS
           IN THE PROSPECTIVE CHINA MARKET FOR CARS

           -A KNOWN TECHNOLOGY THAT IS WIDELY AVAILABLE--CHINA IS IN
           A BUYER'S MARKET; 

           -OPTING FOR ELECTRIC VEHICLES OR PRIVATE RAPID
           TRANSPORT SYSTEMS WHILE MAY BE CUTTING EDGE AND 
	   APPEARS TO BE A MUCH MORE RATIONAL CHOICE, DOES NOT HAVE  
           AS MANY SUPPLIERS AND THUS NOT AS COMPETITIVE
           AND WOULD HAVE TO RELY EVEN MORE HEAVILY ON OUTSIDE
           TECHNICAL KNOW-HOW WHICH CAN BE SEEN AS UNDERCUTTING
           THE CONTROLLING ASPECT OF THE CHINESE SYSTEM; THEREFORE
           MORE OF A THREAT THAN JOINT VENTURES WITH KNOWN PRODUCERS;
           PLUS HAVE TO FINANCE MOST IF NOT ALL OF PRODUCTION 

          -JOINT VENTURES WITH FOREIGN AUTO COMPANIES ENABLES CHINA
          TO OBTAIN MODERN MANUFACTURING TECHNOLOGY, TO LEARN MODERN
          MANAGEMENT TECHNIQUES, TO EARN FOREIGN EXCHANGE THRU  THE 
          EXPORT  OF  THE  MANUFACTURED  PRODUCT,  AND EVENTUALLY BECOME
          COMPETITIVE IN EXPORTING THEIR PRODUCTS AND FOREIGN FIRMS
          OFFER FINANCIAL INCENTIVES THE FOREIGN FIRM IS IN CHINA 
          BECAUSE OF THE HIGH WALL OF TARIFF CHINA HAS BUILT AROUND
          THE INDUSTRY, BECAUSE IT WANTS ACCESS TO THE VAST CHINA MARKET,
          AND BECAUSE IT BELIEVES THAT LOW WAGE CHINESE WORKERS WITH HIGH
          LEARNING ABILITY OFFER PROFIT POTENTIAL
              MARIA   MORGAN,    "REVIEW"   IN   CHINA   REVIEW INTERNATIONAL,
              2:2 (Fall 1995), 469-476 

          THUS, THE WORLD HAS TO FACE THE REALITY OF CHINA COMING ON LINE 
          AT  THE  BEGINNING  OF  THE  2lST  CENTURY  WITH  A  MODE 
          OF TRANSPORTATION DESIGNED FOR THE 2OTH CENTURY THAT WILL
          RAPIDLY BECOME A DINOSAUR BUT WILL ADD MUCH DESTRUCTION
          TO AN ALREADY CHALLENGED ECOSYSTEM BEFORE IT RUNS OUT OF GAS.