By Richard Lee, Connecticut Post, Bridgeport
Mar. 24–China’s booming economy is making increasing demands on the world’s natural resources and heightening competition with other nations, but the shipping industry is reaping the benefits.
“The impact on trade flow and shipping is fantastic. Before Christmas, about 80 percent of what you were buying was from China. The dragon is awake,” Dagfinn Lunde, head of shipping at DVB Banke SE in Frankfurt, Germany, told an audience of 350 on Tuesday at the Connecticut Maritime Association’s Shipping 2010 at the Hilton Stamford Hotel. “In February, China passed Japan as the second-biggest economy.”
An indication of China’s impact on the global economy is its need for high-grade iron ore and coal, according to Justine Fisher, vice president in high-yield research at Goldman Sachs & Co.
Chinese steel production will grow by 10 percent this year and 11 percent in 2011 as the country becomes more urbanized, she said, while its gross domestic product rises 11.4 percent this year and 10 percent in 2011.
Fisher questioned whether there will be enough iron ore to meet the global demand this year and said China will pay more to meet its needs.
“You’ll see China coming to the table more voraciously,” she said, and it is likely to hone its tactics as its population increases.
It is unlikely that the world will see a repeat of Japan’s aggression in the 1930s, when it invaded Korea and China to control their natural resources, Fisher said, noting that globalization will prevent a recurrence.
But China will provide stiff competition for industrialized Western economies as it strives to maintain its growth, said Peter Sandler, director in ocean freight strategy and business development at Louis Dreyfus Commodities in Wilton.
“The Chinese are traders. The Chinese will import as much as they can take, if the price is right. China has changed the trade flow for coal dramatically,” he said, noting that its per capita electricity consumption is only a fraction of what it is in the United States. “China has only scratched the surface of an industrial revolution.”
Sandler, who recently returned from two weeks in China and other parts of Asia, left impressed by the way the Chinese government has steered the nation’s growth.
“The one-party system does a much better job in maintaining an economy. I think we (the U.S.) are paralyzed,” he said. “I don’t believe we’re in the driver’s seat anymore.”
And with a $2.4 trillion surplus, compared with a $12.4 trillion debt shouldered by the United States, China will continue to grow, consuming oil at high levels and making use of its new refineries, said Ray Bartoszek, managing director of oil at Glencore Ltd., the commodities trader with an operation at 301 Tresser Blvd. in Stamford.
“Chinese oil production plateaued at 4 million barrels a day. Chinese oil demand was 5 million barrels a day in 2002, and it’s 8 million barrels a day in 2010,” he said, adding that China now imports most of its oil from Saudi Arabia, Angola and other West African nations. “China will increase its strategic reserves to avoid being at the whims of the world.”
China also is becoming a force in the shipbuilding industry, taking business away from South Korea and growing its own fleet. But it has to step up production match its domestic needs, said Ted Petrone, president of Navios Corp. in South Norwalk, a unit of Navios Maritime Holdings, which owns and charters 72 ships.
“They have a long way to go. The Chinese are stepping up on the ownership side,” he said, adding that the Chinese government is sure to play a role.
The exposition concludes today with another series of discussions on environmental issues, admiralty law issues and the Commodore Gala Dinner.
“It’s very collegial. It’s a very pure community networking opportunity,” said Jim Lawrence, conference coordinator and chairman of International Marketing Strategies, which is partnering with the Connecticut Maritime Association in the event. He estimated that 40 different countries are represented at Shipping 2010. “The leaders of all the international shipping trade associations are there.”
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