Feeding a Dragon

Aug 1, 2006

As China's economic might expands and it throws more weight around in Latin America, some see opportunity while others fear setbacks.

China is now the world's fourth-largest economy, and well on its way to regaining the economic pole position it held for much of recorded history. As recently as the early 19th century, it accounted for 30% of global gross domestic product (see chart, Age Old Economic Might, p. 14). Then, during the age of industrialization, western economies sprinted past China, leaving the Middle Kingdom with just 5% of world GDP. In recent decades, though, China has grown at leaps and bounds, and some predict it will again be the world's largest economy by 2040, overtaking the US. 

To fuel that growth, China is hunting the world over for natural resources. One corner that has an abundance of what the hungry Asian dragon needs to feed its development drive – iron ore and nickel for steel; copper for construction in the homeland and to build electronics for the rest of...

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“The crisis has been a setback for reserve diversification."

Jan Dehn, Ashmore Investment Management