China, Commodities, Economics - Thursday, May 5, 2011 21:50 - 0 Comments

Emerging Markets: China’s changing consumption habits spell danger

Emerging Markets, May 5 2011

China’s shift to a domestic consumption economy will have drastic impacts on the country’s need for soft commodities and could exacerbate global problems of food prices and water scarcity, bankers have warned.

China has a stated objective to move away from an export-led model to one fuelled by consumption at home, which suggests a move away from needing metals to instead needing foodstuffs such as meat and grain. Changes in diet that have accompanied the growth of the Chinese middle class, particularly towards meat and dairy, will also have major knock-on effects. “Unfortunately, meat eats 12 times as much grain as grain does,” noted Donald Hanna, managing director of global liquid markets research at Fortress Investment Group.

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