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Depletion of non-renewable resources imported by China

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  • Allen, Creina
  • Day, Garth

Abstract

This paper presents a model of resource management for resource exporters to analyse how the persistence of resource intensive growth in China should affect the depletion of non-renewable resources imported by China. We show that the depletion rate equals the difference between the price elasticity of China's resource import demand times the world interest rate and growth in China's resource import demand. Results indicate that: the temporary increase in China's demand associated with stockpiling resources raises the level of resources extracted for export to China, but does not affect the rate at which resources are depleted over time; the growth in China's demand for resource imports and exponential rise in prices during the contemporary resources boom reduces the rate at which resources should be depleted over time; the depletion rate picks up towards the end of the boom as the growth in China's demand is set to slow. Patterns in the depletion rate of iron ore exported to China, 2001–2011 are in line with the theory.

Suggested Citation

  • Allen, Creina & Day, Garth, 2014. "Depletion of non-renewable resources imported by China," China Economic Review, Elsevier, vol. 30(C), pages 235-243.
    • Handle: RePEc:eee:chieco:v:30:y:2014:i:c:p:235-243
    DOI: 10.1016/j.chieco.2014.06.013
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    More about this item

    Keywords

    Non-renewable resources; Optimal depletion; Open economy;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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