China's Growing Might

I think that the general economic boom experienced by the BRIC economies led by China partly caused the current mayhem in oil and commodity prices. When China finally saw the light and embraced industrialization via the capitalist model, you have 1.3 billion people pursuing that objective. Even if only 20% of the population were really productive, that is still a massive 260 million people. China, I believe, is a US$4 trillion economy (in purchasing power parity terms) and it has registered an average 10% annual growth over the past years-- which is an additional US$400 billion added to the gross domestic output every year-- almost the size of the entire Philippine economy.

The sheer size of the Chinese labor force plus rising productivity levels have caused demand for just about everything-- from oil to food stuffs-- to spike drastically, putting pressure on supply stocks everywhere. The huge oil and steel requirements of the Chinese, for example, have crowded out other smaller countries' requirements. Frodo says that he doesn't have enough roofing material supplies for his clients because everything has been gobbled up by the Chinese. The end result is rising prices because of supply constraints: production capacities are just not enough to service China's massive requirements.

This is just China. Add Brazil, Russia and India into the picture. China's boon is the rest of the world's bane.