Tuesday, March 23, 2010

US Industry, A Dim Bulb

Wang Jianwei, a graduate engineering student in Liaoning, China, was recently surprised to learn that he had been described as a potential cyberwarrior before the United States Congress due to a paper he published last spring- “Cascade-Based Attack Vulnerability on the U.S. Power Grid”.

My first thought on reading this news was that China would likely only resort to such a tactic in the event of actual war given that China and Asia in general generate (I couldn't resist) great profits from the US grid. Asian electronics exports wouldn't be of much use without a functioning grid in the US.

Further reflection on this topic recalled my days as emerging market economist; specifically one of the key bits of data in that field, electricity generation and consumption. Back then (the 90s) higher electricity consumption was seen as one of the few unalloyed goods in emerging economies- the more electricity an economy consumed the more it would grow.

Applying that view to the US, the graph below paints a picture of wonderful growth.

Yet, looks, in this case might be deceiving. While US electricity consumption has been growing it is being used to power a different mix of activities.

Until the mid 80s US Industry was the biggest consumer of energy, as the graphs below depict. Since the era of financial deregulation and industrial off-shoring (among other changes) Residential (all those new electronics exports from Asia) and Commercial (all those new office towers filled with people and computers in cubicles) use have continued to grow while Industrial use has lagged. US Industry uses roughly the same amount of power today as it used in the early 90s.



Meanwhile China's electricity consumption has been growing by leaps and bounds. The CIA's World Factbook lists China's electricity consumption as a close second to the US.

However, Chinese Industry currently uses, according to their Statistical Yearbook, almost 2.5 times as much electricity as US Industry. Current (2008) Chinese Industrial Electricity Consumption of some 2500B KwH is up from 883B KwH in 1999.

Suffice it to write that, if this data is a guide, the US is no longer the industrial workshop of the world.

3 comments:

STS said...

This is a very satisfying bit of empirical observation. I mean satisfying in the sense that it's measuring something physical that really cuts through the statistical and rhetorical noise of most economic analysis.

The implications, on the other hand, are actually a bit worrying: "Doctor! The patient is flat-lining!"

rjs said...

you might be interested in my aggregation of info about chinese growth: the coming chinese hegemony

(btw, i know, nothing grows forever)

Dude said...

STS,

Glad you found the info illuminating (I just can't resist a pun).

RJS,

I was interested in the view, thanks for the link.

The main issue with China analysis is, in my view, population. Their history suggests a facility to organize well when the "stars are right". That combined with a huge population, and, despite great change, a still large number of peasants argues for lots more growth ahead.

After that...well, we'll see.