Pick an element, any element. Let's say.... chromium. Referred to colloquially as "chrome," chromium is primarily important in the global economy for its indispensable role in the production of stainless steel. The raw material, chromite ore, is smelted into the compound "ferrochrome," which is then used for manufacturing stainless steel. There is no substitute.
Who do you suppose is the largest consumer of stainless steel in the world today? The answer, of course, is China.
Don't worry, this isn't a peak chromium story. According to the U.S. Geological Survey there are some 12 billion tons of "shipping-grade" chromite ore in the world, enough for centuries of stainless steel production. That may be one reason why the U.S. is no longer stockpiling chromite ore and ferrochrome. (China, on the other hand, just announced plans to start stockpiling the substance, along with a number of other industrially important metals.)
But even though there might be plenty of the stuff lying around worldwide, practically speaking, chromite ore is mined mainly in just two places: South Africa and Kazakhstan. And in South Africa, ferrochrome producers are beginning to get nervous.
They're antsy because chromite ore exports from South Africa to China are ticking up -- China is offering a better price for the raw material than South Africa's own ferrochrome producers. In the long run, worry some analysts, this could end up damaging the health of South Africa's ferrochrome industry.
Meanwhile, in China, the government is ordering a consolidation of the ferrochrome industry, because years of overinvestment are threatening imminent overcapacity. Although China does not yet produce enough ferrochrome and stainless steel to satisfy local demand, that day is coming fast. Indeed, big stainless steel producers in the European Union, who have been shoveling the metal to China as rapidly as possible, are suddenly envisioning a future in which Chinese demand disappears.
There's no smoking gun in this chromium tale -- think of it as just a mental exercise in imagining the global economy. Pick an element, any element, and trace how China's economic surge is remaking not just economic flows, but the world political order. We've talked here before about how China's hunger for raw materials has led it to prop up some of the worst dictators in Africa. Guess what other country near South Africa has large deposits of chromite ore? Zimbabwe, where Robert Mugabe is prone to note that "China is a good friend." And guess why China is cozying up to neighboring Kazakhstan's Nursultan Nazarbayev?
We've also discussed how China is steadily moving up the value chain; here's another classic example. First the company imports stainless steel to make appliances. Then it imports ferrochrome to make the stainless steel. Then it imports chromite ore to make the ferrochrome. Actually, it is doing all these things simultaneously. On a scale never before matched in history, China is tackling every link of the supply chain.
Stainless steel is a ubiquitous part of everyday life. Usually I don't think about it too much. But the next time I look at my reflection in a spoon, I'm also going to be seeing Robert Mugabe, anxious South African ferrochrome company execs, the delining fortunes of European Union stainless steel exporters and, naturally, China, China, China.