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Our China Connection

Our China Connection

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The Far East has a new economic king, and its appetite for resources could be laying the foundation for recovery in Southwest Washington.

China has now surpassed Japan and ranks as the second-largest economy in the world behind the United States, the Wall Street Journal reported last month. Surging nearly 10 percent in 2010, China's gross domestic product was $5.88 billion in 2010, and the world's most populated country is gobbling up whatever resources it can find to support its booming economy.

In other words, China needs raw materials, and fast, to build new factories and homes and grain to feed its 1.3 billion people.

A sampling of the Chinese impact on the local economy:

Wood products: Last year, U.S. and Canadian log and lumber exports to China rose 150 percent, according to Wood Resources Quarterly, a trade publication. U.S. log exports to China totalled 2.4 million in 2010, 24 times the 100,000 metric tons exported in 2007, Wood Resources reported.

The story is the same at the Port of Longview and Weyerhaeuser Co. docks, where total log exports rose 60 percent over the year. Japan remains the area's largest trading partner for logs, but China's imports from Longview docks rose 427 percent in 2010, the largest increase by far, according to Jones Stevedoring Company.

Export of wood chips grew 25 percent in 2010, largely because of Chinese demand, according to Wood Resources.

Steel: Port of Longview officials say Chinese steel imports are rising to supply three companies on port property - NAP Steel, Brown Strauss and Skyline Steel, which started production in February.

Demand is offset somewhat by federal tariffs aimed at protecting U.S. steel producers, port officials said.

Grain: EGT plans to complete its $200 million grain terminal at the Port of Longview in time for the fall harvest. The company, mostly owned by St. Louis-based grain giant Bunge North America, decided to start building the terminal three years ago to meet the huge food demand from Asia, particularly China. Over the next decade, China's demand for soybeans will increase by 21.6 million metric tons - about 80 percent of the total worldwide demand for exports, according to the U.S. Department of Agriculture.

The Port of Kalama's two grain terminals, Kalama Export and United Harvest, have also undergone massive expansions to keep up with EGT.

Coal: It's the most controversial commodity sparked by Chinese demand, by far. Millennium Bulk Logistics, an offshoot of Australia-based coal giant Ambre Energy, is seeking to export 5.7 million tons of coal annually at a new terminal on the Columbia River in Longview. If approved, the company could eventually seek to move as much as 20 million to 60 million tons of coal through the site at the former Reynolds smelter, bringing 70 or more jobs to the area.

Cowlitz County commissioners approved the company's permit in November, but a coalition of environmental groups have appealed to the state's Shoreline Hearings Board.

Millennium officials are touting the jobs and positive economic development the terminal would bring to the Reynolds site, which had been contaminated for years by aluminum making. Environmentalists worry that supporting the coal industry is supporting climate change, and area residents are concerned about accumulations of coal dust and coal trains clogging traffic.

Both sides agree on one thing. The demand from China for coal, and other resources, is real, and it likely isn't going away.

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