Shawn Halladay in China

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Beijing is a fascinating city, and certainly one of contrasts. On the one hand, there are still vestiges of a slower time and place, such as the bicycles many people still ride, or the horse drawn cart full of watermelons that I saw in the city. It also is quite modern – both our hotels had free internet access which had great spam filters. Apparently, all email traffic into China flows through Beijing, where is goes through some form of censorship process. Although very minimal spam got through to me while there, a lot of legitimate email also did not, and I had trouble getting things sent out.

What really struck me about Beijing, though, was the level of construction activity that was occurring, much of which I am sure is related to the 2008 Olympics. In one of the business areas of the city where I stayed, I could count around 30 tower cranes just by looking out the hotel window. Buildings were going up all over. Fascinating for me, of course, and great for manufacturers such as Manitowoc, but why bring it up?

I think that, in terms of the global economy, the crane situation reflects much of what is going on with China – the growth of the Chinese economy is putting pressure on the availability of resources throughout the world with a concomitant increase in prices. Going back to the crane example, for instance, the Miami Herald recently noted the high demand for tower cranes in South Florida, where some rental companies have deployed 30-50% of their crane fleets. According to a quote from a developer in the article, ''In the old days, you could always get one. But today we're dealing in a commodities trade environment.'' This high demand throughout the world has increased lease rates for these cranes to around $30,000 per month.

The same thing can be said for oil, steel, and other metals. Chinese demand has caused the prices of most commodities to increase substantially. Iron manhole covers now are being stolen faster than they can be replaced. Here in Salt Lake, we have a problem with people stealing the soccer goal posts and selling them for scrap. Certainly, we all feel the effect of high oil prices. True, there is a lot of opportunity in China, but this growth also is pointing out some harsh realities regarding limited resources that we tend to ignore. There is only so much oil and iron ore in the Earth. How are these nonrenewable resources going to be allocated, and will this cause a shift in power between the resource-rich and those without? Just think Russian natural gas and Venezuelan oil.

If you are interested in China and want to get a good overview of how leasing works there, you can read the Equipment Leasing & Finance Foundation report that I and several other Alta principals authored. that I and several other Alta principals authored:

http://leasingnews.org/PDF/China_Report_FINAL.pdf

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