Late September update: cap-and-trade, UK-China ties, and Thucydides
Selected articles (subjective list) on the Chinese economy
Previous lists from this month are here:
The past year has seen several examples of Beijing’s brand of climate detente. The first came in 2014 when China set itself the target of stemming any rise in carbon emissions beyond 2030. Last week, on a visit to the US, President Xi went further, committing $3.1bn in finance to help low-income countries least able to help themselves. He also committed China to launch a national carbon market by 2017. ...
... China is demonstrating leadership at a time when the climate agenda has lacked champions willing to take political risks. Beijing’s initiative adds momentum to the discussions ahead of the international climate conference in Paris at the end of the year. Its engagement should help to avoid a re-run of the fiasco that overtook the last climate meeting in Copenhagen in 2009. ...
... Global climate politics since the stalemate in Copenhagen has been remorselessly gloomy. China’s willingness to play a part is a rare bright spot in an otherwise dim picture.
Although many economists believe that cap-and-trade systems represent the cheapest way to reduce emissions, their track record in the real world is mixed. The EU carbon market, for instance, crashed early on owing to an oversupply of allowances, and even today prices remain around €8 (US$9) per tonne of carbon dioxide — too low to spur a major industrial revolution.
China has been experimenting with carbon trading at the provincial and city level, but implementing a national system could be particularly difficult.
Josh Margolis: Why China’s New Cap and Trade Plan is the Real Deal
Skeptics of China’s commitment may overlook what might have motivated China to move forward with such a cutting-edge national policy. Controlling climate pollution is one goal, for sure. And a national cap and trade policy also demonstrates China’s commitment to addressing a global problem as world leaders prepare for the Paris climate negotiations in December. But there are other compelling reasons as to why we should believe that China means what it says: Beijing is also motivated by enlightened self-interest.
Kate Gordon, Paulson Institute: Congress runs out of excuses as China sets the pace on climate
We’ve been hearing for years from some members of Congress that the U.S. would launch into a serious effort to address climate change “if only China would act.” After this week, it looks like it’s time to make good on that promise.
The 2017 start date for a national emissions trading scheme announced to great fanfare in Washington on Friday, only referred to a preliminary regulatory rollout, people with knowledge of China’s plans said on Monday. ...
... “It’s just the beginning, the rollout,” said Yang Fuqiang, a Beijing-based senior adviser to the National Resources Defense Council, a US campaign group. “It’s not to say the whole country will be trading.” ...
... A national system could help realise China’s complex plans for limiting emissions in prosperous eastern cities while encouraging coal-based industry in the poorer central and frontier regions. For instance, a coal-fired plant in the desert region of Xinjiang could sell its excess credits to an aluminium smelter in coastal Shandong, where regulations are stricter.
At the moment, quotas are distributed to local governments. “That’s still effective if you favour administrative ways, but if you want to build a carbon trade market, this will constrain cross-regional trade,” Mr Zou said.
The current wave of Chinese foreign direct investment began in 2010 and since then California, the largest state economy, has notched up the most deals with 211 transactions. In the first six months of this year, Chinese companies across the US spent $6.4bn on 88 transactions, the highest half-year figure on record, according to Rhodium Group, a research company.
... The largest Chinese transaction in the first half of the year was Anbang Insurance’s $1.95bn acquisition of New York’s Waldorf Astoria hotel — a deal that has resulted in Mr Obama opting not to stay at the hotel when he attends the UN general assembly next week. Hospitality accounted for the biggest share of investment along with property, technology and financial services, says Rhodium.
... Jon Huntsman, a former US ambassador to China and 2012 Republican presidential contender, said Beijing’s growing economic and military might meant it would inevitably provoke “nativist” talk. “Primaries just tend to bring out that language and there’s not much anyone can do about it,” he said recently. “Our friends in China have learned . . . not to take it at face value.”
The Obama administration views its relationship with China as “the most consequential bilateral relationship in the world,” Ben Rhodes, deputy national security adviser for strategic communications said during a press call on Tuesday.
China’s pledge to work with the U.S. to reduce carbon emissions with the aim of preventing climate change is one the top examples of diplomatic progress, says Jenn Turner, director of the China Environment Forum at the Woodrow Wilson International Center for Scholars. China in November pledged that its carbon emissions will peak by 2030 -- a significant commitment considering it draws about 80 percent of its electricity from coal. China is investing more in renewable energy not just to show its commitment ahead of the United Nations Climate Change Conference in December, but to counter the “serious air pollution” in its cities, Turner says.
“We see China as the number one in wind energy and they are soon going to surpass Germany in use of solar panel energy,” she says.
The Thucydides Trap: Are the U.S. and China Headed for War?: "In 12 of 16 past cases in which a rising power has confronted a ruling power, the result has been [war]."
Americans have a tendency to lecture others about why they should be “more like us.” In urging China to follow the lead of the United States, should we Americans be careful what we wish for?
... The rise of a 5,000-year-old civilization with 1.3 billion people is not a problem to be fixed. It is a condition—a chronic condition that will have to be managed over a generation. Success will require not just a new slogan, more frequent summits of presidents, and additional meetings of departmental working groups. Managing this relationship without war will demand sustained attention, week by week, at the highest level in both countries. It will entail a depth of mutual understanding not seen since the Henry Kissinger-Zhou Enlai conversations in the 1970s. Most significantly, it will mean more radical changes in attitudes and actions, by leaders and publics alike, than anyone has yet imagined.
Jean Pisani-Ferry: What Wile E. Coyote Would Say about Extrapolating Trends
(Misleading headline, but a useful chart) China Industrial Profits Fall Most Since 2011 as Growth Ebbs
Reallocating resources from export-oriented industries to service activities could cause an irreversible drop in productivity. Likewise, while policies that encourage firms to increase wages will raise household income and domestic consumption, wage increases can erode export competitiveness and choke off inflows of foreign direct investment. With rebalancing policies alone unlikely to increase average output growth substantially, enhancing productivity iscrucial to China’s long-term prosperity.
The businessman, Yang Jinjun, is the first among 100 people accused of corruption and pursued abroad by China this year to be sent back from the United States, China’s chief anticorruption body, the Central Commission for Discipline Inspection, said in a statement.
Mr Osborne said he believed Britain and China stood on the brink of “a golden decade” of co-operation, adding: “No economy in the world is as open to Chinese investment as the UK.”
Bagehot: The Osborne Doctrine
Mr Osborne is perhaps the West’s most pro-Beijing statesman of his stature. He is clearly exhilarated by the country’s boom. Sitting down with Bagehot in the British ambassador’s residence, the chancellor animatedly describes his spell backpacking around China in the early 1990s; contrasting the “staid and dull” capital of that era to the buzzing metropolis of today, in the trendy, high-tech corners of which “you could be in San Francisco”. Since 2012, when Mr Cameron’s meeting with the Dalai Lama froze relations between the countries, the chancellor has been the face of the thaw. Britain should be “China’s best partner in the West”, he argues, promising a “golden decade” of co-operation.
China’s population consumes just 4.5 billion cups of coffee a year, well below North Americans, who drink 133.9 billion cups a year, according to data from Euromonitor International. From 2014 to 2019, Chinese coffee consumption should rise 18%, said Euromonitor, while U.S. growth is expected to be 0.9% in that time. ...
... Barclays said coffee tops a list of commodities, including gold and silver, that could benefit as China shifts to a more consumption-oriented economy from one driven by exports and state investment. The brokerage forecasts coffee import growth in the period to 2020 at “more than three times the rate of the past five years.” ...
... Starbucks has more than 1,700 stores in mainland China and hopes to exceed 3,400 in the country by 2019.
GDP per hour worked rising 6% annually - China. In Europe? Take out your magnifying glass... (OECD report)
The number of cities in China with a population of more than a million has leapt from 16 in 1970 to 106 in 2015 (link)
Gideon Rachman: The ideas that divide China and America
[There is] the instinctive American belief in universal values such as freedom and democracy — that should, ideally, be applied everywhere. The Chinese, by contrast, are particularists. They believe that what is right for China is not necessarily right for the world, and vice versa. This difference in mentality underpins America and China’s contrasting approaches to intervention in foreign conflicts and the protection of human rights.
And then there are similarities:
Both countries have something of a Middle Kingdom mentality. The idea of the Middle Kingdom is rooted in China’s past. One historian describes it as “the extraordinary conviction of the Chinese people that their land is the centre of everything”. This conviction was shaken, a little, by the “century of humiliation” that began in the 1840s, when European and Japanese imperialists defeated China in battle. But a resurgent China is now sometimes accused of returning to a Middle Kingdom mentality, particularly in its treatment of the rest of Asia.
The US, meanwhile, has become accustomed to its role as the world’s sole superpower. American foreign policy is still based on the belief that the US is the “indispensable power” in ensuring global order. American presidents, like Chinese emperors of old, are used to receiving extravagant tributes from foreigners.