China’s crisis: a development perspective (part two)

China brings great economic opportunities to the developing world, but there are mixed reactions to the country’s emergence on the world stage. John Warburton & Leo Horn conclude their two-part article.

From a resource consumption perspective, China’s role as a major importer of primary commodities, manufacturer and subsequent exporter not only provides the world with affordable goods, but provides huge opportunities for commodity exporters, primarily in the developing world.

China is now one of the most important global buyers of oil, minerals and timber, and agricultural commodities such as soybean and palm oil. China has huge cash reserves, and Chinese companies often outbid western competitors for oil and mineral concessions, sometimes paying very high premiums, which should benefit the producing countries.

Africa has been a particular focus for China, and economic relations between many African countries and China have been growing very rapidly. In 2006, China was Africa’s second largest trading partner after the US. Two-way trade between China and Africa increased from just under US$10 billion in 2001 to US$55.5 billion by 2006, with an overall balance of trade in 2006 of US$2.1 billion in favour of Africa. China’s relatively open trade regime, their highly competitive construction industry, low-cost trade and investment financing, and, more broadly, China’s internal development experience, all offer a major opportunity for the development of African countries. In turn, China benefits both from Africa’s growing demand for manufacturing support and infrastructure construction and from its export of abundant commodities and resources.

But there are dangers as well. China is investing in countries such as Sudan, Zimbabwe and Burma, where conflict and human rights violations are rife. Such investment weakens pressure for reform, as well as exposing China to international condemnation. In fact, not all the criticism of China’s operations in Africa and elsewhere is international – domestic resentment is also building for various reasons, as was seen recently in this year’s Zambian elections, when a presidential challenger took a popular anti-China stance, or when Chinese oil installations have come under attack in Nigeria, Ethiopia and the Darfur region of Sudan.

China’s investments in soybean and palm oil, and its imports of timber from overseas, is a contributory factor to deforestation (legal and illegal) in countries as near as Indonesia and as far away as Brazil. China is itself gradually realising that it cannot maintain its long-standing tradition of non-interference in sovereign affairs. This is an appropriate evolution of what has been a consistent, and, in many regards, beneficial approach to foreign affairs over the last 50 years, enshrined in the Five Principles of Peaceful Coexistence, whereby countries large and small are treated equally and with respect for their sovereignty.

Ultimately, of course, it will also be up to the commodity-exporting countries themselves to improve their domestic, social and environmental management systems, as well as to negotiate better deals with China that raise social and environmental standards, employ local labour and result in more processing of raw materials within their own countries.

Secondly, China’s environmental crisis has direct negative impacts globally. China’s pollution does not stop at its borders. Propelled eastwards by prevailing winds, polluting emissions and dust are carried as far as the United States, and cause significant damage to Korea and Japan en route. The stakes are even higher for China’s immediate neighbours. China provides the headwaters for many of the great Asian rivers, including the Mekong, Brahmaputra and Salween. If China’s own great rivers such as the Yellow River and Yangtze River are included, 47% of the world’s population lives within these river basins. It is particularly significant therefore that China dumps 70% of its industrial and domestic waste untreated into these rivers, and that it dams and diverts them (half of all the world’s dams are in China). On top of this, climate change is threatening the Himalayan glaciers that supply them.

A third aspect that has to be considered is the extent to which the current resource consumption and pollution trends will continue. Will the levels of most pollutants decline, in line with Chinese targets? Will resource consumption become more sustainable as manufacturing efficiencies improve? Will the increases in efficiency be swamped as hundreds of millions of Chinese are further lifted out of poverty and become consumers more akin to their western counterparts? Will a particular resource – energy or water – impose a strict constraint on further growth?

China’s per capita ecological footprint may be small, but its overall footprint is huge. Certainly, the absorptive capacity of the earth will be breached if China moves towards the same footprint as the US, but preventing this scenario will require lifestyle changes as much in the west as within China.

However optimistic one might be about China’s ability to improve the efficiency of resource utilisation and reduce pollution, the one pollutant that will be the most difficult to address is carbon dioxide. China is now the largest emitter of greenhouse gases with emissions from coal fired power plants and from transport predicted to increase hugely over the next 20 years. However, on a per capita basis this is just 35% of the UK equivalent figure.

 “The magnitude of what is happening in China threatens to wipe out what is happening internationally,” was how David Fridley, leader of China Energy Group at the Lawrence Berkeley National Laboratory, put it when commenting on reports that China will overtake the US as the largest emitter of greenhouse gases by 2008.

The Chinese government recognises the broad threat of climate change and accepts the science, although it tends to perceive limits on emissions as a potential threat to continued economic growth and has therefore been unwilling so far to consider emissions reductions targets. With justification, it believes the developed world is largely responsible for current levels of greenhouse gases, that developed countries need to reduce emissions and that any restrictions on carbon emissions should be on a per capita basis.

Despite these reservations, China’s position on climate change is evolving rapidly, and awareness across government is growing. The two targets China has set as part of its energy security strategy will have a significant impact on reducing the growth in emissions, specifically on reducing the energy intensity of China’s economy by 20% by 2010 and increasing the use of renewables from 5% to 20% of energy production by 2020. The government has developed 10 policy initiatives to meet these targets, and, this year, has published a National Impact Assessment and a National Climate Change Programme, and has established a cross-ministry National Advisory Panel on Climate Change.

Clearly, China’s involvement and leadership is crucial in the ongoing international negotiations around climate change, including the new framework that will be developed to stabilise global levels of greenhouse gases after the Kyoto Protocol expires in 2012. In turn, this relies upon the international negotiations being consistent with China’s efforts to address poverty alleviation and promote employment generation, infrastructure development and livelihoods. Of course, there are also enormous benefits to China in the global efforts to address climate change through the prioritisation of energy efficiency, clean energy and a stable and functioning carbon market. These are in line with China’s domestic priorities, and indeed, the scale of Chinese investments in energy mean that whatever technologies it develops in clean and renewable energies are likely to become global standards. China could also be the leading manufacturer of renewable energy plants, at a price affordable to other developing countries.

Growth, interdependency and dialogue

These four issues, together with others that we have not had room to address, such as China’s cooperation in international environment and development issues, suggest a huge interdependency between China and the world’s environment and development. 

The challenge to China presents a classic case of poverty reduction through industrialisation and manufacturing, requiring a difficult balancing act between environmental degradation, increases in living standards and long-term growth.

China cannot afford to slow down the growth of its economy. Instead, it needs to significantly grow its economy to generate funds to update and retrofit its technologies and ageing plants, to create jobs to absorb the urban unemployed, to provide stronger urban infrastructure, institute banking reforms and distribute the new wealth more equitably.

Caution is required when commenting upon China’s environmental crisis – not only to recognise of the scale of the challenge and acknowledge that China has already made great efforts, but also to take into account the huge interdependency between China and
the rest of the world.

Engagement with China on any of these issues requires a positive approach, an acceptance that there are no simple, technological or even institutional, answers that can be crudely imposed upon China, and a willingness to discuss these issues in a spirit of mutual lesson-sharing and collaboration.

John Warburton is the senior environment adviser for the UK Department for International Development (DFID), and is currently based in China.  He is an environmental professional with 20 years of experience in the public, private and voluntary sectors, and has been working on the integration of environmental sustainability into development planning in many countries in Africa and Asia.

 Leo Horn is national coordinator for the UK-China Sustainable Development Dialogue, and an environmental economic consultant to the World Bank. He was previously working as an environmental economic adviser at DFID China, as well as seconded expert to the China Council for International Cooperation on Environment and Development (CCICED), a high-level advisory body to the Chinese Government. He holds degrees from Oxford, Cambridge and Sussex Universities, in Economics and International Relations.

The opinions of the authors are their own, and are not necessarily those of DFID.

Homepage photo by Michael Jefferies via Flickr