Alexander White tackles two issues that seem too hard for our political system to handle: China and climate change. China’s response to climate change has shaped the course of climate negotiations. They were accused of stymieing negotiations at Copenhagen, and conservatives have used China’s reticence to adopt binding carbon reduction targets as an excuse for taking no action at all. But as China becomes the world’s largest carbon polluter, it is also on track to become the largest global producer of renewable energy. It’s a catch-22 for the Chinese Government – continued growth is essential to reduce domestic poverty, while the effects of climate change threaten its national security.
What is motivating the Chinese leadership and what can Australia do?
In 2006 China overtook the United States of America to become the world’s biggest carbon pollution emitter. Given the growing urgency in ensuring global CO2 (carbon dioxide) emission abatement, understanding China’s economy and its relationship to carbon emissions is essential. In the negotiations for a new Kyoto-style international agreement on climate change, China’s position on reducing its CO2 emissions, and other nation’s positions to China form major hurdles for consensus. A key contention at Copenhagen – and since – was the issue of mandatory emissions reductions.
The lack of any mandatory CO2 reductions from developed countries, such as China and India, has until recently been the largest stumbling block to the United States ratifying the Kyoto Protocol. As responsibility for CO2 emission reductions in the Kyoto Protocol have predominantly rested with developed countries, leaders of those countries have often relied on China’s refusal to accept mandatory emissions reductions as an excuse for taking no or little action.
In the lead up to the ill fated Copenhagen negotiations last December, China’s recent public statements on CO2 emission abatement were very strong, and other major emitters, including the US, took a more conciliatory tone towards compulsory carbon cuts for China. US delegation head, Jonathan Pershing, said the United States wanted developing countries to commit to action, not to guaranteeing the cuts in emissions that would follow those actions.
China’s Economic Growth
Understanding the reasons behind China’s economic growth is essential for understanding China’s CO2 emissions and their negotiating position when it comes to CO2 reductions.
China has experienced a rapid growth in the size of its economy since reforms to agriculture started in 1978, and continued in 1984 when the first non-state agricultural enterprises were established. China is now the fourth largest economy and third largest exporter in the world.
This rapid growth is rooted in its economic liberalisation, especially in its labour market. Economic growth, measured in GDP has averaged 9.5 percent each year since 1978. The result for the Chinese people is a massive increase in per capita income: 239 percent for farmers and 152 percent for urban households. China’s per capita wealth is still low by developed country standards.
The second key element to China’s economic growth was exports, rising from $10billion in 1978 to $149billion in 1995. Non-state enterprises form the overwhelming majority of the export sector.
China’s industries are very vulnerable to import-induced shock, and the two-track approach has cushioned the Chinese labour market since its inception (a policy known as the “iron rice bowl”). In response to various economic shocks, for example the Asian Financial Crisis and China’s accession to the WTO, authorities in Beijing have embarked on prolonged macroeconomic reform and rounds of economic stimulus, cutting inflation, investing in capital construction, minimum wage rises, and reducing interest rates. Unemployment is widely considered the major threat to China’s economic and political stability.
China and CO2 Emissions
The growth in China’s emissions has outstripped most projections, with expectations that China would exceed the USA to become the world’s largest emitter of CO2 by around 2020; China passed that threshold in 2006.
The bulk of China’s carbon dioxide emissions come from its coal-fired power plants. Coal equivalent energy consumption doubled from 1980 to 2002, and then doubled again from 2002 to 2006. Agriculture (14.9 percent), industry (6.97 percent) and waste (4 percent) make up the next largest emitting sectors. Capital construction represents a half of the growth of China’s emissions: it is estimated that half of all the world’s new houses will be built in China in the next decade.
As a non-Annex B country in the Kyoto Protocol, China has no obligation to reducing emissions. However, Beijing’s chief negotiator at Copenhagen, Li Gao, announced that China would reduce its emissions, but will not accept binding targets.
A third of all China’s CO2 emissions – and fully half of China’s recent increase in emissions – are due to producing goods for export to developed countries.
The Kyoto Protocol established the convention that carbon emissions should be counted towards producing rather than consuming countries. Many developed countries have a large comparative advantage when it comes to the production of carbon-intensive products, and “large amounts of emissions would be avoided if certain products were produced elsewhere and imported to China”. Beijing recently announced it wants a re-think on how responsibility is determined for emissions as a result of products created for export.
China must continue its high levels of economic growth simply to accommodate new entrants to the workforce. Approximately 15-20 million people move from rural to urban areas each year. Even a small decrease in rates of growth would result in significant unemployment and potential social and economic disruption. Economic modelling on carbon emission reduction indicates that the early years of any scheme would see a reduction in growth, although growth would be above the baseline in later years.
Bearing the Brunt of Climate Change
China’s economy is especially vulnerable to climate change, despite its “growth miracle”. Gordon Chang wrote that China’s accession into the international community, through the WTO and other institutions, will “shake China to its foundations”:
China’s economic and social stability is built on the need for continued growth of around 9 percent per annum.Impacts from climate change threaten most of China’s eastern provinces, including its mega-cities; rising seawater will result in the contamination of drinking-water supplies. As the Himalayan glaciers melt the water supply for hundreds of millions of Chinese people is at risk.
A great deal of discourse on responsibility for climate change mitigation and adaptation is based in ethics. The basis of liberal economics is that “if the fruits of a society’s economic development cannot be shared by all, it is morally unsound and risky, as it is bound to jeopardize social stability.” The global economic system that has fostered disregard for the consequences of runaway CO2 emissions is being confronted by the values and ethics of addressing climate change.
The issue of emissions reductions and other mitigation efforts is beset with equity challenges, intersecting with structural inequalities. There are many different philosophical approaches to answering the question of historical responsibility, and how that should affect different countries’ mitigation efforts.
China has repeatedly proposed “common but differentiated responsibility”, calling on developed nations to take more responsibility for their historical emissions, while still acknowledging responsibility for current emissions.
Chinese climate negotiator, Yu Qingtai sums up the problem of historical responsibility:
There is still a fundamental difference between China and the industrialized nations. People look at our impressive growth rates but they forget that we are still a developing nation with tens of millions of people still living in poverty. Western countries are responsible for most of the accumulated CO2 in the atmosphere. Their historic responsibility is undeniable but still some Western countries try to blame the developing world in order to distract attention from their own failures.
The US until recently has responded that responsibility should be calculated from contemporary, rather than historical standards. Refusal to take responsibility for past emissions, and insisting that major developing country emitters such as China and India reduce their emissions significantly, were reasons that the Bush administration refused to ratify the Kyoto Protocol.
The historical question of emissions is also clouded by the fact that massive growth in emissions in developing countries has been driven by the export sector in those countries. Effectively, the developed world has double-dipped: they have enjoyed unrestrained domestic emissions growth and been able to export many emission-intensive industries to developing countries.
Leadership in Mitigation Efforts
Do developed countries have a duty to assist China by “financing, technology transfer and insurance”? On leadership in global efforts to mitigate climate change, Thomas Friedman recently said: “I think my country needs… five years to invent all the clean power and energy efficiency tools that you, China, will need to avoid choking on pollution and then we are going to come over and sell them… to you.” This sums up in part the developed world’s attitude towards mitigation efforts. The European Union and the USA have certainly bought into this attitude, investing in technology transfer in areas such as carbon capture and sequestration.
There are several proposals on how the rights and responsibilities of developed and developing countries in sharing the responsibility of mitigation:
One possibility is to acknowledge current levels of greenhouse gas emissions (or a proportion of them) as rights as implied by the Kyoto Protocol. Secondly, the contraction and convergence argument proposes a transition from the current income-based distribution of emissions to an equal per capita distribution. Thirdly, it is possible to allocate emission rights according to the countries’ historical responsibility for greenhouse gas emissions.
Discussion over a future Kyoto-style international agreement on climate change has been stymied: the USA refusing to agree to reduce emissions until China does so, and China refusing to do so until the US and other developed countries accept their historical responsibility for emissions. Recently however, both countries’ positions have moderated.
President Obama’s CO2 reduction legislation may have been set back significantly following his loss in the recent mid-term elections, but work continues to advance in states like California. Obama’s legislation would have committed the US to a 17 percent reduction in CO2 emissions by 2020 and 83 percent by 2050. Washington has also withdrawn from its long-held position that China and other large developing nations make cuts to their CO2 emissions. Instead of binding targets, they would merely need to carry out “actions” that would reduce emissions.
China too has acknowledged the prominent role of large developing countries in reducing emissions, while maintaining the principle of “common but differentiated responsibilities”. Recently, Su Wei, a leading Chinese climate negotiator said CO2 reductions may form part of the next Five Year Plan: “China hasn’t reached the stage where we can reduce overall emissions, but we can reduce energy intensity and carbon intensity.” China has also started to invest heavily in renewable energy, with a goal to match the EU in renewable energy usage. China’s recent economic stimulus likewise invested US$30billion (out of US$590 billion) on environmental projects and reducing greenhouse gas emissions, making it a global leading producer of energy from renewable sources.
China faces a disproportionate burden from climate change, economically, socially and environmentally. As a developing country, China is at the forefront of discussions around equitable mitigation and adaptation, and as the world’s largest CO2 emitter it faces enormous global pressure to commit to binding emissions reductions.
China’s massive economic growth has contributed to the massive growth of CO2 emissions, largely driven by coal fired power generation, construction and manufacturing.
The theories and principles of climate change justice and equity are regularly cited by China has long resisted pressure from the US and other countries to commit to binding reductions on the basis of developed nations’ historical responsibility for CO2 atmospheric concentration.
China has another reason for resisting binding targets on emissions cuts, and that is concern that restricting emissions would have negative economic consequences. Some economic modelling, as noted earlier, demonstrates that CO2 restrictions on the Chinese economy would result in short-term decline in growth – although growth would be above-trend in the medium to long term. Susceptibility to a slowdown in economic growth has potentially devastating political consequences for the Chinese leadership. Nevertheless, Beijing is investing in technology to reduce energy consumption intensity, and has even suggested that mandatory reductions in CO2 emissions may be included in the next Five Year Plan – meaning cuts by 2020.
What we can do
In Hugh White’s Quarterly Essay, Power Shift, he argues that we must fundamentally re-evaluate the balance of power between China and the US. For Australia this means assessing China’s geopolitical role in the region, as well as China’s growth. Our own economic growth is intimately tied with China’s – thanks to their insatiable demand for our mineral resources.
Australia not only exports the iron ore China needs to grow, but also our intellectual capital. Not only do Chinese students make up a sizeable portion of international enrolments, but many innovations in the area of renewable technology are now being snapped up by Chinese energy giants.
In only a few years, the US’s uncontested primacy in the field of renewable energy will be overshadowed by China. Australia already lags significantly.
With our abundant natural renewable resources and innovation from our universities and research institutes like CSIRO, Australia could aspire to become a “renewable energy superpower”. Matching the pace of China’s renewable energy investment would rapidly help transform our own economy and society to a low-carbon one, while producing more sustainable export markets to China in the form of expertise, technology and education.
Adopting high unilateral carbon reduction targets, and passing a strong carbon price through the Parliament in 2011 would reposition Australia in our region. Just as we led the West’s engagement with China under Whitlam, our actions in the second decade of the 21st Century could contribute to the leadership we need to help solve the climate crisis.
 David Adam and Suzanne Goldenberg, “US lets Beijing off greenhouse gas cuts”, The Guardian Weekly, June 2009, Vol 181, No 1, page 6.
 Julian Borger, Jonathan Watts, “China’s big plans for wind and solar power”, The Guardian Weekly, June 2009, Vol 181, No 1, page 6.
 “US: China need not pledge carbon cuts”, United Press International, 12 June 2009, available online: http://www.upi.com/Top_News/2009/06/12/US-China-need-not-pledge-carbon-cuts/UPI-97231244865458/.
 Adam and Goldenberg, page 6.
 J. D. Sachs and W. T. Woo, “China’s Economic Growth After WTO Membership”, Journal of Chinese Economic and Business Studies, Inaugural Issue, September 2002, page 2.
 D. Guan, K. Hubacek, C. L. Weber, G. P. Peters, D. M. Reiner, “The drivers of Chinese CO2 emissions from 1998 to 2030”, Global Environmental Change, Vol 18, Issue 4, October 2008, page 626.
 Sachs and Woo, 2002, page 3.
 Wing Thye Woo, “Chinese Economic Growth: Sources and Prospects”, Economics Department, University of California, October 1997, page 3.
 J. D. Sachs and W. T. Woo, “Understanding China’s Economic Performance”, Working Paper 5935, National Bureau of Economic Research, February 1997, page 10-11.
 Ibid, page 11.
 Sachs and Woo, 2002, page 7 and page 27.
 R. F. Garbaccio, M. S. Ho, D. W. Jorgenson, “Controlling Carbon Emissions in China”, Kennedy School of Government, Harvard University, 1998, page 1.
 This date is debated, and some projections put China as overtaking the USA in emissions in 2008, rather than 2006 (see D. Guan, K. Hubacek, C. L. Weber, G. P. Peters, D. M. Reiner, “The drivers of Chinese CO2 emissions from 1998 to 2030”, Global Environmental Change, Vol 18, Issue 4, October 2008, page 627).
 Guan, Hubacek, Weber, Peters, Reiner, 2008, page 632.
 “Emission Summary for China”, UNFCCC Secretariat, page 1.
 Guan, Hubacek, Weber, Peters, Reiner, 2008, page 629.
 Duncan Clark, “China’s China’s increasing carbon emissions blamed on manufacturing for west”, The Guardian, 23 February 2009, available online: http://www.guardian.co.uk/environment/2009/feb/23/china-carbon-emissions.
 Guan, Hubacek, Weber, Peters, Reiner, 2008, page 633.
 Jonathan Watts, “Consuming nations should pay for carbon dioxide emissions, not manufacturing countries, says China”, The Guardian, 17 March 2009, available online: http://www.guardian.co.uk/environment/2009/mar/17/climate-change-china.
 Garbaccio, Ho, Jorgenson, 1998, page 10.
 Gordon Chang, The Coming Collapse of China, 2001, page xviii.
 John Kerry, “US: Chairman Kerry Addresses Council on Foreign Relations”, ISRIA, Geopolitical and Diplomatic News, June 2009, available online: http://www.isria.com/pages/16_June_2009_34.htm.
 Wen Jiabao, “See China in the Light of Her Development”, Chinese Premier’s speech at Cambridge University, February 2009, available online: http://www.chinese-embassy.org.uk/eng/zyxw/t535203.htm.
 See “Open letter to G-20 Heads of State from an international global coalition for a green economy, comprising environment, development, business and labour groups”, March 2009, available online: http://cmsdata.iucn.org/downloads/coalition_letter_to_g20_heads_of_state.pdf.
 “Key Message 4: Equity Dimensions”, Synthesis Report from Climate Change, Global Risks, Challenges & Decisions, Copenhagen 2009, University of Copenhagen, Denmark, page 24.
 “China urges developed nations to fulfill obligations in fighting climate change”, XinhuaNet, June 2009, available online: http://news.xinhuanet.com/english/2009-06/13/content_11537150.htm.
 Quote from Teng Fei, in “Developed countries responsible for climate change: Chinese expert”, XinhuaNet, June 2009, available online: http://news.xinhuanet.com/english/2009-06/05/content_11495817.htm.
 William Bleisch, “China ‘unfairly seen as eco-villain’: Viewpoint”, June 2009, available online: http://news.bbc.co.uk/2/hi/science/nature/8100988.stm.
 Paavola & Adger, “Fair adaptation to climate change”, page 599.
 Thomas Friedman, quoted in “Red, green and black: China and the environment”, The Guardian Weekly, June 2009, Vol 181, No 1, page 22.
 H. Josef Herbert, “Study: US technology key to China and climate”, The Associated Press, June 2009, available online: http://www.google.com/hostednews/ap/article/ALeqM5hQyQMarv1iBI2JKk56Hyhr5O0zpAD98TKJ500. See also Pete Harrison, “Europe to offer China help in burying CO2 emissions”, Reuters, June 2009, available online: http://www.reuters.com/article/latestCrisis/idUSLI320173.
 Paavola & Adger, “Fair adaptation to climate change”, page 595.
 Richard Cowan, “House may vote on climate change bill next week”, Reuters, June 2009, available online: http://www.reuters.com/article/environmentNews/idUSTRE55F5UC20090616.
 “US: China need not pledge carbon cuts”, United Press International, June 2009, available online: http://www.upi.com/Top_News/2009/06/12/US-China-need-not-pledge-carbon-cuts/UPI-97231244865458/.
 Li Keqiang, quoted in “China calls for substantial co-op with U.S. on climate change”, XinhuaNet, June 2009, available online: http://news.xinhuanet.com/english/2009-06/08/content_11509757.htm.
 Jonathan Watts, “China considers setting targets for carbon emissions”, The Guardian, April 2009, available online: http://www.guardian.co.uk/world/2009/apr/19/china-environment-kyoto.
 Julian Borger and Jonathan Watts, “China launches green power revolution to catch up on West”, The Guardian, June 2009, available online: http://www.guardian.co.uk/world/2009/jun/09/china-green-energy-solar-wind.
 The Climate Group (China), China’s Clean Revolution, August 2008, St Ives Westerham Press Ltd, page 28, available online: http://www.theclimategroup.org/assets/resources/Chinas_Clean_Revolution.pdf.