China Comment

Energy, Environment, and Economy

Post-Olympic Pieces

Here’s a couple of interesting “Olympic-Aftermath” posts from around the internet, and below is some value-added analysis:

* The Olympic Sponsor – Biggest Winners and Biggest Losers
All Roads Lead to China
Discusses how sponsors like Lenovo and GE may have benefitted from their Olympic sponsorship.

*Yeah! I’m a Llama Again
Silk Road International
Great Olympic-review/overview piece with even better links that are worth consideration. (Such as this harsh piece by TimesOnline (Some of its assertions might be treated with a grain of salt though- and it should be noted that the British Times appears to have an almost pathological dislike for China’s regime), and a thoughful piece in the Washington Post.)

* The Great Convergence?
The China Beat
Compares similarities between China and the United States and coverage of the Olympics.

* Making sense of what comes after the Olympics
Michael Pettis at Asia EconoMonitor
Discusses China’s still-weak stock-market, declining growth in expansion of tax revenues, and speculates on near-future performance of the Chinese economy.

*Rio Tinto predicts post-games boom
By Rebecca Bream and Chris Flood; Financial Times
The Financial Times reports how Rio Tinto believes commodity prices will rise again, amid a post-Olympics construction boom as transportation/supply chains are untangled, factories are reopened, and trucks get back onto the streets… This would probably happen starting sometime around mid-September after the Paralympic Games are finished.

Olympic Pollution: Comparisons
chinacomment
If you wanted to compare pollution pre-Olympics, or to compare Beijing’s pollution to Olympics’ pollution in Athens, or Barcelona, this is an excellent resource.

Wireless Data Roaming Wins Gold During Beijing Olympics
MarketWatch
Ever wondered how much information was sent over roaming phones during the Beijing Games? Now you can become enlightened. “[A] surge in wireless data roaming traffic exceeding 40 percent over the same period of days the month before. This increase in roaming traffic resulted in more than 332 GB of data being exchanged between 225 mobile operators in 106 different countries on the Aicent network. This increase in wireless data roaming is the equivalent of the content in books stored on nearly two miles of shelves.”

Conclusion… What Does This Mean?
Links without analysis are only of marginal use, so here’s some value-added content.

* Rio Tinto is probably right to believe demand in China for metals and resources will continue, despite a weak international economy. And if other countries’ demand for resources drops, China has the cash to step in and bargain-shop.

* A weaker international economy will harm China’s export-market, but the PRC appears willing to focus policy on expanding economic growth. Brad Setser of the CFR (Council on Foreign Relations) persuasively argues that China’s exports have not yet been significantly harmed by the global slowdown.

It appears RMB appreciation will slow if the Chinese continue to prop up their exporters. Michael Pettis, who specializes on Chinese Financial Markets and teaches at Beida in Beijing, believes that China might also sustain high inflation in order to support its exporters.

It is surprising that exporters are still maintaining at least a limited amount of strength, considering that the new Labor Law requires employers to pay workers more and treat them better, and considering that new tax provisions do away with some benefits for foreign companies based in China. A fuller examination of China’s economic future and the consequences of its economic policies definitely merits more in-depth future analysis that will certainly take a good deal of time to properly treat.

* And The China Beat reminds us that in many ways, China and the United States have similarities… things that often go unnoticed when the “China Threat Theory” is promulgated, or China’s collectivist culture is over-stressed, or when commentators focus on China’s “communism.”

* And, to close, I welcome your thoughts on where China’s economy is going post-Olympics or if the Olympics really changed anything about China in the long run. (Bonus Article: “Orville Schell discusses the future of Chinese nationalism and Olympic changes. (Written Before the Games)”) Thanks for reading.

29 August, 2008 Posted by | China Economy, China Future | , , , , , , | 1 Comment

Xinjiang’s Energy Resources

Resources buried under Xinjiang account for over 20% of China’s future petroleum reserves, over 40% of its coal reserves, and Xinjiang has potential for large uranium deposits. Recent terrorist attacks and instability in Xinjiang makes it worthwhile to examine just what the Chinese have of interest in the region. Below, I explore the importance of Xinjiang’s security to Beijing’s energy policy. (Examination of a political point-of-view calculation will have to wait until later.)

An Overview of Xinjiang’s Energy Resources

“Xinjiang’s annual oil and gas equivalent output… ranks the first in the country… The third national resources evaluation shows that: Xinjiang’s total oil and natural gas resource reserves exceeded 30 billion tons… Recently, Xinjiang has been producing 75,000 tons of crude oil daily, occupying 14.4 percent of the country’s daily crude oil output. In 2007, Xinjiang’s oil and gas equivalent reached 44.94 million tons” which was the highest production value of all Chinese provinces” (People’s Daily).

“Xinjiang produced 26.4 million tons of crude oil and 21.2 billion cubic meters of gas last year, or 43.3 million tons of oil equivalent, representing a rise of 13.6 percent from 2006. [Note, these estimates differ slightly from People’s Daily’s estimates] As a result, Xinjiang, with estimated reserves of 20.8 billion tons of oil and 10.8 trillion cu m of gas, has been designated as a strategic area to replace Heilongjiang [in the Northeast] in China’s oil industry” (Stephen Blank, Jamestown).

“[B]eneath Xinjiang’s dusty soil and mountainous steppes lies buried 40% of China’s coal reserves. Equally abundant and far more precious to the central government are oil and natural gas deposits that total the equivalent of about 30 billion tons of oil and represent one-fourth to one-third of China’s total petroleum reserves” (Peter Navarro).

* A short, four page report on Xinjiang’s energy potential by the WSI (World Security Institute).

Xinjiang’s Coal

“It is predicted that during the 11th Five-Year Program period (2006-10), in the Zhundong area of eastern Xinjiang, the total installed capacity to be constructed – based on coal resources there – will reach 8.8 million kilowatts, and that of coal-to-methanol, coal-to-olefin, and coal-to-oil projects will total 7.6 million, 1.96 million and 3 million tons respectively. The aforesaid projects are expected to generate sales revenue of some 55 billion yuan (US$7 billion) after going into production… In 2006, raw-coal output in Xinjiang increased by some 3.6 million tons over 2005” (Asia Times).

“In accordance with the region’s 11th Five-Year Program, by 2010 Xinjiang’s raw-coal output is expected to exceed 100 million tons, and its installed capacity to top 10 million kilowatts” (Asia Times). 

Xinjiang’s Natural Gas

“The Tarin Basin alone has proven reserves of over one billion tons of crude and 59 billion cubic meters of natural gas” (Martin Andrew, Jamestown Foundation).

Xinjiang’s Wind

Xinjiang is also home to the Dabancheng wind farm, one of the largest in China, and has potential for much more wind power expansion. And “The Ala Mountain Pass region… will have an installed base of wind farms totaling 1 GW” by 2015 (Renewable Energy World).

“(Although significant power-grid transmission to the East would be a logistical problem to overcome.) “Currently, the total wind power capacity installed in Xinjiang accounts for 20% of nationwide capacity installed… The total capacity is estimated to reach 43.8 million kW, which can generate 1 00 billion kWh of electric power and is nine times of the current electric power generated in Xinjiang” (World Security Institute).

Energy Security and Transportation

* “The 2008 People’s Republic of China (PRC) White Paper on Diplomacy placed energy security as a major centerpiece of the country’s foreign policy…The White Paper specifically emphasized that China is currently the world’s second largest producer and consumer of energy, and therefore an indispensable part of the global energy market, and is increasingly playing a prominent role in ensuring global energy security” (Russell Hsiao, Jamestown).

* “Central Asia can serve as a transshipment area for Middle East oil should war ever break out over Taiwan or China’s various claims for oil reserves in the South China Seas” (Peter Navarro). Pipelines through Xinjiang connect China with Turkmenistan, Kazakhstan (2010), and also run through Uzbekistan. It is vital to China’s energy security that these energy pipelines are secured.

* Crude Oil reserve bases are also located in Xinjiang, which will be useful if coastal oil reserves in Zhejiang or Fujian come under fire due to a Taiwan conflict.

* Xinjiang’s vast resources can help China wean itself off of foreign countries’ energy. If developed properly, and if China restrains its energy consumption, the country can continue to possess a modicum of energy independence.

Conclusion

Security of Xinjiang’s resources is central to Beijing’s strategy of becoming a developed nation. Without Xinjiang’s resources, the Chinese would depend even more on the vagaries of the Malacca Strait for transshipment of energy. Russia’s new pipeline into China will help alleviate some of China’s dependence on pipelines through Xinjiang, should said pipelines become plagued by sabotaguge (which is unlikely). Additionally, more energy diversification is planned with expansions of China into Myanmar energy.

Still, China’s domestic energy hub for the future is Xinjiang. Its supply of energy to the rest of the country is disproportionate to its population and its wealth. Because Xinjiang is key, China will continue to be harsh in its crackdowns against splittists, terrorists, and overly zealous religion adherents.

27 August, 2008 Posted by | China Energy, China Future | , , , , , , , , , , | 1 Comment

Olympic Pollution- Comparisons

Air quality in Beijing during the Olympics, according to the BBC, was actually quite clean. “Beijing met the strictest WHO standard for particulate matter in six out of the first 11 days of the Games.” Below, I examine just how good Beijing’s air quality was compared to air quality in previous games’ cities.

Pollution during the Beijing Olympics was rated on average 62 AQI for July 25 through August 24. Pollution was a 43 from the 18th through the 24th of August, according to the WSJ Beijing Air Quality Widget. (AQI is a composite number that includes measurements of ground-based ozone, sulfur dioxide, nitrogen dioxide, and particulate matter.) An AQI score of 43 would be considered green or safe in the United States, and yellow or fair in Canada.

To better understand the improvements Beijing made in its air quality, I present numbers from Runner’s Magazine’s September 2008 issue (page 96) which presented a comparative study of Olympic host cities’ pollution rates. The study measured average yearly concentrations of particulate matter (PM), sulfur dioxide (SD), and nitrogen dioxide (ND).

Note: Numbers below for “Beijing 2008” are pre-Olympics.

Particulate Matter
Montreal (1976)… 19
LA (1984)… 34
Barcelona (1992)… 35
Athens (2004)… 43
Beijing (2008)… 89
Beijing (DURING OLYMPICS)… 52-62
Safe Levels… 15-35
2004 EU Levels… 30
WHO Air Quality Target… 50

Sulfur Dioxide
Montreal (1976)… 10
LA (1984)… 9
Barcelona (1992)… 11
Athens (2004)… 34
Beijing (2008)… 90
Beijing (DURING OLYMPICS)… 10-14
Safe Levels… 20 (WHO Guidelines. p.414)

Nitrogen Dioxide
Montreal (1976)… 42
LA (1984)… 74
Barcelona (1992)… 43
Athens (2004)… 64
Beijing (2008)… 122
Beijing (DURING OLYMPICS)… 24-32
Safe Levels… 40
2004 EU Levels… Over 40

(numbers in micrograms per cubic meter)

Beijing appeared to do a good job on reducing Particulate Matter pollution. Beijing lowered its average PM10 pollution by nearly 40 points on average. However, Beijing still suffered more floating particulates than were present in previous Olympic host cities. On average, Beijing was over the “safe” limit by nearly 30 points. 

Beijing’s sulfur dioxide content, however, was notably lower than that of Athens in 2004 which put sulfur  dioxide pollution within safe levels. Still, the amount was higher than SO2 content in other previous Olympic host cities.

Perhaps the best pollution prevention news is that nitrogen dioxide pollution was down by 1/4th, and was much lower than NO2 pollution in previous Games-holding cities.

Conclusion

China effectively confronted pollution in Beijing, at least in the short term. As September arrives and factories and construction begin turning on and cars return to the road, Beijing’s usual smog will return. But with luck, Beijingers now enjoying clear skies might be motivated to adopt and promote further environmental measures.

For now though, let us celebrate Beijing’s clear skies and Olympic environmental-stopgap success.

Appendix

In English, here are district by district reports of air quality from the Beijing Municipal Environmental Protection Bureau for August 23:

DISTRICT/ SULFUR/PARTICULATE MATTER/NITROGEN

    Dongsi Station in Dongcheng District 7 46 22
    Guanyuan Station in Xicheng District 10 39 22
    Tiantan Station in Chongwen District 9 48 25
    Wan Shou Station in Xuanwu District 8 52 17
    Olympic Sports Center Stadium in Chaoyang District 10 46 32
    Agriculture Exhibition Center Station in Chaoyang District 16 44 30
    Wanliu Station in Haidian District 11 46 27
    North Developping Area Station in Haidian District 9 51 8
    Botanical Garden Station in Haidian District 8 41 16
    Fengtai Town Station in Fengtai District 9 56 39
    Yungang Station in Fengtai District 9 51 8
    Gu Cheng Station in Shi Jingshan District 15 56 23
    Station in Yizhuang Developping Area 10 55 19
    Longquan Town Station in Men Tougou District 5 50 13
    Liangxiang Town Station in Fangshan District 8 53 31
    Tongzhou Town Station in Tongzhou District 5 54 13
    Renhe Town station in Shunyi District 5 39 7
    Dingling Station in Changping District 6 31 3
    Changping Town Station in Changping District 7 38 9
    Yellow village Station in Daxing District 17 58 18
    Yufa Station in Daxing District 5 61 14
    Pinggu Town Station in Pinggu District 5 48 5
    Huairou Town Station in Huairou District 5 29 5
    Miyun Town Station in Miyun County 7 28 4
    Miyun Reservoir Station 6 19 12
    Yanqing Town Station in Yanqing District 11 37 13
    Ba Daling Station in Yanqing County 7 24 19

 Particulate Matter Chart for Beijing: http://news.bbc.co.uk/2/hi/asia-pacific/7498198.stm

From the BBC

25 August, 2008 Posted by | China Environment/Health | , , , , , , , | 4 Comments

China Energy Efficiency

China faces energy shortages. There has been power rationing in Shanghai, Hubei, and elsewhere this year. “China has forecast a power shortfall of 10 gigawatts for the summer, about 1.4 percent of installed capacity” (Reuters). Concurrently while boosting capacity, the country is struggling to achieve its stated goal of a 20% increase in energy efficiency from 2005 through 2010.

Steps have been taken to ensure that China’s energy efficiency goals are reached, but ultimately, it appears the Chinese will fall short of realizing their goal. Still, in striving, the Chinese government may realize that placing price caps on energy producers can actually harm the environment. As a result, China may come to allow market forces to dictate energy pricing- to a point. By doing this, China could finally succeed in chasing inefficient factories to other countries.

Energy Goals

In 2005, China drafted a plan to increase energy efficiency per unit of economic output 10% by 2010. “In 2006, the first year of the plan, the country’s reduction in energy intensity… was a mere 1.23%. For the first half of 2007, this figure was close to 3%… but that’s still short of the 4% reduction needed each year from 2006 to 2010 to achieve the goal” (Forbes).

Energy Consumption

“In 2005, China’s energy consumption per unit of GDP was… more than three times the level of the United States, more than five times that of Germany and eight times that of Japan” (Xinhua); specifically, “the energy intensity of China in 2005… was 35,766 British thermal units per U.S. dollar. In the U.S., the Btu/dollar ratio was 9,113. In the U.K. and Japan, the figures were even lower, 6,145 and 4,519 respectively” (Forbes).

Interestingly, unlike the US, which utilizes energy on a massive scale- about 7.794 kgoe/person as of 2003, China’s consumption per capital energy consumption is still only 1.1 kgoe/capita in 2003, which rose from 0.946 kgoe/capita in 2000, and 0.791/capita in 1990.

Also, “in 2005, China’s per capita commercial energy consumption was about 1.7 Mtce, only two thirds of the world average” (People’s Daily).

Since China currently uses such low amounts of energy per capita despite being vastly energy inefficient, it will be crucial for China to modernize its energy efficiency before more people become affluent and begin using larger amounts of electricity.

By starting from such a low base in per-capita energy usage, China has the potential to easily build state-of-the-art power transmission grids, to dictate strict regulations, and to build a culture based on energy conservation first, rather than reverse-engineering its energy regulations and energy consumption culture like other countries need to do.

kgoekilograms oil equivalent

mtcemetric tons carbon equivalent

Energy Expansion

China’s power generation capacity in 2002 of 356.6 GW was 9.6% of the world’s total power generation capacity, second only to the United States’ capacity of 979.6 GW. By 2005, China’s power generation capacity had risen to 508 GW (statistics from HERE). In 2006, China added over 114 GW of power generating capacity, and is continuing to expand generously.

If China is to satisfy its energy demands, it will need to increase energy efficiency. Otherwise, world energy prices, which recently saw oil rise to over $140/barrel, could check Chinese economic growth.

“Green” construction alone will not ameliorate China’s energy situation, since even construction of over 30 efficient nuclear power plants in the next 10-20 years will only add 60 GW of power. Wind and Solar electricity will account for much smaller increases in Chinese energy capacity at a little over 30 GW of power by 2020.

Considering China’s ambitious goal to improve energy efficiency, it appears the Government does realize the challenge. But what reprecussions might happen as the country struggles to meet this challenge?

Why Price Caps Harm the Environment

By putting price caps on how much energy can sell for and concurrently subsidising SinoPec and other energy companies, China encourages inefficient, polluting companies to remain in business or delay upgrading technologies. When subsidies and price caps are eliminated, prices rise and factory producers have to survive in a more Darwinistic competition model where the most efficient companies are rewarded for infrastructure investments.

Instead, partially due to the price caps, factories both efficient and inefficient have to endure power rationing.

Of course, too-low-set price controls sometimes encourage producers to produce less power. Or producers may decide to do things on the cheap and produce dirty coal instead of less environmentally destructive, but more expensive options (NYT discusses high-tech coal plants).

Results: Higher Quality Companies, Freer Energy?

It appears that regardless of its ultimate decision on price controls, China will maintain some sort of government intervention so its poor will be able to afford energy. Considering the widening GINI coefficient of wealth inequality in China, such supports will be necessary. And price assistance will be especially needed in rural regions, since urban income still outpaces rural income by at least 3.28:1.

Future government intervention, however, may be more in the form of direct subsidies to people rather than price caps on companies. 

Freeing energy markets will allow the market to incentivize energy efficiency, and continue the trend of driving away inefficient industries. For China to most efficiently continue its energy capacity expansions in an era of high oil prices and expensive energy, it makes sense that the country will move to price liberalization. When might this happen? To take a wild guess, I’ll predict it’ll happen whenever oil hits $200/barrel. Barring war or shortages due to a major conflict such as a Iran-US war, I don’t see that happening until at least 2012, so the move toward Chinese energy price liberalization might take some time– but since China’s power demands are so great, said liberalization will eventually happen.

Miscellaniety

* Official figures on energy efficiency increases in the first half of 2008. (2.88%).

* Erica Downs of Brookings is even more pessimistic about China’s eventual move toward energy efficiency and modernization, arguing that “China’s new energy administration is unlikely to substantially improve energy governance.”

* China Daily had evidence of a perhaps laudable, but perhaps disturbingly only stop-gap fix for solving China’s energy efficiency and “green” problems. By ranking 60% of cadres’ career evaluations on energy efficiency and pollution solutions, China’s government pursues a bureaucratic incentivistic solution to what appears to be mostly a market problem. 

* More reading on China’s progress toward greater environmental and energy efficiency care can be found at China Environmental Law.

19 August, 2008 Posted by | China Economy, China Energy, China Environment/Health | , , , , , | Leave a comment

Protesters and the Olympics (Guest)

by: Danny J. (Guest Contributor)

There is one group who the Western media has generally not quite given much face-time, a group who could potentially cause even more embarrassment to Beijing than the Tibet and Darfur protesters. This group is China’s general population of ‘petitioners.’

Beijing is said to have been home to 10,000 petitioners before the Olympics. Many of these people came to Beijing to petition because they believe they have ‘been denied justice in their home provinces.’ These people could expose untold numbers of stories of local corruption, and at least some of the stories would be true.  Now, groups allege there has been a large crackdown that has swept petitioners, along with other undesirables such as ‘beggars and pickpockets’ out of the city. Also, to discourage undesirables (the poor, migrants, Uighurs, 等等) from residing in Beijing, the government ‘closed down thousands of cheap hotels and basement apartments where rooms could be rented for less than $1 a day’ and ‘demolished housing in entire neighborhoods where petitioners have lived.’

Anyone who has lived in Beijing is probably familiar with this sort of tactic, the clearing off the street of beggars before a big event – be it a Party Congress, or the Africa-China meeting. This time, however, the clearing is being done with an ‘unprecedented intensity.’

One common petitioner spot known as Kaiyang Bridge had somewhere around 10,000 petitioners before the crackdown. Now it only holds a few hundred. Such petitioners wish to have their problems heard, hopefully in front of a television camera. Gauging Beijing’s reaction so far, it is a bit unlikely that their problems will be heard before they are detained.

High profile protests have already begun. Pro-T^&(t activists unfurled some huge banners near the stadium, ‘others managed to screen a pro-T^&(t video, a U.S. swimmer unveiled an anti-fur advertisement and three U.S. Christian activists were able to enter T*(ananmen Square to protest briefly.’ No one was arrested, although it appears that all save the anti-fur swimmer were deported on the 9th, but all were quickly quieted and removed from their protest sites.

For something to look forward to, there are the ‘more than 40 athletes’ who signed an ‘open letter to china’s government to respect human rights and freedom of religion.’ Protests have also started and have been ongoing, to some extent, in many parts of the world.

What all this will lead to in the aftermath of both protests and the Olympic games, and whether or not the Chinese government can respond appropriately to unrest and dissent, might very well shape future Chinese domestic and foreign policy.

(ed: in the August 19, 2008 WSJ, page A10- Shai Oster noted in “China is Pitching a Protester Shutout” that 77 applications for protests from 149 people have been filed. 74 were withdrawn “because their problems ‘were [allegedly] properly addressed by relevant authorities…’ No protests have been approved. This could lead to simmering discontent among the people as Leslie Hook describes on page A15 in “The Chinese Want Property Rights Too.” In that article, Hook describes several petitioners’ struggles.)

Specifically of note (and for deeper analysis): Willy Lam of the Jamestown Foundation wrote a good article on the “Coming crackdown” post-Olympics games.

This piece does not necessarily reflect the views of chinacomment. However, it is interesting, so I hope you will find it enjoyable. Once again, I thank Danny very much for his contribution.

(Note: Chinacomment is currently on vacation and without constant access to computer until the beginning of September; however, updates will continue at the pace of 1-3 a week since Chinacomment does have a sizable backlog of relevant material to post.)

18 August, 2008 Posted by | China Future, China General, China Stability | , , , , , , , , | Leave a comment

Kuznets & China’s Pollution

Prognostications are often suspect, but here’s an alternative view in juxtaposition to the usual gloom and doom regarding the threat posed to China by its air and water pollution.

Still, pollution in China is definitely a problem. It leads to over 750,000 premature deaths each year in China, according to a World Bank report. (656,000 air pollution-related deaths, and 95,600 water-related deaths.) “Of the 1,300 Chinese rivers surveyed in 2004, 40.6% received a quality rating of grade IV or V, and 30% of the river water monitored by the Chinese government is grade V.” A rating of IV indicates that the water is unfit for human consumption. Grade V is not even acceptable for agricultural or industrial use (Anna Brettell, 158. In Guo, Challenges Facing Chinese Political Development, 2007).

However dire the current situation is, it is similar to the troubles suffered by America and other countries during the Industrial Revolution and in its wake. But, the problems exist on a much larger scale, since China has more people.

For comparison purposes; as of 2007 in the United States over 41,000 people a year  (0.00014 % of 300M) are estimated to die prematurely due to air pollution (Also see WHO comparisons for 2002). (Other estimates place the 2007 US mortality rate at between 22,000 to 52,000 and speculate that this amount must have dropped significantly in the past 30 years since “the US Environmental Protection Agency reported a decline of 25% from 1970 to 2001 in 6 principal air pollutants: carbon monoxide, lead, ozone, nitrogen dioxide, sulfur dioxide, and particulate matter.” The best data I could find on prior US mortality rates was cited HERE, and argued that in 1991, 60,000 a year in the US succumbed to early death due to air pollution. (1990 US Population=250M, so 0.00024%) (* See End of Article for full citation). This past higher number implies that improvements in pollution mortality rates can be made in a relatively short period of time

In India, 527,700 perish each year due to air pollution. (0.00044% of 1.2B) In China, the amount is 656,000 (0.00050% of 1.3B). 

The US (1948), UK (1952), and Japan, with its Minamata disaster, suffered environmental problems in their manufacturing boom-eras with higher percentages of pollution-related deaths than they currently sustain. What changed in these countries? The passage of legislation such as Clean Air acts in the United States (1962) helped regulate pollution. As people became more aware of pollution’s deleterious effects, they became more motivated to regulate and end it.

Through an abstract theory, it can be argued that China has good precedence for being able, like the US, Europe, and Japan, to mitigate its pollution problems. The “Kuznets Curve Theory” states that as societies modernize, “Pollution will begin to decrease after a country reaches a per capita GDP of between US $3,000 to US $5,000” (Anna Brettell, 155 in Guo Challenges Facing Chinese Political Development, 2007) (other articles state $8,000) . This decline in pollution can be attribuitable to 1.) Awareness, 2.) Improvement in technologies for energy efficiency, 3.) A shift away from manufacturing to cleaner industries.

China’s GDP per capita, in Purchasing Power Parity, for 2007 was ~$6,700 according to the UN Human Development Reports, but according to the CIA it was $5,300. (I believe the CIA may be using the updated numbers after China’s PPP was readjusted around December.)  

In constant dollars, China’s GDP per capita in 2000 was $846 US… by 2007 it had grown to $2,200 US. The Chinese expect to reach $3,000/capita around 2010 (China Daily). If China maintains current +10%/year growth rates, per capita GDP could reach $6,000 by 2020 (It should be noted that China’s GDP statistics are often called into question for being over-estimated; for ease of discussion, I’ll take the official stats at face value.)

Once basic necessities are provided, and economic growth secure, people can afford to deal with pollution externalities that threaten their long-term health.

Environmental NGOs and Environmental Activism in China

In 2001, there were only 39 registered environmental NGOs in China. By 2005, there were over 2000, according to Elizabeth Economy at the CFR (Council on Foreign Relations).

Environmental consciousness is rising, and the State is allowing it to perpetuate. In 1990, citizen environmental complaints were a “mere” 140,681. By 2004, over 726,192 instances of people sending letters and visiting the Environmental Protection Bureau were recorded; a 410% rise over 1990. The number of incidents leading to those visits and letters rose from 111,359 in 1991 to 682,744 in 2004 (Brettell in Guo, 156).

And these letters and groups are having some effect; “The decision in late January 2005 by SEPA Vice Director Pan Yue (with the support of Premier Wen Jiabao and the State Council) to bring to a halt 30 large infrastructure projects including 26 power-related projects on the grounds that environmental impact assessments were not properly completed suggests strong support within the top reaches of Beijing for NGO activity in this realm” (Economy).

 What Does This Mean?

China is in the midst of a pollution crisis. But if its situation is similar to that faced by countries elsewhere around the world, its amount of pollution is nearly at an apex, after which, in China’s wealthier and better-developed coastal provinces, pollution will decrease.

By examining the situation through the lens of the Kuznet’s Curve, it appears that China’s has nearly reached the ~$6000 per capita/PPP amount necessary to facilitate development toward cleaner industries and technologies. China’s recent expansion of its Environmental Ministry represents a step in the direction of a cleaner environment and less pollution.

I prefer to use PPP (Purchasing Power Parity) for comparisons since PPP presents a good way to compare costs of living in different countries. Therefore, I argue China is due for a major anti-pollution push. In a few years, with the assistance of its new Environmental Ministry, and barring any extreme energy crisis necessitating sustained reopening of unclean coal mines, China will get even more serious about enforcing its pollution laws. So, from 2010 and through 2012, prepare to see some major improvements to China’s environment– for the better.

ALSO; The Economist talks about China and India’s differing approaches to dealing with pollution.

World Bank 2007 comparative charts on pollution in countries and cities around the world.

Extra Notes: (see above *) * according to an “Air Pollution in Typical U.S. Cities Increases Death Risk,” press release dated May 13, 1991, from the Harvard School of Public Health, Boston, Mass. describing findings later reported in Joel Schwartz and Douglas W. Dockery, “Increased Mortality in Philadelphia Associated With Daily Air Pollution Concentrations,” AMERICAN REVIEW OF RESPIRATORY DISEASE Vol. 145 (1992), pgs. 600-604.”)

and  [Brettell, Anna. “China’s Pollution Challenge.” 155-193. In Guo. Challenges Facing Chinese Political Development, 2007.]

* AEI did an excellent article on China and the Kuznet’s Curve.

13 August, 2008 Posted by | China Environment/Health, China Future | , , , , , , , , | 1 Comment

Beijingers Love Their Games? (Guest)

by: Danny J. (Guest Contributor)

In a survey of Chinese natives, 93% believed that ‘the Olympics will help China’s image around the globe’ and 96% said that the games ‘will be successful.’

These numbers, while enlightening on exposing Chinese national thought, don’t hit on one key question: How are Chinese, and Beijingers in particular, satisfied with the preparations for the games and the new security regulations?

This quote seems to sum up at least some Beijingers’ feelings: ‘For years we couldn’t wait for the Olympics to start. Now we can’t wait for them to be over.’ To be fair, many are still excited for the event, they are just a bit tired of all the extra measures.

The quoted person presumably wants the Olympics to be over so everything can be ‘normal’ again, without all the new rules and restrictions imposed on Beijing to clean it up – environmentally, legally, and even in terms of fashion (Shirts and ties for taxi drivers) . (ed: One interesting dramatized story about local discontent with the Olympic games can be found in this “sci-fi” tale from China Digital Times, reposting from the SCI-FI Great Wall blog. The story discusses how poor local Beijingers are pushed aside in the lead-up to the Olympics, all for the sake of honored foreign guests.)

Rules have been drawn up to guard against fashion no-no’s. Here’s the abridged version: ‘white socks worn with black shoes are out, leather skirts are frowned upon, bright nail varnish is a no and woe betide anyone whose colours clash.’ What will actually happen to someone who violates these new guidelines, let alone what these rules will do to that Chinese 农民(nongmin) summertime tradition of rolling up shirts to mid-chest height, is unclear.

Maybe it’s not just the fashion police who are bothering Beijingers. It could be the new Taxi protocol requiring identity checks at random police stops. Or it could be that a good number of clubs ‘have been forced to go dark,’ and the ones that are still open have a mandated 2 a.m. closing time. Then, in a move to clean up pollution, most barbecue or 串儿 restaurants/stalls have been closed.

Checkpoints on the outskirts of the city have helped decrease the number of vegetables in Beijing, and partially due to that and inflation, foodstuff prices have increased by around ’20 percent.’ Compounded together, it’s easy to understand a Beijinger’s frustration.

There is some good news: Water will not be in short supply in Beijing. It has been diverted from Hebei, to ensure that the Olympians get enough water. Hebei, already a bit short of water, might have some problems. On top of sufficient water, rules have been put in place to ensure cabbies ‘go easy on their garlic consumption.’

One more humorous measure involved ‘a series of measures banning cigarettes in schools, railway stations, office buildings and other public places.’ Wen Jiabao ‘has declared that the Olympics will be smoke free.’ 100,000 inspectors are on the lookout to ticket smokers, but the ticket is a mere $1.40, which among the middle classes is unlikely to curb much smoking. To emphasize this, a general reaction to the rare non-smoking sign: “If I point to the no-smoking sign, the passenger will just laugh and keep smoking.”

Chinese may love their Olympic games, but with over 350 million Chinese smokers, 1/3rd of the world’s smoking population, many Chinese also love their cigarettes and their normal lives.

This piece does not necessarily reflect the views of chinacomment. However, it is interesting, so I hope you will find it enjoyable. Once again, I thank Danny very much for his contribution.

(Note: Chinacomment is currently on vacation and without constant access to computer until the beginning of September; however, updates will continue at the pace of 1-3 a week since Chinacomment does have a sizable backlog of relevant material to post.)

12 August, 2008 Posted by | China General, Isn't That Odd? | , , , , , , | Leave a comment

Sudan and China (Guest)

 by: Danny J. (Guest Contributor)

The following piece does not necessarily reflect the views of chinacomment. However, it is interesting, so I hope you will find it enjoyable. Once again, I thank Danny very much for his contribution.

Last month, Sudan’s President Omar al-Bashir was recommended to be arrested by Luis Moreno-Ocampo, a prosecutor for the International Criminal Court (ICC). Days before the actual announcement, China’s UN ambassador expressed concern, arguing Bashir’s indictment could hurt possibilities for peace in Darfur, a western region of Sudan. Sudan’s UN ambassador responded similarly, saying the arrest would lead to ‘grave consequences’. ICC judges are not expected to make a ruling on Bashir’s arrest until October or November, so it is not an imminent threat. (Note: There are currently no Darfur peace processes on the table.) 

Sudan and China have a fairly good relationship, but during much of Sudan’s North-South civil war, Sudan and China only had limited ties. 

Even after al-Bashir came to power in a June 30, 1989 coup, Sudan’s primary business during its Civil War period was with Western countries. It was not until the late 90’s and early 2000’s that American and European companies, for the most part, pulled out due to domestic human rights lobbying and Sudan’s internal unrest. Talisman Oil, a Canadian Company completely left Sudan in early 2004 following several pipeline bombings – it was one of, if not the last remaining Western oil interests in Sudan. 

As the West was pulling out, China dedicated more and more to Sudan, and Africa. Currently, China has large investments in Sudan, both commercially and politically. Regarding Oil, China is ‘leading developer of reserves in Sudan,’ and currently takes between 40 to 80 percent of its production, or about six percent of China’s total oil imports.

 

The Indictment and China’s Policies

 Once al-Bashir’s indictment was officially announced, the Sudanese UN ambassador is said to have sought help with Security Council members China and Russia. By July 13, both UNSC members informally pledged support to Sudan’s government. As of July 31, China urged the UN to suspend the indictment of Bashir.

 The African Union, Arab League, Non-Aligned Movement, and the Organization of Islamic Conference have all called for invoking ‘Article 16,’ a measure that allows the UNSC to suspend the ICC proceedings for 12 months, renewable indefinitely. The US, on the other hand, is firmly against freezing the indictment.

 Even with an arrest warrant, it is unlikely that Bashir would be easy to get, considering that two other arrest warrants were issued last year, and both targets still remain at large. Yet, the warrant on al-Bashir may result in positive action toward resolution of the Sudanese situation. ‘Western diplomats say Mr. Bashir could escape indictment if he ended what they see as impunity for two men the ICC charged last year over Darfur.’ This presents a way out for Bashir, but should he do so, the move would probably be viewed as bargaining sovereignty for safety.

 So, why do Russia and China support Bashir and Sudan? The main reason is Sovereignty. Internationally, China acts in a ‘treat others how you would like to be treated’ sort of way. It has done this in two ways over the years.

 First, imagine what China would do if a high ranking Party member were indicted by the ICC. A member would more than likely never get to that point, since China possesses a UNSC veto, but in the current situation, China can even avoid the potentially embarrassing situation of having to cast a UNSC veto. In this way, the Party solidifies the power it holds over its people, ensuring that there can be no one above the state, in much the same way the USA’s refusal to join the ICC protects its sovereignty. The state has the last word.

 A second example of this type of action regards how China previously addressed Sudan’s problems in Darfur and the civil war in the South as issues Sudan must deal with alone. Think of southern Sudan and Darfur as provinces in China like Xinjiang, Tibet, or Taiwan. China occasionally has problems with these regions. If secession by these regions were to happen to China, it would want support for its policy of ‘unifying’ itself. Therefore, China argues that Sudan’s internal ‘territorial problems’ should be ‘solved internally.’

 

 Military Aid to Sudan? (Where Exactly is it Coming From?)

 For a time, this meant even militarily helping Sudan. The BBC reported that ‘Dong Feng Military Trucks,’ ‘Chinese anti-aircraft guns,’ and ‘Fantan fighter jets’ have been sold or given to Sudan by China, in possible violation of a UN arms embargo. The BBC believes that some equipment arrived before, and some after the embargo, and that the Chinese are training Sudanese to pilot the jets (yet another breach of the sanctions).

 China maintains it does not sell weapons to countries on the ‘embargo list.’ However, a new report was just released naming China as the top violator of the Sudan embargo.

 One problem with this report was that it just names ‘China’, not differentiating whether the actor violating the embargo is official government policy, the military acting of its own accord without the Center noticing, or the embargo is being broken by smuggling of Chinese Arms.

 It is possible the Chinese government (like other weapon-producing countries) sold the Sudanese government arms legally before the embargo, then other sales were made after the embargo (with or without official permission) by people and groups with access to the equipment.

 

 Chinese Peacekeepers … Demonstrate Beijing is Honoring its Commitments

 Still, China has helped make some positive action in the last two years. Last year, China began pestering Bashir into accepting UN troops and other decrees to prevent further problems in Darfur. The UN peacekeeping troops are foundering, but not because of China. It is because other countries fail to send the number of troops they pledged. (The current number of peacekeepers is around 9,100, with a pledged total of 26,000.)

 China has sent most, if not all, of the troops it committed. Considering how understaffed the peacekeeping force currently is, China’s fulfillment of its promises is more than many other countries can say.

 

 Concluding Remarks

 As with everything, the relationship between Sudan and China is complicated. For both countries, the positives are great: Beijing gets more oil and another African supporter of ‘One China’; Khartoum gets money, at least some of which goes into modernizing the city and to a much lesser extent the country.

 Unfortunately, weapons sales also play a part in the relationship, whether official or unofficial. This has helped exacerbate the conflict in Sudan (to be honest, even without Chinese arms, Sudan still would have gotten guns and Darfur would still be a problem) and made China lose some international face.

 Sure, China dragged its feet in the beginning of the UN peacekeeping process, but that is the general nature of Chinese foreign policy: wait until you have to act, then act. In this case China balanced and preached noninterference, but changed position and acted when negative international PR threatened China’s face/image.

 Still, it is important to commend the Chinese for convincing Bashir to allow peacekeeping troops, and for sending many troops themselves. There have been successes and failures, but China’s interaction with Sudan demonstrates how China is beginning to accept international responsibilities while maintaining dialogue, economic relations and involvement with its Sudanese friends.

Guest Contributor Danny J. has a BS in Political Science and International Studies with a focus on China and its politics. He lived a year in China and visited places, from Urumqi to Beijing to Yunnan, to list only a few.

(Note: Chinacomment is currently on vacation and without constant access to computer until the beginning of September; however, updates will continue at the pace of 1-3 a week since Chinacomment does have a sizable backlog of relevant material to post.

Also: Happy 08-08-08 08:08!)

8 August, 2008 Posted by | China and Africa, China Diplomacy | , , , , , , , | Leave a comment

The Other Challenges

Last week, I discussed John Pomfret’s Washington Post article that described challenges China faces to becoming a superpower.

What Is A Superpower?

In comments on my site, and on the China Law Blog, Here and Here, several readers indicated it would be useful to define “superpower” when discussing China’s future propensity for achieving “superpower” status.

The debate about what defines a “superpower”, whether it is a high ranking on the Human Development index, whether it is equivalent or not to “hegemon”, whether it is “force projection”, or merely “military” or “economic” force, is quite expansive.

For the purposes of my post, I’ll take a simplified position. From what I gather, when the hoi polloi (common people… the laobaixing 老百姓) discuss “superpower” or what makes a nation great, they mean an entity that can project its force overwhelmingly and has the ability to influence geopolitical events on a worldwide scale. Other countries need to plan around this country’s policies. In that sense, the United States and the USSR were “superpowers”; to some degree, the economic Japanese juggernaut was a superpower in the late 1980s and 1990s. Increasingly, China is becoming an economic superpower.

While I acknowledge this definition can be debated, I hope to keep the definition simple so I can move into the point of the post.

Another issue perhaps worthy of consideration is that my article and Pomfret’s did not set a timetable on when China might achieve said “superpower” status. I assume Pomfret was taking Keidel’s statement of China surpassing the US in total GDP around 2030 as the date most people assume for China’s arrival at superpower status.

In listing possible challenges facing China, I’ve tried to base statements on the time horizon of 2020-2025, shortly after the sixth generation of PRC leaders comes to power. One inspirational source was the roundtable discussion of Cheng Li, Pieter Bottelier, Fenggang Yang, and David Lampton in “China in the Year 2020.” 

China’s Challenges

To continue its rise to an economic and soft power status that can “shake the world” by 2025, China’s pressing challenges include a need to ensure energy supplies, tame inflation, confront environmental degredation, deal with dissent/protests/petitioning by instituting a rule of law and providing social services.

Below, I briefly cover these ideas. Eventually, I hope to deal with these challenges at length– a lot of good articles and books have been written on all of them and they are all large issues and deserve more treatment.

Energy Supply Maintenance

China will require 11.6 to 12.3 million barrels of oil a day, up from 6.9 million/day in 2005, and around 7.5 million/day in 2007, and allegedly 8 million/day in 2008 (according to IEA-2004 and DOE-2005 estimates, respectively (Kreft, 2) and more recent energy statistics.) Nearly 75% of this capacity will have to be imported since China can only produce around 3.7 million/day domestically.

China could also experience a deficit of 620-770Mt/a of coal in 2020 alone, according to He Youguo in a 2003 report by China Coal Industry Development Research and Consulting Co. Ltd. (7).

If current trends continue, Herculean efforts at ensuring an uninterrupted energy supply will need to be undergone to ensure that the lights stay on at China’s factories.

More on China Energy:  Nuclear Power, Wind Power, Natural Gas.

Taming Inflation

In 1989, part of the impetus for the protests was runaway inflation, rising unemployment and lowering standards of living. And as Pieter Botellier also argued; “the Communists’ defeat of the Nationalists in the Chinese civil war of 1945-1949 was greatly assisted by the run-away inflation of those years, which sharply reduced the popularity of Chiang Kai-shek’s Republic of China (ROC) government. “

China’s economic system today, however, is more sophisticated. Still, this is the highest inflation we’ve seen in China since the mid 1990s, with over 20% price hikes on food and double-digit growth in gas prices.

Currently, policy priorities appear to be toward promotion of economic growth rather than inflation containment. Arguably, maintaining growth could contribute more toward long-term stability. Still, if growth only goes to the middle and upper classes and the poor bear the brunt of inflationary increases, and their lives stop becoming noticably better- and their standard of living stagnates… there may be problems. Every year, China’s ranking on the GINI coefficient, which measures wealth distribution, becomes increasingly unequal. Currently, China’s GINI hovers between .37 and .46 (depending on measurement), either slightly more equal than the US’ GINI rating, or much less equal.  

Environmental Challenges

China faces severe environmental challenges. Pomfret, Economy, and other experts have discussed this in detail. For China to continue 10%+ yearly GDP growth, it will have to clean up its polluting industries. According to China’s Green GDP, in 2004, pollution cost China at least 3% potential growth. The Green GDP numbers for 2005 were never released, and arguably China’s pollution increases every year.

Energy efficiency per unit of GDP improved 3.66% in 2007, and arguably should improve this year as energy-intensive factories are shuttered. But, partially due to rising car ownership, pollution expanded significantly in the 21st Century. China hopes to reduce energy consumption per unit of GDP 20% by 2010, but it is a little behind its goal of yearly reduction percentages. Small coal mines and plants have been shut to ensure compliance, but to avoid power disruptions, many mines have recently been reopened.

Stability and the Rule of Law

China could arrest dissidents en masse, growing more repressive, but this will increase tensions in its relations to the outside world, and might stifle ideas and innovation.

However, as China’s economic influence becomes felt around the world, it is possible that it might set up its own international framework in competition to the West’s APEC, WTO, and IMF. (See the last section of my article on Maslow’s Hierarchy and Rule of Law- Not Human Rights for more info.)

With sovereign wealth holdings of over $1.7 trillion, China has extensive ability to affect the world… Unless of course, that wealth becomes tied down in foreign non-performing assets, declining currencies, and a need to invest in overpriced resource markets.

China is a giant in terms of wealth, so it can take quite a beating in economic losses from its funds, but poorly performing assets can lead to public opinion backlashes.

Without strong development of a domestic consumer economy, China will have difficulty in existing isolated from international economic forces.

Providing Social Services

Pomfret identified China’s demographics, its aging, and its peak of a working age population around 2015 as being a large problem. I rebutted that. However, with China’s GINI coefficient rising (at increases of 6%, the fastest in the world for the past decade), and with a degrading environment, and 350 million smokers, perhaps 1/3 of the world’s total smokers, health care costs will rise and create public tensions if the government fails to aid sick people.

Fear of these tensions could be a reason the Party prevents cross-provincial NGOs from organizing, and is cracking down on Sichuan post-earthquake support organizations and people who threaten to challenge the Government’s handling of the incident.*

Crafting an efficient social safety net, or preventing unrest in response to lack of said net, will be an important challenge for future Chinese administrators.

* Note: I realize this particular person, Huang Qi, has a history of challenging the state which might lead it to be more repressive. However, the point still stands; the state has harassed and/or  paid off families not to complain about allegedly faulty construction that may have caused more schools to collapse than should have if codes were followed.

Conclusion

To solve its many challenges, China could turn inward and become repressive, or turn outward and allow development of civil society, or it could mix the practices. While some commentators might paint China’s future as that of a “negative” (closed-society) or a “positive” (democratic society), both I and the commentators in “China in the Year 2020” tend to see opportunities from many points along the choice continuum.

China could “succeed” in achieving superpower status even in spite of democratization. Or it could fail to achieve said status even despite democratization and liberalization. 

Once again, I welcome your comments regarding challenges China’s development could confront in the coming 20 years.

* On August 25, 2008, The Wall Street Journal presented its own ideas about which challenges China faces. (Inequality, Resources, Population/Aging).

5 August, 2008 Posted by | China Future, China Stability | , , , , , , , , | 5 Comments

Isn’t That Odd: Dumpling Museum

Danwei had a hilarious photo, by Joel Martinsen, of what could either be a mistranslation into English, or an attempt to create an come-on for foreign visitors. Considering China’s highly innovative and capitalistic nature, it would not surprise me if this mistranslation was done on purpose to lure in Olympic guests. Congratulations to the marketer who thought of that!

Two shops here, side by side:
From Danwei.org - Dumpling Museum

One is the “Aqui Pasta Museum” and the other is the “Dishes Dumpling Museum”. From what I can gather from my translation of the Chinese characters, the actual Chinese lettering is saying: “House of Dumplings Place” rather than Museum, 博物馆 bowuguan。 “馆”as a character is also used in “饭馆”fanguan or “restaurant.” Now, Isn’t That Odd?

4 August, 2008 Posted by | Isn't That Odd? | , , , | Leave a comment

China’s Nuclear Power Expansions

On August 1, China raised its planned development of nuclear power to account for 5% of China’s total energy mix by 2020 instead of the previously projected 4%. This would account for over 60 GW of power.

” The country would boost the development of the nuclear power industry by speeding up construction of nuclear power plants in the coastal areas and drawing up plans for the inland regions, said Zhang Guobao, director of the newly-established National Energy Bureau.”

As part of the development of new nuclear energy sources, on July 18, approval of development for a reactor on Hainan Island in Changjiang County was confirmed. China National Nuclear Corp. will construct the reactor.  “[I]t is expected to come into operation in late 2014.” And, interestingly it is claimed that, “more than 70 percent of the plant’s equipment will be manufactured in China.”

Currently 1.3% of China’s energy (9 GW) comes from nuclear energy, originating from 11 reactors.

Further Reading on China’s Nuclear Industry: China’s Nuclear Power, Uranium Update.

2 August, 2008 Posted by | China Energy, China Future | , , , , | 3 Comments