Home » Opinion » Chinese Views
Growth fetish imperils drive to go green
By Sun Lijian |
March 5, 2010, Friday
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Print Edition
Print Edition
ASIDE from breathing some life into the floundering global economy, a series of government interventions of late have had the side effects of causing excess liquidity, inflation and asset price bubbles.
To leave bitter economic memories behind and effect an early exit from stimulus packages, national governments around the world are now in search of a new growth engine.
They have found one in developing a low-carbon economy, which could absorb excess liquidity, create jobs and get stimulus-fed economies back on their own feet.
Leading the low-carbon push are a handful of industrialized European countries. Their desire to overtake the United States as the main advocate and beneficiary of green growth was manifested in the Copenhagen climate change summit.
China hasn't missed out on this universal drive for a low-carbon growth formula. As the country's lawmakers and political advisers gather this week in Beijing to map out an economic blueprint, they will likely come up with plans that respond to opportunities and challenges posed by the low-carbon era.
China's commitment to the low-carbon cause is not without caveats. There are some pitfalls the country should avoid in its formulation of a low-carbon economy.
First, importing a European low-carbon standard without regard for China's specific conditions and constraints would be counterproductive. It would be foolhardy for China to totally overhaul its industrial structure to try to narrow its technological gap with the eco-savvy Europeans. The price for this ill-conceived decision would be the weakening of "Made-in-China's" appeal in the global market.
A notable fact about the green revolution in developed countries is that emission levels there didn't drop dramatically until per capita income reached US$10,000.
For China, where urbanization, industrialization and machinery building combine to fuel a huge demand for energy input in the economy, a conflict of interests looms on the horizon. Whether this conflict is resolved through the government's implementation of more environmentally friendly industrial policies - for example, enforcing market entry standards and offering incentives for using clean energy - or through market transaction schemes like a cap-and-trade regime and carbon tax, it will inevitably bring about tremendous costs.
All this is not to say China is a bystander in the green mega-trend. But a mass campaign of expediting the arrival of a low-carbon society, full of sound and fury, will probably signify nothing but even greater idle capacity.
Hence, before effective cost-cutting methods can be found, China may do well to join emerging economies in stemming the proliferation of a "radical" European low-carbon standard.
Second, we often hear the term "low-carbon" trip off the tongues of some local government officials. But to realize a genuine low-carbon economy it is the content that counts, not the political expediency the word connotes.
What worries me is that some officials, driven by a growth fetish, have approved projects with little market potential or technological sophistication just because they look "green."
In fact, those projects may emit more carbon dioxide and add to the woes of overcapacity. A sign of their growing proportions is the widespread fever with which the solar photovoltaic sector is being tapped, no matter its cost-effectiveness and real market demand.
Third, China must move up the value chain of low-carbon economy. Chinese companies previously resigned themselves to the humble role of workshops supplying commodities for foreign households. They can't settle for just that in the future.
Even if they are making energy-efficient products, their low status in the production echelon will doom them to miserable fortunes: discharging the most emissions yet reaping measly profits. Moreover, the value these products can deliver to Chinese consumers is very limited, because they are often priced out of reach. What an irony it would be if Chinese customers couldn't afford items made by domestic firms.
That's why we ought to insist that developed countries honor their pledges of technology transfer when they place orders with Chinese suppliers.
Otherwise, wholesale manufacturing by Chinese workers of goods that measure up to European low-carbon standards will only lower the prices of those products, thus sharpening their competitive edge. This hardly translates into China's manufacturing expertise.
Now that Americans and Europeans are at odds with setting a commonly accepted low-carbon standard, China should continue to leverage economies of scale - its trump card.
Meanwhile, it can increase spending on the research of low-carbon technologies - but incrementally. Any reckless move toward this goal is bound to fizzle.
(The author is executive vice dean of the School of Economics at Fudan University. The views are his own.)
To leave bitter economic memories behind and effect an early exit from stimulus packages, national governments around the world are now in search of a new growth engine.
They have found one in developing a low-carbon economy, which could absorb excess liquidity, create jobs and get stimulus-fed economies back on their own feet.
Leading the low-carbon push are a handful of industrialized European countries. Their desire to overtake the United States as the main advocate and beneficiary of green growth was manifested in the Copenhagen climate change summit.
China hasn't missed out on this universal drive for a low-carbon growth formula. As the country's lawmakers and political advisers gather this week in Beijing to map out an economic blueprint, they will likely come up with plans that respond to opportunities and challenges posed by the low-carbon era.
China's commitment to the low-carbon cause is not without caveats. There are some pitfalls the country should avoid in its formulation of a low-carbon economy.
First, importing a European low-carbon standard without regard for China's specific conditions and constraints would be counterproductive. It would be foolhardy for China to totally overhaul its industrial structure to try to narrow its technological gap with the eco-savvy Europeans. The price for this ill-conceived decision would be the weakening of "Made-in-China's" appeal in the global market.
A notable fact about the green revolution in developed countries is that emission levels there didn't drop dramatically until per capita income reached US$10,000.
For China, where urbanization, industrialization and machinery building combine to fuel a huge demand for energy input in the economy, a conflict of interests looms on the horizon. Whether this conflict is resolved through the government's implementation of more environmentally friendly industrial policies - for example, enforcing market entry standards and offering incentives for using clean energy - or through market transaction schemes like a cap-and-trade regime and carbon tax, it will inevitably bring about tremendous costs.
All this is not to say China is a bystander in the green mega-trend. But a mass campaign of expediting the arrival of a low-carbon society, full of sound and fury, will probably signify nothing but even greater idle capacity.
Hence, before effective cost-cutting methods can be found, China may do well to join emerging economies in stemming the proliferation of a "radical" European low-carbon standard.
Second, we often hear the term "low-carbon" trip off the tongues of some local government officials. But to realize a genuine low-carbon economy it is the content that counts, not the political expediency the word connotes.
What worries me is that some officials, driven by a growth fetish, have approved projects with little market potential or technological sophistication just because they look "green."
In fact, those projects may emit more carbon dioxide and add to the woes of overcapacity. A sign of their growing proportions is the widespread fever with which the solar photovoltaic sector is being tapped, no matter its cost-effectiveness and real market demand.
Third, China must move up the value chain of low-carbon economy. Chinese companies previously resigned themselves to the humble role of workshops supplying commodities for foreign households. They can't settle for just that in the future.
Even if they are making energy-efficient products, their low status in the production echelon will doom them to miserable fortunes: discharging the most emissions yet reaping measly profits. Moreover, the value these products can deliver to Chinese consumers is very limited, because they are often priced out of reach. What an irony it would be if Chinese customers couldn't afford items made by domestic firms.
That's why we ought to insist that developed countries honor their pledges of technology transfer when they place orders with Chinese suppliers.
Otherwise, wholesale manufacturing by Chinese workers of goods that measure up to European low-carbon standards will only lower the prices of those products, thus sharpening their competitive edge. This hardly translates into China's manufacturing expertise.
Now that Americans and Europeans are at odds with setting a commonly accepted low-carbon standard, China should continue to leverage economies of scale - its trump card.
Meanwhile, it can increase spending on the research of low-carbon technologies - but incrementally. Any reckless move toward this goal is bound to fizzle.
(The author is executive vice dean of the School of Economics at Fudan University. The views are his own.)
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