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China Eats the World: How America Learned To Bike And China Learned To Drive
The alarming environmental news out of China this week: according to a report issued by the World Wildlife Federation, the country now uses more than double the resources that its land and water can support. The report (here in PDF) says that the individual Chinese resident has an Ecological Footprint of 3.9 global acres.
The measurement needs to be taken in context: the average American needs a whopping 23.7 acres of global land each year to support his or her lifestyle. The U.S. is the second-highest consuming country by this measure, after the United Arab Emirates; China meanwhile ranks 69th in the world, using just less than Syria. (There are other reasons this measurement isn't quite fair either, which I'll get to later.)
Still, the thrust of the report deserves attention: If each Chinese were on average to consume as much as each American, "China would demand the available capacity of the entire planet." To appreciate this, and how we've all ended up using so much beyond our means, it's worthwhile remembering what China's consumption has to do with us.
Recently a friend who lives near Los Angeles and belongs to an upper-middle class family told me she now relies on her bike to get around. She just can't afford to pay for gas. In the suburbs of Los Angeles, which were designed around the car, that's no minor feat. Fortunately, she's used to riding her bike, even along car-choked roads: she spent three years living in Beijing, where the bike is a way of life.
Back in Beijing, a Chinese friend of the same age, 25, with a job at a state-owned company, explained to me why he was eager to buy a car. Yes, he knew that car emissions were clogging the skies over Beijing, so severely in fact that the city plans to keep over a million cars off the roads in August in order to achieve a "Green Olympics." But the car was simply too convenient and too comfortable to avoid, he told me. If you have spent hours on a bus as crowded as the roads are, trying to get from one side of the city to the other, it's not hard to see his point.
Of course, more cars on the road means more traffic. In Beijing, one solution has been to build more roads and more city. Suburbs have proliferated outside the third, fourth and fifth ring roads. A sixth is on its way. Sounds an awful lot like Los Angeles, no?
Just as Americans are starting to realize the errors of excess, suffering at the gas pump and learning the virtues of saving energy, the Chinese are headed in the other direction: they're getting richer and using more resources than ever before. While Americans get back on their bikes and subways and commuter rails, Chinese are climbing into cars. In Beijing, they're doing so at a rate of 1300 new cars a day. (Yes, you read that right.)
While the global cost of gas means that a suburbanite in LA must resort to the bicycle, how can middle-class Chinese manage to give up the bike for the car?
One reason is because the government heavily subsidizes fuel prices: a gallon of gas in Beijing is $2.60, less than half the price in the U.S. The resulting high demand for fuel in China, says the International Energy Agency, helps explain why my friend in Los Angeles is now riding her bike.
The policy is part of the Chinese government's tacit bargain with its citizens: economic stability equals social stability. When prices rise, as they have recently for food, people get angry. When a Carrefour store cut prices by 20% on cooking oil in November, a stampede left 3 people dead.
Alongside an artificially low currency, the fuel subsidy also helps to keep costs of manufacturing and labor low, ensuring that the rest of the world remains China's customer.
But as with its controls over the RMB, the Chinese government has essentially promoted a policy that helps the country in the short term but may have very bad consequences down the road. It's a familiar narrative in economic development: in exchange for rapid growth, China has looked the other way as factories and cars pollute the skies and the waters. Meanwhile, inflation grows, and oil supplies dwindle. The outcome isn't pretty.
For a while, Americans looked the other way too. Sure, the US has long criticized China on the environmental score. But we have also reaped the benefits of this dirty arrangement, in the form of excessive spending on cheap Chinese goods. Instead of consuming resources and polluting at home, we let China do our dirty work for us. China's ecological footprint may be twice what its environment can support, but part of that deficit is due to the resources it uses and the CO2 it emits in order to fill store shelves in the U.S. In 2004, for instance, goods consumed in other countries accounted for 31 percent of China's carbon-dioxide emissions that year. Today, a study was released confirming that China is the world's leading CO2 emitter.
The arrangement reminds me of an internal memo written in 1991 on behalf of Larry Summers, then chief economist of the World Bank. He argued that "the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that." After the memo was leaked, the response came from Brazil's secretary of the environment Jose Lutzenburger: "your reasoning is perfectly logical but totally insane."
China's arrangement with the U.S. - low gas prices, a cheap currency, cheap imports, and high natural resource use - is also looking pretty insane right about now. And it can't last for much longer.
On a number of levels, China just can't afford to keep its gas prices so low. The cost of reconstruction after the Sichuan earthquake has only put a bigger burden on the country's pocketbook. Sure, estimates say that China spends only 1% of its GDP on fuel subsidies. But subsidies also risk overheating the economy and exacerbate already growing inflation. And of course, they keep China from developing better public transportation and exploring more alternative energy sources (putting it at a disadvantage as supplies of oil tighten), while contributing to costly pollution and greenhouse gases, and propping up unsavory regimes like Burma or Sudan, where China gets much of its oil.
Of course, if China is to reduce its subsidies, as some predict may happen after the Olympics, it will need to do so without sparking social unrest. But the subsidies may lead to unrest too: aside from anger over inflation, a strain on the fuel supply has already led to hour-long lines at gas stations that are reminiscent of similar shortages in the U.S. in the 1970s.
China's leaders also need to remember that pollution from excess consumption of things like fuel can also lead to social unrest. In 2005, official figures show there were over 50,000 protests related to dirty skies and water. No wonder: Last year, the World Bank reported that 750,000 Chinese die prematurely each year due to pollution. As China becomes more connected, via internet and mobile phone, and a growing middle-class becomes environmentally-savvy, the number of protests is expected to keep growing.
There is another obvious reason why the average Chinese wants a car. The same middle-class that demands cleaner air also demands more comfortable (read: high-consumption, American-style) lifestyles. Cars are but one example: all those rising incomes mean higher demand for meat, milk, jewelery, computers and a lot of other stuff. In the month of May China's retail sales grow faster than they have in nearly a decade.
The big irony is that while we begin to reduce our own huge ecological footprint - theoretically putting less strain on China's environment - China's own small footprint is growing to look like our own. If China's environment summons images in our heads of pitch-dark coal piles, blackened skies and growing swaths of desert, it should now also call to mind more familiar scenes: backed-up highways, expansive suburbs, big box store aisles colored in the spectrum of brand names.
That China has an opportunity to forge a new path of development has become a mantra for environmentalists. But that doesn't just mean new ideas of developed-world living. Even if middle-class Chinese drive more efficient cars than Americans do, even if they trade in their plastic bags for tote bags, as a new law encourages them to do, they are going to demand more energy use, period.
The bigger opportunity may lie in technologies. If China can develop top-notch alternative energy - and companies like Suntech (STP) have showed that it can - then it won't just help reduce its energy consumption. It will make a lot of money selling green tech to the rest of the world.
Of course that's a big if. The U.S. can help. It can lead by example, by reducing its own consumption, and embracing measures to keep its own CO2 levels down. It can also keep pressuring China to cut its fuel subsidies and let its currency float. And it can also help wean China off the path that Americans have followed, by encouraging more technology transfer and advising on things like cap and trade systems, as they plan to do at this month's Sino-U.S. summit. For the most part, China's environmental officials are eager for help and serious about change.
But it is up to China's enigmatic economic policy makers to make the important decisions that will begin to temper China's growing love affair with high consumption. If they do so they might provide a good example to the rest of the world, from other developing nations to high consumers like the U.S.
If not, as incomes grow to U.S. levels in the next two decades, China's citizens will learn the dangers of living past their means. Given the state of China's strained environment alone, it could be a much harsher lesson than the one Americans are getting now.
Follow Alex Pasternack on Twitter: www.twitter.com/pasternack
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China is a scourge on the world and we will be in a war for resources with them in the very near future. Thats a fact. The sad thing is, at this time, the US is in control of Chinas destiny. We still are their # 1 consumer of their products and all we have to do is start enforcing the import/export laws we had a few decades ago. You know, the laws that made the US the strongest and most admired economy in the world (the same type that China uses to keep our imports out).
If we would have shown China the recipe for growth using everything we learned from our own industrial revolution and other technical improvements, they could have grown more sustainably. Instead we allowed them to grow using the worst of every pollution control measure we ever designed. Threw away everything we learned about how to make money and products without totally ruining the environs. How could we allow short term profit thinking cloud our obligation to protecting the very world we live in???
Yes, America is a wasteful country, but we are learning. At the time we thought the current model was sustainable and now we are addressing the issues associated with pollution and over consumption. Now we're supposed to sit idle and watch another country make all of the same mistakes we did by a factor of 3 to boot???? It cannot happen, we cannot let it happen. The Earth will revolt.
You touch on an interesting point. If you have seen the developing areas of China, they have built 16 lane interstates in the middle of the countryside, because soon there will be a city of 10 million and they have planned for the traffic.
China went into Africa and locked up entire supplies of oil for $80/barrel. The EU laughed at China, because at the time oil was $60. Why would China over pay to lock up the entire supply of oil from various countries for life? Now you see. China is playing this for the long term, thinking 50 years, not tonights news. He who plans for the long term wins. He who panders to the voters for the 2008 elections loses (that is the people of that country lose).
China is also drilling 50 miles off of Florida . . . you know where we can't?
Luke 6:41-42
6:41 Why do you see the speck in your neighbor's eye, but do not notice the log in your own eye?
6:42 Or how can you say to your neighbor, 'Friend, let me take out the speck in your eye,' when you yourself do not see the log in your own eye? You hypocrite, first take the log out of your own eye, and then you will see clearly to take the speck out of your neighbor's eye.
Mort 1:1
Stop buying crap made by $2/day labor and realize that every dollar you spend is a vote. Stop buying things in Wal-Mart and other non-union discounters.
every dollar you spend is a vote
Now that's deep! I've got to start reading from the book of Mort.
The writer mentions "cheap Chinese goods." There is nothing "cheap" about them. We buy them in America at the cost of millions of good paying jobs, while the Chinese pay their adult workers 75 cents and hour and their children 25 cents an hour.
China's population will not support their material aspirations. How long before the country becomes chocked with smog and commuter gridlock? Ridiculous, absurd, and typically stupid in a human sort of way. If they come to their senses, they'll back off from wanting to be rich. Hmmmm.....somehow, I don't think so.
And America? Nothing wrong with riding bikes and utilizing public transportation. Unfortunately, we've become too spread out and "local neighborhoods" have all but disppeared. In addition, no real effort has been made to explore alternatives to oil, at least until now.
This article has some relevant perspectives on China's push towards alternative energy, esp. windfarms:
"GREEN FINANCE - Sun setting on foreign investors' green dream"
http://www.asiamoney.com/default.asp?Page=7&PUBID=185&ISS=24613&SID=703366&SM=ALL&SearchStr=china%20alternative%20energy
An interesting quote:
***********
"For China, the development of wind power projects has been especially pronounced. A report co-authored in 2006 by the Global Wind Energy Council (GWEC) and Greenpeace found that the country had built 61 wind farms, from Guangdong to Mongolia, which when connected to the electricity grid can collectively produce more than four gigawatts of energy. But foreign investors are not getting a look in...."
"The reason is simple. China persists in tendering its new wind projects and awarding them to bidders that offer the lowest delivery price per megawatt of energy. But as HSBC energy banker Jonathan Drew explains, the government also demands that local power companies source more of their power from renewable sources. Meeting these quotas is more important for the local firms than making money on the investments, so they have been bidding at levels that more commercially-orientated international corporates can't match."
********
In other words, the Chinese government requires local utilities to source more renewable energy even if it's not profitable.
In this case, the government appears to be placing environmental policies ahead of utilities' profits.
(post to be continued)
(comment re: "Green Finance" continued)
Given the Chinese government policy which effectively subsidizes alternative energy production at the expense of utility profitability, if I were a shareholder in the Chinese utility and looking only at investment return, I'd say this is a bad policy.
In the U.S., the utility would complain to its congressmen and congresswomen and hire lobbyists and PR firms and fund think tanks like the Heritage Foundation and the American Enterprise Institute to produce research on why freeing the utility sector from excessive government regulation would promote innovation and more alternative energy usage, not less.
In China, the utilities are not permitted to put profits ahead of the public interest, as defined by the government, which needs to deliver the goods (rising living standards) or they might get kicked out of power. What a terrible government they have.
Americans think we have a better system. The Chinese think they have a better system. Time will tell which one works better.
In the meantime, let's try to be rational and work together with the Chinese on this. We only have one world and hopefully we'll be living together on it for a very long time.
"But it is up to China's enigmatic economic policy makers to make the important decisions that will begin to temper China's unaffordable and dangerous love affair with high consumption. If they do so they might provide a good example to the rest of the world, from other developing nations to high consumers like the U.S. "
Replace China with US, and vice versa, and it will read very well. I am fed up with hyporcrites in America criticizing China on energy consumption. You yourself pointed out the ecological footprint is 6 times for an American as compared to a Chinese.
The only new topic in your article is the fuel subsidy what is going on in China today. But we should have some perspective on this. For a very long time, the gasoline price in China was more expensive than in US, and in US the gasoline price went up a lot only recently. China has a different approach, the government is not going to subsidize in the long run, they do it to modulate the price flatuation, and to avoid unnecessary anger among consumers. In the next 1-2 years, several things can happen to make the gasoline price in China to be about the same as in US: 1.) RMB valuation increase relative to dollar; 2.) Crude oil price drop which will push the gasoline price in US back down; 3.) Removal of government subsidy step by step by the Chinese government.
"Replace China with US, and vice versa, and it will read very well. I am fed up with hyporcrites in America criticizing China on energy consumption. You yourself pointed out the ecological footprint is 6 times for an American as compared to a Chinese." by zhoea
Give it a rest! China has over one billion people. It's not hypocritical to state that if the Chinese demand to be as foolish as Americans regarding consumption of resources, they'll begin and end their day in an oxygen tent.
When I see self-described "progressives" eagerly looking forward to the day when Americans can no longer afford to drive cars and are forced to ride bicycles, I am reminded of a quote from "Atlas Shrugged":
"The nation which once held the creed that greatness is achieved by production, is now being told that it is achieved by squalor"
-- Ayn Rand, "Atlas Shrugged," 1957
Just because Ayn Rand was a stupid, selfish twit doesn't mean the rest of us have to be.
Methinks pollution is very squalid indeed and we need to rethink that definition of progress, given current realities.
Ayn Rand is a passe philosopher, the patron saint of market fundamentalists. Her time passed since the 1950s even though her disciples have continued to wreck the planet into today. Is there still an argument against the fact that the earth's resources are limited and its environment is not infinitely resilient, and that we are pushing both beyond their ability to rebound?
Wealth, virtue have to mean different things in our days.
Ayn Rand devotees are like living Neanderthals.
I question the assumption that "Americans are starting to realize the errors of excess... and learning the virtures of saving energy." There's a lot of media hype and the odd anecdote, but higher gas prices have not yet translated into a lower average emission of US cars (in fact, as of last year it was still going up). There isn't a significantly higher use of public transit or bicycles. There aren't more houses that are built to reduce the need for air conditioning. We have a long, long way to go before US consumers even become the world's second worst polluters.
You have to be careful how you calculate an eco footprint. The eco footprint of the Chinese has a lot to do with their manufacturing - which is largely exported, largely to the US.
As for your headline "China Eats the World" - that's just nonsense. Gas prices may be half the US price in China but wages are less than half. 1300 cars a day is not so huge in a country with a billion and a half people. The Chinese also have far stronger emission standards than the US. And as you say, the Chinese footprint is still a sixth that of the US.
Finally, as Gwynne Dyer says, "They [China, India, etc] may be adding the bit that makes the cup overflow but we filled the cup."
The US needs to look to its own atrocious record and stop demonizing the Chinese.
"1300 cars a day is not so huge in a country with a billion and a half people. "
That figure is just for Beijing - not the entire country!
"The Chinese also have far stronger emission standards than the US."
True, but as is always the case with China, it's useless to look at what the laws say unless you also look at how they are enforced. And in this case, as is often true in China, enforement is quite lax.
"True, but as is always the case with China, it's useless to look at what the laws say unless you also look at how they are enforced. And in this case, as is often true in China, enforcement is quite lax."
You can say the same thing about America. Fact is, we're using 6 times as much energy so we have some work to do before complaining about China and India.
The Chinese have just begun to improve their standard of living after 200 or more years of poverty and deprivation. It is understandable that they couldn't care less about the environment and are eager to enjoy a life style like the rest of the world. When they have become as rich and as secured as the West, then and only then, will they be concerned about the environment and preservation of world resources and all the good deeds.
There will always be a different standard between the haves and the have-nots in this world and it will never be possible to apply the same standard to both. Besides, the U.S. is still the major offender when it comes to carbon emission on an individual basis even today ! The advanced countries must do something by example first.
I would not worry about all of this too much. The Chinese have proven over and over and over again that they can adjust to and deal with problems like these. Their working "one child" policy is living proof of that. If any of the countries in the West, but especially the US, had nearly as much control over their own wasteful habits as the Chinese have, I would not be worried about the world.
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