China's Downfall: the Ultimate Impact of Environmental Degradation

We have short memories, and as a consequence we keep perpetuating the same myths and mistakes as if the past is nothing but a black void offering no lessons for the future. The unquestioned conventional wisdom that China will be the next economic superpower is a case in point. In making that claim we have clearly forgotten the Japan that can say no. In making that claim, we clearly ignore the impacts of environmental degradation on future economic growth.

I come to this discussion having lived in Japan for two years in my youth. Later in life, I participated in multiple negotiations with the governments of Japan and China as Chief Environmental Officer at the Agency for International Development and during my time in the Clinton White House as the Assistant Director for International Science and Technology. I offer that background because the confluence of science, technology, economics and the environment has much to say about the future of Japan and China, and how those economies will impact the United States.

Wild assertions about Asian economic dominance have had cyclical rises in popularity for decades. We can learn important lessons from the previous high point in the 1980s, if only we would glance back. Do we not remember our fears of the Japanese economic tsunami that threatened to envelop the United States? Japan was buying up iconic American real estate like the Rockefeller Center, Columbia Pictures and the Pebble Beach golf course, creating angst about our patrimony. Hawaii became an extension of Tokyo. The Japanese business model was crushing American industry. The Japanese economy was expanding while ours was contracting. The trade imbalance with Japan was exploding. Japan became the world's biggest creditor just as the United States earned the dubious distinction of being the world's biggest debtor. Japan was the very image of high quality and efficiency that the whole world wished to emulate, while American industry had a growing reputation for making sub-standard products considered second-rate in the global economy. Japanese companies became industry leaders in fields previously dominated by American businesses. Japanese ascendancy was assumed, unquestioned, accepted as inevitable, a juggernaut unstoppable by a weakened United States.

In this heady environment, the Japanese grew to believe that their country and people were superior. This attitude was captured perfectly in 1989 in The Japan That Can Say No, co-authored by Sony co-founder Akio Morita and Shintaro Ishihara, Tokyo's current mayor (governor). The authors boldly claimed that American workers were lazy, and that Japan benefited from a huge advantage with its highly educated workforce. The book went further to claim that Japanese character was innately superior to Americans, who have been contaminated by the problems of a multiethnic and multicultural society.

Yet this panic and hysteria are barely mentioned in polite circles today. We do not discuss the breathless headlines about Japan buying America. We bury the memory of the most prominent Asian experts pontificating ominously about a new world order. We do so out of a sense of embarrassment, because all the talking heads and prognosticators were simply wrong. Chalmers Johnson, perhaps the best known of the Japanese experts, recently confessed with amazing understatement, "In retrospect I probably did overstate the nature of the Japanese challenge."

And now we are repeating the exercise with China, perpetuating the same myths.

We have clearly learned absolutely nothing from our lessons about Asia. Yes, China's meteoric rise has a different genesis than Japan's and significantly different implications for the United States. But the heavy breathing about China is wrong, just as the experts got Japan wrong. To understand why we misjudge China, we first have to examine our misunderstanding of Japan's false rise.

The economic prosperity of the Clinton years, and a decade of stagnation and burst bubbles in Tokyo, proved beyond doubt that the hypothesis put forth by Morita and Ishihara represented nothing but insular racism rather than any fundamental truth about Japanese greatness. But how did all the pundits get so spectacularly off track before the reality of Japan's fallibility was exposed by world events? They simply did not look deep enough at Japanese culture.

America's economic might derives directly from an infrastructure that encourages individualism, innovation, entrepreneurship and risk-taking. Japan's economic growth resulted from the focused determination that derives from uniformity, conformity, risk-aversion and group-thinking. The Japanese approach has great merit, but severe limitations. Those limitations were reached in the 1990s. In the midst of our collective panic about Japan, I said to anybody who would listen, and I am sure nobody did, that we just needed to take a deep breath, and let Japan's methodology play itself out. The school system crushes individualism, punishes severely any attempt to innovate, and demands a degree of social conformity unthinkable in the United States. That fundamental constraint was missed by the experts.

Also missed were the structural limitations of Japan's "keiretsu" or cartels, most of which are illegal but exist as an open dirty secret. The Japanese economy was then, and in many ways still is, highly "cartelized" in manufacturing, farming and trade. This model of rigid uniformity in a school system that feeds automatons into a semi-monopolized command-control economy works well for an emerging economy, but is not suitable for global leadership. A culture and economy so hostile to individualism simply cannot outgrow a system dedicated to the entrepreneurial spirit.

We can see this with a political analogy. A dictator has certain advantages over an elected president in a democracy. An absolute ruler unencumbered by negotiations with opponents can move by decree and react quickly. But while that model has certain short-term advantages, the limits can be seen by the results of history. The more flexible, messy, democratic approach has proven superior. Likewise, the American economy, which is messy, multicultural, scrappy and individualistic, is ultimately more powerful than the rigid, neater, uniform, and tidier Japanese model, in spite of the latter's short-term advantages. What we really ended up with is the Japan that can say maybe.

Just as we overlooked the structural flaws in the Japanese economy during Japan's rapid rise, so too are we blind to limiting and deep-seated constraints in China that will prove to be inherent brakes on growth. What pundits today fail to recognize is that China's economic expansion is more illusory than spectacular. The fundamental constraint on future growth imposed by severe environmental degradation in China is the story line that is not being read. Multi-decadal double-digit expansion has been achieved at the terrible cost of unprecedented levels of pollution, irreversible damage to ecosystem functions, and depletion of critical non-renewable natural resources. China has sustained unprecedented growth by stealing, not borrowing, from future generations. That debt must be paid, and when the invoice comes due, the economic expansion will come to a grinding halt.

The magnitude of the environmental waste and destruction in China is so staggering as to be hard to comprehend. Sixteen of the world's 20 most polluted cities are in China. Nearly one-third of all Chinese lacks access to potable water, with a per-capita supply about one-quarter the global average. More than 70% of China's rivers, lakes and streams are heavily polluted. Every year, nearly 6000 square miles of grasslands and forests are lost to desertification. Desert sands claim an area equivalent to New Jersey every five years. One impact among many is an unprecedented number of choking sandstorms, more than quadruple the number compared to just ten years ago.

Chinese air is now a nasty brew of sulfur dioxide, nitrogen dioxide and ozone. Many regions of China can now lay claim to the most polluted air in the world. The situation is only getting worse, because automobiles are now the leading cause of dirty air, even though China imposes emissions and mileage standards that well exceed those in the United States. If China achieves parity with the United States on per-capita automobile ownership, China alone would have 1.1 billion cars compared to the global fleet today of 800 million.

Acid rain is so pervasive and severe that crop yields have declined in about 30% of the country, and buildings are being seriously damaged in every urban area.

The impact of air pollution on human health is enormous. From 2001-2006, a study conducted by Nanjing University showed that air pollution caused an increase in birth defects by an astonishing 50%, affecting 1.2 million babies. Respiratory diseases are now a leading cause of death in adults. A report from the United Nations in 2002 concluded that 23,000 respiratory deaths, 13,000 fatal heart attacks and 15 million cases of bronchitis were directly attributable to air pollution. The World Health Organization estimates that air pollution kills 656,000 Chinese each year.

The remainder of the animal kingdom is not immune, either, to pollution or habitat destruction. According to the IUCN Red List, China is a tenuous home to 385 threatened species. Some are familiar to the West, including the giant panda, South China and Siberian tigers, Asian elephant, and Yangtze River dolphin, but they are joined by many lesser-known species essential to normal ecosystem functioning.

A projected population of 1.5 billion by 2031 will impose ever-greater demands on dwindling supplies of scarce but vital resources. At that population level, China itself will be consuming resources at a volume now being used by the rest of the world combined. For example, a population of that size would, with reasonable projections of per capita consumption, require about 100 million barrels of oil per day, compared to global use today of about 85 million barrels daily. They will soon exceed the oil consumption of the United States. China is already the world's leading consumer of tropical hardwoods, grain, meat, coal and steel.

The environmental crisis is not the only burden the Chinese must overcome. Social issues like the spread of AIDS, a disparity between numbers of men and women creating a restless "bachelor class", unchecked urban migration, and widespread racism will diminish prosperity and hamper economic growth as well.

China is fighting a losing battle between resource depletion, pollution, population growth and fragile political stability. Only by eating their seed corn have they been able to promote growth and maintain order, giving a false sense of progress that is not sustainable. The granary is rapidly approaching empty, and when the degraded and polluted land can no longer support the mirage, the miracle of the Chinese economy will be exposed for the myth that it is.

But that does not stop the pundits. The New York Times published an article in 2005 opening with the paragraph:

Not even 20 years have passed since the apparently unstoppable Japanese economic juggernaut struck fear in the hearts of Americans, and now China has emerged to be seen as the new economic menace threatening the nation's vital strategic interests.

The forecasts have only gotten more dire since then. The very same expert who warned us about the land of the rising sun now says, yes, but "China is several orders of magnitude different from Japan."

When you hear experts talk about the economic threat posed by an ascending China, remember Japan. They are ignoring the obvious, just like in the 1980s.

Comments

[Discomustachio]

I think the only thing I would take issue with in this article is it seems to have been written in the vain of, "So don't worry America, all of this bad stuff is going to happen to China and we will likely continue to dominate the globa for much longer than you think". I take issue because the same stuff that is going to happen in China is going to happen here as well. It's true that it is on a much more massive scale in China but just think about the water shortages in the West, the lack of rainfall in the SouthEast, reports that are hardly making it to corporate news about crop failures all over the US that, if repeat themselves once or twice could lead to a famine.

It's a great article-don't get me wrong. It just seems that the tone should have been a touch more accurate in that a collapse of China doesn't mean good times are back for America at all. If anything we will expereince something similar to China and likely decend into chaos like they will.

[LetMeUnderstandThis]

Couldn't happen to a better Government, feel sorry for the people though

[listeningpost]

Good piece Jeff. I think a key axiom for this period is "the bigger they are...", just as true with our own situation right now. The most salient conclusion I draw from your article is: what are the global consequences when China begins to convulse? China has been making hay while the sun shines and spreading its influence everywhere it can. From South American agriculture, to controlling the ports of the Panama Canal, to African resources, and Western financial investments; what is going to happen when the going gets tough? There may well be an event horizon beyond which China will not be able to project maximum power, this point may be fairly predictable based upon when its financial, human, and natural resources really begin to decline. Then what?
Right now, for some reason, we are very afraid that Iran could exercise blackmail on the whole world economy were it to get nuclear weapons. It seems to me that there are plenty of countries that already can if push comes to shove. I think it would be a useful intellectual exercise to consider when and where China might seek to delay some of its problems with aggressive international actions. Point being, perhaps we should fear the implosion of China much more than explosion.

[Jeff Schweitzer - Huffpost Blogger]

Yes, you are correct, we should fear both, but for radically different reasons as you imply. A subtext of the blog really was that we are fearing the wrong thing about China. We should not fear their economic dominance for the reasons articulated, but that does not mean we have nothing to fear from military aggression. That is the much more likely threat; as their world implodes they may strike out violently in a desperate attempt to protect their failing empire. Thanks for your post -- well said.

[kapo]

The environment has an enormous capacity to regenerate itself if given the chance. Thus the industrial areas of the United States and Europe went through some rough patches and have been subsequently transformed over the last century. Remember Walden Pond, and much of the easten US had been deforested by Thoreau's day. The Soviets were world class polluters, as Chernobyl attests, but the costs are being managed now. The Chinese are simply following what others have done. The big problem is that their economic doctrine has hit the brick wall of success. How much futher can their exports grow? China is not doomed, but they are set for a nasty patch until they can figure out a new direction for themselves.

[Jeff Schweitzer - Huffpost Blogger]

The environment is amazingly resilient, but only up to a point. An exinct species cannot be brought back. A mangrove forest lost is usually lost forever. In many cases I believe China has crossed the threshold of no-return. Yes, if they stopped the destruction now, much of the ecosystem would recover in the next century or so; but that is not a highly likely scenario. China may well be doing what others have done before, but on a scale never before seen. And scale matters.

[DiogenesOfAlaska]

On top of the environmental problems that you detail - and which are certainly 'good enough' to create a longlasting series of nightmares - China also faces another sustainability problem, which is less visible, but maybe just as 'dirty': the funding of their pension and retirement systems isn't up to the demographic facts of ageing.

Well, then.

It remains to point out the little x that has not been pointed out - I don't know why:

Just why was it or is it that the punditry is so fond of scaring the heck out of the Western workforce, including an increasing fraction of the knowledge workforce?

Let's call it the British Empire's favorite game of divide and conquer, played by everybody who is sufficiently privileged to be in the driver's seat of globalization. And not so oft openly discussed.

[Jeff Schweitzer - Huffpost Blogger]

Along those same lines, also little discussed is the up-to-$1 trillion stimulus package that the Chinese government is expected to fund to keep their economy from imploding along the lines that ours did; if they do so, that is $1 tirllion less they will be spending to buy our Treasury Bonds, which begs the questions of who will fund our exploding debts that we are using to stimulate our economy.

[DiogenesOfAlaska]

This is a big subject, but in a back-of-th­e-envelope manner, one can make a case that it's not such a terrible desaster either:

the estimate is that the yield on US government bonds has been artificially compressed by the China purchase of bonds by roughly half a percentage point.

Well then. Means that without China it will cost the US half a percentage point more to get their bonds out there. So what? No biggie.

As I said. This is back of the envelope. No rigor in it.

[JohnnyBoyyy]

Wow, Mr. Schweitzer, the cadence of your article built-up into a fast and powerful crescendo for me. My heart was beating faster the more I read. My thirst for knowledge on this matter has never been more quenched!

Like many Americans, I have heard the "experts talk about the economic threat posed by an ascending China". I am also sure most Americans shared my feelings of a crushed American Pride. After all, WE are the 232 year old "experiment" that has always been a world power for innovation and good will despite our sometime child-like actions and, yes, our tendency to be perceived as a little arrogant.

I am so very relieved that the "American economy, which is messy, multicultural, scrappy and individualistic" has it's place in the new order of the world. I am also very sad that the Chinese people, as well as people from many nearby nations will pay for the rapid Chinese growth with their very lives for years to come. China has no system of goverance, nor the intellectual infrastructure that we take for granted to effect changes for a better environment and educate the rank and file citizen.

This Is OUR Time - This Is OUR Moment.

Barack Hussein Obama II
President-Elect
United States of America

[KillTheMessenger]

I wonder what the real Barack Obama thinks about a nation that has a 3500 year old history of continuous government governance? Would he really think they are an ungoverned nation without "intellectual infrastructure"?

Hardly. Don't soil the man, Johnnyboy. Or yourself.

[Paudler]

The article focuses on China's competitiveness with the U.S. and the West in general and Schweitzer's points are valid and well-articulated but the terrible environmental, social and political effects of China's unchecked, unregulated and unconstrained growth won't be held within China's borders; they will affect the rest of the world, they already do. So while we might find some comfort that China's dreaded, imminent dominance is an illusion, much of the rest of the world will also have to cover the bad checks that China has written to construct an image of limitless growth and prosperity. Hey! a fading illusion of limitless growth and prosperity. Why does that sound so familiar? Maybe we don't need to feel commercially or economically threatened by China, maybe we can continue to feel superior, but we face plenty of threats raised by our own hands. Our own culture, economy and government desperately need to be re-tooled or we'll find ourselves sharing China's vortex.

[Jeff Schweitzer - Huffpost Blogger]

Bravo, well said. I agree with everything that you say here.

[greenTmom]

China is building a new coal fired power plant every ten days. China can see first hand the effects of these plants and other greenhouse gas emitting factories because their glaciers are melting.
The glaciers, which regulate the water supply to the Ganges, Indus, Brahmaputra, Mekong, Thanlwin, Yangtze and Yellow rivers is receding at a rate of 35 to 50 feet per year.

To see videos of this yourself, check out http://www.greenearthfriend.com/2009/01/chinese-glaciers-are-melting/

[Jeff Schweitzer - Huffpost Blogger]

Their water shortage and quality problems are not getting any better, and snow pack is just one of many critical issues. All of these will put a brake on their economic growth.

[KillTheMessenger]

"Their water shortage and quality problems are not getting any better, "

Neither are ours. Do I really have to say that? Really?

[Overtone]

Revolutionary breakthrough energy systems can reverse the pollution in China and everywhere else on earth.

Unconventional energy conversion systems are under development tapping a never previously commercialized, renewable, abundant source of energy. These revolutionary new energy conversion devices are inherently cost-competitive. They can make practical cars, trucks and buses that need no engines, banks of batteries, or any variety of conventional fuel or recharge.

Advanced designs are capable of producing electricity on a self-sustaining basis. Some devices without moving parts are comparable to an inexhaustible battery. One Proof-of-Concept prototype is analogous to the early work on the transistor, which eventually led to a Nobel Prize and the creation of Silicon Valley.

A generator we are developing is expected to generate sufficient power to demonstrate replacement of the plug needed by a plug-in hybrid car. A prototype new energy conversion system is anticipated to replace an automobile engine within three years. This will open a path to mass production of an entirely new variety of automotive power plant. Electric vehicles powered by these technologies will never require conventional fuel or recharge.

Cars, trucks and buses powered by such systems can become fuel free power plants when parked - wirelessly transmitting electricity to the grid or industrial facility.

See: http://www.renewableenergyworld.com/rea/partner/story?id=54361&cid=7763

[BatMasterson]

by the time those technologies come out China will look like earth in Wall-E.

[Jeff Schweitzer - Huffpost Blogger]

I wish you all the success in the world, truly. But as others have noted, whatever China does from this moment forward, they will still have to pay the price for wanton destruction of the environment. That price wil be so steep that their economy will suffer for generations, even if we could provide a near-miracle source of energy.

[KillTheMessenger]

Mr. Schwetizer, Overtone talks about "inventions" that violate the energy conservation law. I hope you noticed that. :-)