China

As Barack Obama embarks on his first trip to Beijing as president -- and with less than a month to go before the Copenhagen climate change summit -- it's worth asking: Is China's rapid economic growth ravaging the environment? Or are that nation's massive investments in green technology an environmental lifeline -- not to mention a huge headstart in a sector that could drive the economy of the 21st century?

New America Foundation Schwartz Fellow Christina Larson will be discussing these questions Tuesday, Nov. 17, in this week's New America Foundation / Politico live web chat.

Update: This chat has concluded, but a full transcript is archived below.

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Past Chats

Previous New America/Politico chats have their full transcripts archived:

I had a dream about watching one of those high stakes poker games that you see on TV these days. There were bit players who you knew, from the few colored chips in front of them, would soon fold - - but the two "whales" at the table were Barack Obama and Hu Jintao. They each had so many chips on the table that you could barely see their cowboy shirts, but the purpose in their deadly stares could not be obscured, even by the dark black Ray Bans that shaded their eyes.

Obama wasted no time putting his ante smack in the middle of the green felt for all to see - - roll back greenhouse gases to 1990 levels by 2020 and 80% lower by 2050 (a statement made just 14 days after he was elected). Hu countered with a commitment to reduce energy consumption by 20%. Cards were dealt and the players tugged on their caps (Hu's read "Made in China" and Obama's proclaimed "Copenhagen", an obscure reference to either the failed Chicago bid for the 2016 Olympics or the upcoming climate talks).

The American Prez made the first bet - - adopting California's greenhouse gas limits on tailpipes as the national standard. The crowd murmured as they realized this meant he was betting on executive power instead of Congress. The Chinese Prez countered with a commitment to replace 15% of dirty fossil fuels with clean energy, like wind and solar, by 2020. The crowd gasped audibly, realizing that this would double China's current renewable energy supply.

By Patrick Doherty and Ben Katcher

While the media are drawn to the story of the day, which today means the killing of Baitullah Mehsud in Pakistan and the longevity of the "cash for clunkers" program here at home, it is essential for the Obama administration to keep its eye on the strategic ball. In short, while the administration was absolutely right to triage the domestic economy and global crises like Iraq and Afghanistan during its first six months, the President and his most senior advisors must now turn to the great questions of statecraft: great power relations and America's role in the world.

I've written about health reform in China on this blog before. This week, on the Foreign Policy website I have a more in-depth analysis of China's health care system, its path towards health reform and the impact reform will have on China's 1.3 billion citizens. Check it out!

As a student at Peking University in Beijing in 2005-06—China's version of Harvard, without the Ivy—I was honored to be amidst some of China's best and brightest minds. I often wondered whether the person I was sitting next to at the school cafeteria eating noodles and baozi would be a future finance minister or a scientist that will cure cancer. I never once thought that some of these students would be unemployed. And uninsured. But in today's economic climate, some of them are.

After China's revolution, people got a basic level of medical care for free. That system was dismantled in the 1980s amid the economic reforms. Now China has gaps between the quality and access of care in rural and urban areas. And China has uninsured people—about 200 million of them. And costs are rising, as they are here. (NEJM had a great brief history of modern China's health system called "Privatization and its Discontents.")

China's export surplus in September set a new record at $29.3bn, despite the global slowdown. But, Chinese government officials and economists agree that exports will fall in coming months. The Chinese leadership issued a report saying that the country would rely more on domestic demand as a source of growth as consumers in Europe and the US cut back on spending.

The Central Committee's report promised better healthcare, more education, housing, pensions, land rights for rural peasants, and a doubling of rural incomes by 2020. The strengthening of the social safety net, which has deteriorated in recent years, and providing higher wages, is thought to increase domestic Chinese demand.

Snapshot asks, does China's central leadership have the will and capacity to boost consumption?

Bloomberg - China's Trade Surplus Widens to Record $29.3 Billion
AP - China looking inward as foreign economies slow
Bloomberg - China to Double Rural Incomes to Boost Consumption

China's leadership is contemplating a RMB 400bn ($58bn) stimulus package that includes large spending on a backlog of transportation projects like subways and railroads, according to JPMorgan. The Chinese government, unlike that of the United States, understands the benefits that infrastructure investments have on increasing efficiency and stimulating a slowing economy. JPMorgan predicts Chinese leaders will release the stimulus once we see more signs of a weakening economy and commodity prices fall further, which would reduce the input costs for strained Chinese producers. If exporters, which make up 37.5% of GDP, are badly hit and shed jobs, infrastructure investment may even prop up private consumption, which has held up remarkably well despite inflating food prices and a falling stock market.

Snapshot asks, can we learn how to invest in public infrastructure and stimulate a slowing economy from the Chinese government?

Tax systems get used for a lot more than raising revenue for the government. They are also often used to help change behavior and to make prices reflect costs of "negative externalities." If you want to discourage something, raise the tax on it.  If you want to encourage something, lower the tax or offer a special deduction or tax credit.

One activity we want to discourage today is greenhouse gas emissions, such as CO2 from burning fossil fuels - like the gas in your car. So, despite some elected officials calling for ways to lower the cost of gasoline, we should really be looking to increase the cost because:

1. The higher cost will encourage people to drive less or find other ways to use less gasoline.
2. What we pay for gas at the pump is not the true cost. When we drive and burn gasoline, we cause air pollution, create GHG emissions that contribute to global warming, wear out roads, and cause congestion. These activities have costs - such as cleaning the air or refurbishing roads. When that cost is not included in the price we pay, the government doesn't get the money needed to deal with the problems - the negative externalities of driving.

Beijing seems to have the idea right. It was reported in several news outlets that on August 13, Beijing announced that there would be a much higher sales tax on large cars and a lower tax on smaller cars (see abcnews.go.com)

Associated Press (08/06) cites William Hartung on potential cooperation with China on energy security.
Washington Post (08/06) quotes Flynt Leverett on Iran's continuing uranium enrichment.
National Interest (08/01) cites Peter Bergen on Washington's evolving strategy against terrorism.
Somerville Journal (08/01) quotes Daniel Levy's analysis on Israel negotiating through Turkey and Egypt.

I was in Beijing last week and noticed the smog, of course, but as China grapples with Olympics and air quality I also saw something much more important. China is serious about energy efficiency and reducing greenhouse gases.

In recent months, the Chinese government has closed over 21 gigawatts of the dirtiest, most inefficient power plants. They didn't do this just for a temporary clean air benefit around Beijing - - it was done permanently all across the country. They also closed inefficient foundries, furnaces, and cement makers in huge numbers.

The government is in talks with major manufacturers, provincial leaders, and experts from places like California's Energy Commission (the agency that is largely responsible for making the Golden State 40% more energy efficient than the rest of America) to squeeze out all of the inefficient machinery, power generators, and heating/air conditioning equipment. They're also doing the obvious - - one official told me that the government will replace 2 billion incandescent light bulbs in the next year with more efficient ones.