Carl Mortished: World business briefing
We've made some changes
to The Sunday Times
Hu Jintao wants to make every Chinese twice as rich by 2020. He has done it once – in just five years, income per capita doubled to $2,000 (£983) - and the only obstacle in the Chinese President’s path is the fuel needed to stoke the boiler in China’s locomotive.
The president needs more copper, iron ore, zinc and natural gas. Above all, he needs more coal to keep the power stations humming nicely and more oil for Chinese cars and lorries. China accounts for more than a third of world demand for coal and the price in Australia soared this year as the People’s Republic switched from being an exporter to being an importer. If Mr Hu had a message for the world in his address to the Communist Party National Congress, it was this: we will burn our coal and, if we have to, we will burn yours, too.
What does this mean? Put bluntly, it means that the Kyoto treaty on greenhouse gas emissions is dead and so is any prospect of persuading Beijing to bind itself to other curbs on carbon emissions. We can stop kidding ourselves that China will sign up to any green thingy that hinders his party’s ten-year plan to get rich quick. Instead, the ravenous demand for minerals and metals will continue and the desperate land grab by Chinese state companies in their pursuit of resources in Central Asia, Africa and Canada will become more politically embarrassing.
Until now, we in the West have been able to sit back and watch the global energy game passively on our Chinese-made flatscreen television sets. We could pretend that wind farms and wave machines could really make substantial contributions, that carbon trading could somehow make the cost of green energy disappear. We did not understand that the real cost of our affluent, energy-intensive lifestyles was being defrayed by sweated labour in a Chinese factory. While the price of clothes, fridges, TVs and toys was plummeting, we could ignore that petrol, transport and even bread and milk were in the grip of an inflationary spiral.
That is about to change because China’s rate of consumption is beginning to have internal consequences for the People’s Republic. Skilled labour is becoming a more scarce commodity for Chinese businesses and the cost of living is bearing down on Chinese consumers with increases in fuel and food prices. Inexorably, Chinese inflation will feed through into the cost of goods that China sells to the world.
That means that competition for resources will ratchet up in intensity. In Europe, we have not even begun to consider the consequences for our half-hearted strategy of pursuing a low-carbon economy. In an effort to rein in the cost of electricity, British power generators have been switching from natural gas to coal, traditionally a cheaper fuel. However, it is rapidly losing its lower-cost allure, the European price having doubled to $100 per tonne. Even so, analysts at Société Générale calculate that the cost of carbon permits is still so low that, on the basis of current gas and coal prices, it remains cheaper to burn coal than to switch to cleaner natural gas.
For Mr Hu, this is a race for prosperity. Of course, he said a lot of other things about “the excessively high cost in resources and the environment” and about a restructuring of the economy away from heavy industry to services and high technology. That may be a sensible objective in Shanghai, where inflation in manufacturing wages is already causing problems, but a doubling of the incomes of peasants in western China will not be achieved by turning them into estate agents. Industrialisation will move west and that has been the Communist Party’s objective for more than a decade. Mr Hu knows that disparities in wealth between east and west are a huge political risk. The party needs growth if it is to survive for another decade and that means it must build homes, factories, hospitals and sewage plants.
Removing huge disparities in wealth means a massive acceleration in the burning of hydrocarbons. The four great energy companies of the West – ExxonMobil, Shell, BP and Total – have quietly turned their backs on the low-carbon option. Alternative technologies simply do not deliver the power required to achieve the economic growth targets of China and India. These companies are investing tiny sums in alternative energy. They know full well that the nations of the West depend heavily on the profits, taxes and dividends that accrue from an efficient hydrocarbon economy. A failure to invest in oil and gas extraction will leave Europe and America poor, technologically disabled and unequipped financially to cope with climate change.
The feeble intellectual response of Europe and America to this energy challenge is becoming a matter not of concern but alarm. The use of food crops for biofuels, the hobbling of energy companies with the obligation to use unreliable and expensive alternatives and the lack of investment in nuclear power is frightening.
Those whom the gods wish to destroy, they first make mad. It is not in our power to stop the Chinese locomotive; we should leave our fantasies behind, acknowledge that carbon emissions will continue to grow and plan accordingly.
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Every American contributes 5/6 times more Carbon that a Chinese citizen. Australian's are even worse. UK comes in at just under twice the pollution per head versus China.
Have you ever been to rural China? You want to keep these people living tough lives when we are not prepared to give up our 4x4s
Simon, London, UK
Exactly Right Michael. In my opinion this is not a china vs the west or communist against democratic issue. Greed is what powers all of this, The Chinese and Indian growth through the easiest means and our refusal to invest heavily in the less profitable âgreenâ power.
The more investment and incentives to use green power, the more cost effective and efficient it will become.
As far as I can see, it will impact on developed countries a lot less to invest in green technology to make it effective and efficient than it will on developing countries. Therefore the onus is on the developed countries, US, Europe and Australia.
But I fear greed for power (by politicians to keep the economy strong and therefore get votes) and private industry lust for money will prevent this until the majority of the public in these countries will force the politicians to regulate in such a way that it is possible. But are we willing to give up the greed. Collectively I fear not.
Ben, Melbourne , Australia
For the Chinese bloggers here: if a convicted criminal tries to teach a young gang member why it is a bad idea to lead a life of crime, do you call the criminal a hypocrite and stop listening to him? For the Westerners here, the comment that we must lead by example is exactly right -- until we subsidize a massive alternative energy program and thereafter gift the technology to China and India, we should not be surprised that they will use whatever they can to grow, whether it is communist China or democratic India.
Michael, Burlingame, CA
you mean china have rights to live in poverty, and have no rights to develope at all
cpc, shanghai, china
us is the largest carbon-emission country for more than 100 years.
cpc, shanghai, china
If you have an economy with our current technological arrangements, you have CO2 emissions. The bigger the economy, the more the emissions. Since China, and India, and South America, and Africa, and for that matter Europe and the US, want to improve their economies, they will produce more CO2, at least in the short term. Conservation may reduce emissions somewhat in the richer countries for awhile, but it won't help places like China that are starting from a nearly zero economic basis in much of the country (even today).
If CO2 proves to be as bad as Goracolytes say, the only choice will be large-scale geo-engineering. Kyoto-style "managed" emissions reduction won't work, will cost $trillions, and will keep billions poor.
Foobarista, Mountain View, California
Oliver
I cannot see the point of your comment. The fact that we have invented the infrastructure of a destructive system now being emulated by countries who want our lifestyle at all cost is not really the issue. What is, is, what sort of future are we leaving our kids
On that point incidentally I have to disagree...a good deal of our technology also has its origins in Japan, the sister nation of China.
Darryl Smyth, Nelson, New Zealand
China and other emerging markets are doing the right thing. There is no other way to change the feeble response of advanced industrial nations to climate change and carbon emissions except palpable fear. As long as rich nations continue to massively blow smoke in the air with no end in sight, it's silly to expect poorer nations to stake out a more expensive path to prosperity. Lead by example or shut up.
Name Withheld, USA,
In the end.....The USA is totally justified in its refusal to sign on to Kyoto...even though the President and the US in general are pilloried throughout the politically correct world (mostly Euros) for not agreeing to it. We were right....the "Progressive" Libs were wrong, again.
The article is a penneywhistle view of China. The point was not even made that the government here turns a blind eye to gross polluters in all industries, just to keep up the 12% growth rate per annum. Not just the energy issue....but in all pollution control areas. Don't be fooled by CNN and the BBC who only show you a cameras-eye view of the "booming China". They, in their rush to exemplify themselves in self fladulation.....are one of the main reasons the rest of the world gets a skewed vision of the China revolution.
Marc Robinson (American), Panyu, China
The West made its progress in 100 years by inventing everything from scratch, and also developed democracy, human rights, and for that matter environmentalism, at the same time. All the Chinese Communist Party has bee doing for the last 28 years is copying the material aspects of the west, while oppressing its own people, and supporting tyrants around the world.
Oliver Chettle, Bedford,
Why don't we invite the whole of China to come and live in the UK?
This would solve the problem of limiting their carbon emissions and add to our cultural diversity.
As Mr Brown has explained, 'there is no natural limit to the number of migrants we invite to our country.
alan bond, lancaster, england
China made the economic progress in just 28 years reform while the west develop its indutry for over a 100 years while polluting the whole world. While developing in this short time, China doesnt have enough time to digest all these envirement problem like the west which can even export their waste now to the developing countries.
When pointing the finger easily to China, try not to forget that 17% of industry emission in China is for the production for USA and 12% for Europe. The westerners should be grateful and have nothing to complain.
gao hong, beijing china,
Why does the above reader take offense to this article? the article was clearly not suggesting that Chinese citizens remain in the stone age as slave labor to the west. If you took a minute to read carefully you would realize that this article is a timely plea for the Western Developed Nations to develop clean, reliable power because coal and natural gas are going to be used by the Chinese no matter what.
No one is 'blaming' China for global warming. The fact of the matter is, however that China's carbon emissions have already overtaken the US's as the highest in the world. Its also convenient for you to sit there in Canada one of the cleanest expanses of natural beauty in the world and support people over here burning massive piles of garbage outside, leaving factory emissions completely untreated and dumping raw sewage into the drinking water. Do these carbon emissions really raise the standard of living when these '10 people in China' are going to die of lung cancer at age 30?
Will Slack, Wenzhou, China
China has 1/5 of the world's population, with more than half still living in poverty, yet the author seem to think, if one is to lower greenhouse gas emissions, its better to let the Chinese poor suffer longer, than to cut down on individual luxuries in the west?
Isn't it convenient to blame China for global warming? Why should you stop driving your car even just to heat 5/6 of your unoccupied room in the winter, when 10 people in China are emitting the same amount coal-wise just to barely make a living? Clearly those 10 people should go back to poverty to just to make your life more convenient AND to benefit the environment at the same time?
Meng Wei, Toronto,