Globalist Perspective

Green China — Part I: Why Go Green?

China is betting its economic future on investments in alternative energy sources.

Credit: Arkadymar/Shutterstock.com

Takeaways


  • Only if China's leaders succeed in delivering clean energy can they provide the stability, resilience and security that the nation requires to continue on its arc of peaceful development.
  • The Western model cannot "scale" to accommodate the aspirations of all of the countries waiting in line for their turn to enjoy the fruits of industrialization.
  • The more that countries like China and India become dependent on oil imports, the closer the world gets to a 21st century dominated by resource wars and oil wars.
  • China's strategy is not to turn its back on growth and industrial development, but to build a new kind of industrial system to sustain its growth.

China is staging a “Great Convergence” — a transformation that will reverse the past two centuries of the Great Divergence, which separated China (as well as the other BICs, Brazil and India) from the West. In the process, these countries are lifting billions of people out of poverty.

But in this great transformation, there is a significant problem to contend with: The model of industrial capitalism that has served the West so well — and which has been held out as a model for the BICs — will simply not “scale” to meet the aspirations of so many billions of people.

Washington’s never-ceasing worries notwithstanding, the old model of industrialization — one which plunders resources and extends supply-lines through armed conquest — is simply not available to the BICs.

Nor can China, India and Brazil have any confidence in a model that binds them to fossil fuel dependence indefinitely, even as the oil and coal supplies peak and then decline, and carbon emissions cumulate.

All of this boils down to a straightforward, yet widely inconvenient insight: A new model of industrial capitalism has to be developed. More inconvenient yet, especially from a U.S. perspective, is that it is being developed — by China.

It is China that is busily forging new institutional arrangements and new strategies of industrialization.

These strategies and arrangements are based around three main components — renewable energies and low-carbon technologies, circular economy initiatives, and eco-finance. In effect, they amount to a new green model of industrial capitalism, and they are being developed at the same time China is ramping up its black energy and resource supplies.

Consider it as a short-term/long-term strategy — one in which the green component is underpinned, as China’ leadership certainly realizes, by an unrelenting desire on the part of the Chinese population for a much cleaner environment, for the simple reason that they don’t want to suffocate.

Only if China’s leaders succeed in that task can they deliver the stability, resilience and security that their nation requires to continue on its self-ascribed arc of peaceful development.

Better yet, if this approach can be made a reality and serves China well, it will be an attractive model for other countries, enhancing China’s soft power and offering an enticing replacement of the discredited, largely self-satisfied Washington Consensus.

In particular, in clear emulation of China, Brazil and India have already commenced a shift towards a green development strategy. And in the advanced world, Germany and now Japan are also swinging away from nuclear power towards a clear reliance on renewables.

Meanwhile, the United States not only remains fixated on fossil fuels. It has even found new vigor and strategic purpose in what Michael Klare, a professor of world security at Hampshire College in the United States, calls “extreme energy” — the fracking of coal seam gas and oil and the extraction of fuel from dangerous locations, such as deepwater wells and Arctic drilling.

Whether the three BIC countries succumb to “carbon lock-in,” as their Western counterparts traditionally have, is the great unanswered question — both for themselves and for the world.

Why a new industrial model is needed

Industrial capitalism has revealed itself to be the most powerful transformative agent in the world today. Its appearance in Britain in the second half of the 17th century, powered by access to fossil fuels, unleashed astonishing gains in productivity associated with rises in income.

This proved so attractive that it was widely emulated elsewhere. The economic historian Karl Polanyi aptly called this the “Great Transformation,” in the sense that nothing would be the same again.

Capitalism was indeed an amazing invention of humankind. Its appearance in cities led to demands for independence and liberties that today we take for granted in the West, and which are now spreading worldwide.

It ushered in the Industrial Revolution — which applied fossil fuels to production — along with new mechanical inventions. This started the world on a trajectory of industrialization and modernization that is bringing more and more of the world’s people into its orbit.

In his recent book, The Next Convergence, Nobel prizewinning economist Michael Spence did the world a great service by pointing out that in this current period a new pattern of growth is emerging.

He foresees that the divergence between incomes and wealth that characterized the first two centuries is being reversed. Giant countries like China, India and Brazil are starting to seriously catch-up with the West.

According to Spence, there is a distinct possibility that by 2050 no less than 75% of the world’s population could be living moderately comfortable lives — up from only 15% who enjoyed such a status a century before.

In other words, of the projected world population of eight billion in 2060, six billion people would not be living in poverty. Six billion people raised out of poverty — six times the one billion who enjoy a middle-income standard of living today. What an extraordinary goal — and what an achievement if indeed it comes to pass. What a triumph for our industrial capitalist civilization.

But here is the catch. Can the model of industrial capitalism that was developed by and for the West — by Britain, Europe, the United States and finally Japan — allow for a six-fold expansion in its energy and resource impact on an already over-stretched planet?

Can the number of cars on the planet be increased from something under one billion to four or five billion? Can the vast steel and cement industries that are building the infrastructure of China and India expand six-fold or more?

Just asking the questions this way is to answer them. The Western model cannot “scale” to accommodate the aspirations of Brazil, India and China, and all the other peoples waiting in line for their turn to enjoy the fruits of industrialization.

The result would be urban congestion, pollution, waste generation, demands on fossil fuels, and resource wars that would have to be fought to extend and defend oil supply lines.

And that does not even mention the global warming impact of continued and expanded carbon emissions. Just enumerating the consequences of extending the “business as usual” pathway is to reveal why it cannot “scale.”

The constraints under which China is developing industrially cannot be illustrated better than by revealing its growing dependence on imports of oil — a disastrous dependence, both in terms of the sums that have to be paid for these imports and the energy insecurity it engenders.

The more that countries like China and India become dependent on oil imports, joining the already highly-dependent United States, Europe and Japan, the closer the world gets to a 21st century dominated by resource wars and oil wars.

It is now understood that the Iraq War, launched by the George W. Bush Administration in 2003, was largely fought to secure future oil supply lines for the United States, as was the case with the previous Gulf War, launched by George H.W. Bush Administration in 1991.

In both cases, China and India were prepared to play a passive role. But can be assumed to be the case in the future?

India’s oil import problem (or the gap between oil production and imports) is even worse than China’s. China and India are both courting disaster, from rising oil prices, increasing vulnerability to a handful of oil suppliers, and exacerbating tensions with existing industrialized countries and their “carbon lock-in.”

China’s (and to some extent India’s) answer to this conundrum is not to turn its back on growth and industrial development, but to build a new kind of industrial system.

Read the second part of this article: A New Growth Model

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About John Mathews

John Mathews holds the Chair of Strategy at the Macquarie Graduate School of Management at Macquarie University, Sydney.

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