Globalist Analysis

Acknowledging China

Should the United States and the EU do more to acknowledge China’s efforts on climate change and trade disputes?

A changing landscape

Takeaways


  • China's development is as an evolutionary stage, rather than an obstacle to its relations with the United States and European Union.
  • China needs to further develop, so as to improve the living standards of its citizens. This is their right — and indeed one of their fundamental human rights.
  • Kind-hearted people in the rest of the world hail the economic progress in China, for it helps millions of people there escape from poverty.
  • Between close trading partners, disputes are a normal phenomenon. This should not be a factor to undermine relations between them.
  • If international cooperation in developing greenhouse gas zero-discharge technologies can be accelerated, the impacts of China's development on climate change will be further minimized.

In the context of globalization, the economy increasingly influences international relations. This is because strengthening interdependence and intensifying frictions between economies tend to go hand-in-hand. As a result, it is no wonder China is worried about the impacts on its relations with the United States and the European Union.

It is well-known that China’s economy has been growing at an average rate over 9% for 27 years now. And, in the past five years, its annual growth rate exceeded 10%.

In 2006, China's GDP reached $2.6 trillion (in purchasing power terms), or 5% of the world total — ranking fourth in the world.

China has reached the top ranks of economies in the world by GDP — but it still lags behind 109 other countries in terms of per capita income.

China needs to further develop, so as to improve the living standards of its citizens, allowing them to enjoy a life comparable to that in medium-developed countries.

This is their right — and indeed one of their fundamental human rights.

The continual growth in China makes significant contributions to the world economy. Firstly, China's economy contributed 13.8% of the global GDP growth during the 2003-2005 period.

The rate is second only to that of the United States. That is to say, with China's continued growth, the world economy will not substantially slide down even if the U.S. economy falls into recession.

Second, cheap goods exported from China are helpful to prevent inflation in its trading partners. Third, the fruits of economic growth in China are shared by industrialized countries in general — and in the United States and the European Union in particular.

They receive a great deal of profits from their place in the international division of labor, and gain significant returns from their financial services, foreign direct investment and patent income from China.

For example, about 20% of revenues from each mobile phone, 30% from each computer and 30-40% from numerically controlled machine tools made in China go to investors or patent owners in the United States, the European Union or other countries.

Kind-hearted people in the rest of the world are happy to see and hail the economic progress in China, for it helps millions of people there escape from poverty. Thus, it brings new impetus to economic growth globally.

However, the United States and Europe are very concerned about the consequences of China's development. Apart from positive expectations, they wonder what negative impacts China's development will have on them.

For instance, they wonder whether China will compete for natural resources, energy and markets with them — and to what extent China's development will lead to pollution and climate change. A more extreme observation even views China's development as a "threat."

As regards climate change, it should be noted that Beijing has already set about tackling the problem.

The Chinese government pursues a policy of "scientific development" and carries out programs to build China into a resource-conserving society, which contain a series of measures to save resources and energy.

From 1990 to 2005, the energy consumption per thousand dollars of GDP was cut from 2.19 to 1.17 tons of coal equivalent, with an annual reduction rate of 4.1%. This figure, however, as well as greenhouse gases emissions per unit of GDP in China, is still higher than those in the United States and the European Union.

This is largely because the United States and the European Union have been in the post-industrialized stage (where more than 70% of GDP is contributed by service sectors), while China is still in the industrializing stage (where almost half of GDP comes from the industrial sector). This can be changed only by further development — and the change is under way at an accelerating pace.

The Chinese government set the targets of bringing down energy consumption per unit of GDP by 20%, cutting the total discharge of major pollutants by 10% and increasing forest cover from 18.2% to 20% between the end of 2005 and 2010.

The National Program on Tackling Climate Change released in May 2007 formulates that, by 2010, China will cut CO2 emissions by one billion tons through improving technologies and replacing fossil fuels with renewable energies.

If international cooperation in developing greenhouse gas zero-discharge technologies can be accelerated, the impacts of China's development on climate change will be further minimized.

As for the equitable distribution of energy, as well as natural resources and markets, this matter requires bilateral or multilateral consultations. Such consultations must be carried out on an equal basis.

In this process, two issues should be considered. One is the development right of poor countries. There are quite a few countries in the world where people live a life far below the living standards of industrialized countries.

When distributing the world’s resources, rich countries should give more considerations to the interests and rights of poor countries. Up to now, the per capita income in China is just equal to 4.5% of that in the United States, 5% of that Japan, 5.8% of that in the eurozone and 10% of that in South Korea.

There are still 135 million people in China who live on less than $1 per day. There are 750 million such people in the world, of which China accounts for 18%.

The other issue is the principle of equality. According to the World Bank, the 2000 per capita consumption of energy was 3.8 tons of oil in the euro zone, 8.2 tons in the United States — while just 0.9 ton in China. The per capita consumption of energy in the United States is nine times that in China.

At the same time, the per capita rate of CO2 emissions in China was two tons, compared with eight tons in the eurozone and 21 tons in the United States. In 2004, the per capita CO2 emissions in China increased to four tons.

This figure, however, was only 87% of the world average — and 33% of the OECD average.

Along with China's development, the trade disputes between it and the United States as well as the European Union are on the rise. Between close trading partners, disputes are a normal phenomenon. This should not undermine relations between them.

Trade disputes occur between the United States and the European Union, the United States and Japan, as well as the European Union and Japan. Since its inception, the WTO dispute settlement mechanism has been mostly used to deal with disputes between the United States and the European Union. The disputes, however, have never undermined the bilateral relationship.

In short, the contributions of China's development are a net plus — even in light of its negative influences on the rest of the world. The negative effects brought about by development are controllable.

China's development should be taken as an evolutionary process, rather than an obstacle to its relations with the United States and European Union.

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