Sublime and Beautiful

Enlightened Development: A New Path for China and the World

Posted in Uncategorized by chaoren on April 21, 2009

Last year was the 30th anniversary of China’s economic reform and opening up. Economic reforms introduced under former Chinese leader Deng Xiaoping in 1978 have brought tremendous prosperity to China. According to a World Bank report on China’s poverty reduction agenda, between 1981 and 2004, over 500 million Chinese were lifted out of poverty. In other words, in less than a quarter century, China helped raise a population roughly equal in size to that of the European Union out of extreme indigence. No less impressive of China’s economic successes, at least visually, are modern Chinese cityscapes. Urban areas that were once defined by drab communist-style buildings have given rise to sleek new structures that make Mao Zedong’s China seem more fable than reality. From Shanghai’s magnetic levitation train to Beijing’s Zhongguancun Science Park, the changes brought by China’s reforms are glaring. These changes or “developments” are evidence that China is, as it confidently refers to itself, a developing country. But what exactly is it developing into?

Words without Meaning
For so long the adjective “developing” has been tossed around as if there were a universal agreement on its meaning. On the contrary, the concept of national development is largely open to interpretation. The World Trade Organization (WTO) does not have definitions of “developed” or “developing” countries. Rather than define the terms and label its members, the WTO allows its member countries to each proclaim their own developmental status. Likewise, neither the United Nations (UN) nor the International Monetary Fund (IMF) has firm definitions of the terms. In the Statistical Appendix to the IMF’s 2006 World Economic Outlook report, it states that the classification of countries within the report as either “advanced economies” or “other emerging market and developing countries” “has evolved over time with the objective of facilitating analysis by providing a reasonably meaningful organization of data.” Although the UN does not clearly define “developing” and “developed” countries, its Millennium Development Goals at least help frame some subjects that may be relevant to national development. The subjects include poverty and hunger, gender equality, education, health, environmental sustainability, and international cooperation. Essentially all concepts of national development relate somehow to one, if not all, of these subjects. Yet there are no well-articulated, widely-agreed-upon pair definitions of “developing” and “developed” countries. So when we speak so forthrightly about national development it is with a murky lexicon that we craft our assertions.

The Perils of Progress
Without really knowing what it means to develop it is impossible to say if a country like China is developing or when it can be considered fully developed. It is undeniable that China is making outstanding progress in areas such as poverty reduction, economic productivity and education. And, the kind of progress China is making is generally considered tantamount to development. But what about the sacrifices China is making for this progress? When one looks at the path China is on from a cost-benefit perspective it becomes apparent that the progress the country has made over the last thirty years may be offset or outweighed by future problems.

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Grave troubles are already plaguing the Middle Kingdom. Environmental degradation, while a problem during the Mao years, has intensified since the advent of China’s economic reforms. During its years of autarky China’s industrial production was mainly focused on satisfying domestic demand, no small task in itself for a country experiencing exponential population growth. After opening up to the rest of the world, China quickly found its niche in the global economy as an export-oriented industrial powerhouse. Growing demand for Chinese exports has meant massive trade surpluses for the country in recent years. But the “world’s factory,” as China has become known, has paid a serious price for its profits. In 2007, The World Bank reported that China is home to twenty of the world’s thirty most polluted cities. Smoggy skies and muck filled waterways have become the norm in many parts of China. The country’s edacious fossil fuel consumption has given it the dishonorable distinction of being the world’s largest emitter of carbon dioxide. CO2 emissions have only risen with China’s economic successes: factories burn more coal as they ramp up production and more cars are put on the road as an increasing number of Chinese accumulate the wealth for big purchases. Dioxin and other pollutants have claimed nearly 70 percent of China’s rivers, lakes, and reservoirs. And, according to environmental activist organization Greenpeace, “at least 300 million people in China do not have access to clean drinking water.” China’s severe environmental problems run the gamut from deforestation to desertification caused by overgrazing and excessive pressure on water resources. Just providing the bare necessities for 1.3 billion people in a country approximately the size of the United States would, understandably, place enormous stress on the environment. However, when the national objective is to continually raise the standards of living of over a billion people through industrial hyper-production, air, land, and water become canvasses for pollution Pollocks.

Stay the Course?
It is easy to mistakenly conclude that China’s environmental problems should be ancillary to the country’s economic productivity. Throughout history numerous countries have gone through dirty industrial periods on their way to becoming rich service-based post-industrial economies. China appears to have a winning formula that will give it the wealth needed to finance its way to a cleaner, better future. Besides, the rest of the world isn’t in any hurry to reduce carbon emissions or stop deforestation at the expense of GDP; so why should China change its tack?

Unfortunately, the world can’t afford another hyper-consumptive superpower like the United States. Truth be told, the world can’t even afford for the U.S. to continue burning through resources at its current rate. By most accounts, the world will be in a very grim place if we do not fundamentally change our consumer cultures fast. Environmental damage and resource scarcity are reaching critical levels.

In the long run, the best thing for China is for it to totally reevaluate its goals and change its conception of development. China can draw upon its many strengths to forge a new path to a more satisfying future. Chinese already drive fewer cars, own fewer major household appliances, spend less money on luxury goods, and save a higher percentage of their income than their “developed” counterparts–in the Bizarro World we have come to live in these are considered liabilities. A new, improved conception of development needs to treat such realities as positives.

Now that the world is in the midst of a financial crisis, everyone is pleading with China to consume more, with the hope that increased Chinese consumption will revitalize international trade. Ironically, just before the financial crisis, there was a massive push for combating global climate change which would undoubtedly require reining in ballooning consumption trends. It is evermore apparent that conventional conceptions of “development” are fraught with contradictions.

China has the ability to insulate itself from the schizophrenia inherent in mainstream, GDP-obsessed ideas of development. It can reject the misguided ideals that have led the “developed” world astray. No longer should China, or the rest of the world for that matter, see a new car and a big-screen TV as symbols of success or progress. But for China to change it has to want to change.

Oil & Automobiles
Regrettably, thirty years of openness have left China nearly as deluded as the “developed” countries. The ruling Chinese Communist Party (CPC) can’t seem to decide weather it wants a green environment or just greenbacks. At times, the CPC shows tremendous support for environmentalism and a more enlightened sense of progress. Other times, the Party fosters a nascent consumer culture while turning a blind eye to its negative repercussions. In June 2006, China’s Ministry of Construction ordered municipal authorities to restore bicycle lanes to city roadways. Over the years China, the bicycle capital of the world, has seen its roads flooded with cars and its bicycle lanes have fallen victim to the onslaught of new vehicles. So the Ministry’s order was a victory for clean transportation. However, in a bid to stimulate a slowing economy, China’s government lent a hand to the country’s auto sector earlier this year. In order to entice more Chinese to buy cars the government cut the sales tax on small-engine vehicles in half. Among other measures the government took to bolster China’s auto industry, it urged a more evolved credit system aimed at encouraging Chinese to buy cars on credit (fewer than 10 percent of Chinese vehicles are purchased on credit). Thus, the CPC broke two windows with one stone. First, its auto stimulus plan helped make China the world’s number one car buyer, adding to the country’s air pollution headache. Second, the government blatantly undermined the well-founded thriftiness of its people by condoning the kind of buy-on-credit consumerism that helped create the current financial mess.

Another discouraging outcome of the financial crisis has been the shopping spree Chinese companies have gone on to snatch up cheap assets while prices are low. China’s state-owned oil giants China National Offshore Oil Corporation (CNOOC), China Petroleum & Chemical Corporation (Sinopec) and China National Petroleum Corporation (CNPC) have been buying up oil and natural gas assets from Kazakhstan to Iraq. The companies have all been gearing up for what looks like a bright future for fossil fuels in China. According to industry news company STP Group, CNOOC plans to increase the crude oil refining capacity of its oil refining base in Huizhou, Guangdong Province. The company’s plans call for expanding the base’s crude oil refining capacity to 22 million tons from its current capacity of 12 million tons and adding 1 million tons of ethylene production capacity between 2011 and 2015. CNPC has indicated strong government support for the industry’s growth. Bloomberg reports CNPC has said the government “will offer preferential lending rates for overseas oil investments and may tap the country’s $1.95 trillion foreign-exchange reserves to help companies buy fields abroad.” In light of these events, one must conclude that fossil fuels are becoming more and more crucial to China’s development plans.

Positive Signs
There is still hope for China, though. The country’s renewable energy industry is emerging as a true force. Despite the CPC’s backtracking on environmental spending (the government reduced its stimulus budget for environmental protection from RMB 350 billion to RMB 210 billion) Chinese wind and solar power companies are seeing reasons for optimism in their own country. The financial crisis cut demand for Chinese greentech exports but China’s domestic demand has picked up some of the slack. China is the fastest growing market for wind power and leading Chinese wind turbine manufactures Xinjiang Goldwind Science and Technology Co. and Sinovel Wind Corporation Ltd. are seeing the benefits. The good fortunes of domestic investment in wind energy have made Xinjiang Goldwind and Sinovel among the world’s top ten wind turbine manufacturers. And, as confirmed by a senior official from China’s National Energy Agency, the government is still committed to a very ambitious long-term wind power expansion plan. China aims to increase its wind power generation capacity from 10 gW as of the end of 2008 to 100 gW by 2020. The prospects for Chinese solar power technology companies also appear good. Although Chinese solar tech companies like Suntech Power Holdings Co., Ltd. and LDK Solar Co., Ltd. have seen their stock prices drop sharply over the past few months, the CPC appears to see solar power as an integral part of China’s energy solutions. Last month, the CPC introduced a substantial subsidy for energy produced by solar projects. Renewable energy as a whole is in a position to become a cornerstone of a truly evolved China. By the end of this year, China intends to obtain 10 percent of its energy from renewable sources. The fact that China is making clean energy a greater priority is encouraging. However, the rate at which it is advancing its use of clean energy may be far too slow to avoid the environmental problems it is headed towards.

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Choose the Right Path
Taking cues from the “developed” world has served China well in many respects. If China had remained shut off from the rest of the world it surely wouldn’t have raised hundreds of millions of its citizens out of poverty. Nor would it enjoy many of the great technologies it has today. On the other hand, China also wouldn’t be suffering so many pollution problems. Moreover, if China hadn’t chosen to follow popular ideas of development it wouldn’t be in the incipient stages of consumerism. A consumer culture will likely bring China new troubles like obesity related illnesses, traffic jams, epidemic indebtedness and myriad mental stresses caused by keeping up with the Joneses. In fact, such problems can be seen in the country today. By no means should China isolate itself. It will, however, help China immensely if it can reject the things that we know are wrong with popular conceptions of development. The Middle Kingdom must have the courage to deny the code of “developed” and “developing” countries alike: wealth before well-being. China now occupies a position of great prominence in the world community. It has the strength and influence to help lead the world towards a better future. What is needed for China, what is needed for the world, is a paradigm shift.