A China Gazer’s Random Musings – No. 3

Kishan S. Rana (IFS Retd.), Emeritus Fellow, Institute of Chinese Studies, Delhi

Environment management: the relevance of China’s experience

At the Paris Accord of 2016 and later, China has taken the high road of a responsible environment protector. Behind this pose, which burnishes its international credentials, especially after President Trump’s rejection of that accord. But it seems that within China, environment regulations are now being applied with more rigor than before, and the ‘real cost’, in terms of loss of economic momentum and impact on industrial prices, is less than estimated earlier. This is of relevance for India.

The Diplomat recently wrote: ‘In China,a major campaign against environmental violations has so far penalized more than 30,000 companies and over 5,700 officials…These changes represent a fundamental shift… We expect that the deep-seated public unease about the quality of food and water will be addressed through the advent of a more systematic approach to surveys and enforcement.’ Some environmental organizations, as NGOs, are now permitted to bring public interest lawsuits against violators of norms, again a shift for this authoritatian country.  (‘China cleans up its act on environmental enforcement’, 9 Dec 2017, https://thediplomat.com/2017/12/china-cleans-up-its-act-on-environmental-enforcement/ An article in The Economist made similar points, adding that while only 60% of steel blast furnaces are now operating, the biggest economic surprise has been ‘how muted that impact has been’; that also applies to price increases which ‘show little sign of spreading widely’. (‘Towards a greener future’, 6 Jan 2018).

This has direct relevance for India. Our environmental regulations are easily circumvented; tighter enforcement is opposed on the argument advanced by vested business interests about how this would impact on the economy. In that manner, industrial units in cities, notably Delhi, operate with impunity, and pollution worsens continually. In contrast, Beijing with a much worse pollution record is now witness to a visible lowering of PM2.5 levels, having closed shifted out wide swathes of polluting units.

India’s support for the PRC’s UN seat  

As well-known, India remained consistent in its principled position on seating the PRC at the UN, all through the 1950s, up to the 1971 UNGA, when Beijing won that right, that the PRC was the legitimate representative of China, not Chiang Kai-Shek’s rump regime in Taiwan. We may also recall that despite temptation, and persusaion by Western powers, India also did not shift its position at the UN vote, refusing to treat this as an ‘important question at the General Assembly (which would have required a two-thirds majority mandate for the PRC, not a simple majority). This was a triumph of principle over pragmatism.

In Diplomacy at the Cutting Edge (2015) I wrote of the scene in 1070-72:

Premier Zhou Enlai appeared frequently at receptions for visiting foreign leaders. It was his custom to walk down the lineup of foreign envoys, shaking hands with each, and their spouses. He was invariably alert and perceptive, and would lock gaze with each person; we used to say that the warmth of that handshake was in proportion to the bilateral political relationship of the day. The evening the news broke of People’s Republic of China’s gaining its seat in the UN, he was at an embassy national day reception. Clutching a glass of Mao Tai, he went to every table to clink glasses with each guest. At my turn, I said to him in Chinese: Congratulations on China’s success, Excellency; he responded with an expansive gesture with an arm and shoulders. Zhou has remained the most enduring of Chinese leaders, in the perception of its people.

Has Beijing ever expressed appreciation, much less gratitude for that Indian stand? Not as far as I know; perhaps someone with information on this could correct me. What I do recall is a  discussion around late 1964 or early 1965, at the Chinese Foreign Ministry when First Secretary AK Damodaran, deputy to our head of mission Jagat Mehta, called on the Deputy Director of the Asia Division. Damu alluded to India’s consistent support for the seating of the PRC at the UN, as an example of India’s principled action, despite the difficulties in bilateral relations. That Chinese official went pyrotechnic, snapping back: what India has done is no more than its duty; do not expect us to show gratitude for that. The real issue is India’s duplicitous actions on the border issue, its support to the illegal Dalai clique…etc.

Tansen Sen, author of the imprtant recent work India, China, and the World: A Connected History, wrote in an article in The Times of India that ‘Nation states have failed us: to improve relations China and India must allow their people to interact freely’. He wrote of niche groups that work in both countries, and elsewhere, to foster understanding, and tackle the large trust deficit. Among them, the Indian standpoint is well understood, for sure. See: https://blogs.timesofindia.indiatimes.com/china-man/nation-states-have-failed-us-to-improve-relations-china-and-india-must-allow-their-peoples-to-interact-freely/

Indian Cancer Drugs in China

A film released in China in 2018, ‘Dying to Survive’ has had remarkable success. It is based on the true story of a Chinese businessman who 5 years back imported a generic cancer drug from India, faced a trial and was released after a pubic furor. The film made $390m in its first two weeks. It is about a leukemia patient who cheap generic drugs from India, and has struck a major chord with publics. Chinese Premier Li Keqiang has called for cheaper and more accessible cancer drugs. A BBC story on the film is at: https://www.bbc.com/news/world-asia-china-44876528


National Carbon Market: China’s Response to Climate change

Ms. Shristi Singh, Research Intern, Institute of Chinese Studies

For a very long time, China believed that climate change is a myth propagated by western countries to contain the growth of developing countries, especially of China. With time, China has realised that climate change is a reality and has decided to stop adhering to the concept of ‘common but differentiated responsibility’. In the past few decades, the economic growth of China had been impressive. It is the world’s second largest economy and most likely to supersede the United States (US) in coming years. The pace of China’s economic growth has put its environment under increasing stresses. Historically, it has been reluctant in cutting its emissions off, fearing that it could hinder its economic growth. At present, China is the world’s largest energy consumer and carbon emitter, but there are positive signs that it is shifting its position.

China launched its much awaited ‘National Carbon Market’ on 19 December 2017 as its biggest initiative to combat climate change. The foundation of carbon market was laid down in 2013 when local markets were launched in five cities (Beijing, Tianjin, Shanghai, Shenzhen, Chongqing) and two provinces (Hubei and Guangdong) to reduce carbon emission. It included sectors like power, cement, metals, textiles and others. These markets were also included in 12th Five-Year Plan (2011-15) and current 13th Five-Year Plan (2016-20). The motive was to experiment the pilot projects in these polluting cities and provinces before commencing the mechanism nationwide. The countdown began when President Xi Jinping visited his US counterpart President Barack Obama in 2015 and promised to launch national carbon market in 2017. This commitment was then included in China’s pledge to Paris Climate Agreement and is also known as ‘Nationally Determined Contribution’ or NDC to reduce global greenhouse gas emissions.

Carbon Market in China

Carbon market can be defined as a marketplace where carbon emissions can be traded. The government sets limit on carbon emissions to ensure that industries cannot pass the environmental costs to the public. There are many ways of implementing the carbon market and the most popular approach is ‘cap-and-trade’ system where the government sets the cap on the emissions based on factors like ‘type’ of the industry and the ‘ease’ with which companies could feasibly reduce their emissions. If the company successfully beats the government’s target it can sell additional ‘saved’ carbon emissions in the market and earn profit whereas other companies that fails, will buy those saved emissions to reach their target.

Carbon market can be seen as China’s response to pressure at home and abroad to clean up its act and achieve target of clean environment. The domestic public is highly concerned about China’s increasingly deteriorating environmental conditions like rising sea level, soil pollution, deteriorating water quality, urban smog and poor air quality and others. The government has responded to these challenges by introducing ‘green technologies’ such as electric cars, solar panels, wind turbines and other eco-friendly technologies.

It was expected that China will upgrade existing local markets into national emission trading system covering eight high-energy intensive sectors such as power generation, iron and steel, paper-making, chemicals, non-ferrous metals, construction materials, aviation and petrochemicals. Instead, the government chose to cover the emission from power sector only, which emits one-third of China’s total greenhouse gases and makes China’s carbon market – the world’s largest carbon market or Emission Trading System (ETS). China has been the world’s leading investor in renewable energy sources for years but its power sector still depends upon high-carbon sources such as coal. Thus, carbon market starting with the power sector will be helpful in reducing coal burning and thereby boost the growth of clean energy industry.

Under the mechanism, the government will set a limit on total carbon emission and within that limit, polluting power generating industries that fails to reach the target will have to buy ‘carbon credits’ from less-polluting industries. This will impose financial burden on the polluters and will grant rewards to the cleaner entities. This way the renewable energy sector would be able to earn extra revenue from selling carbon credits to those that emit more than their allowed quota. For the first time power plants will undergo a rigorous verification process and there will be a continuous check by the government on accurate measure of emissions coming from them.

Environmental or Political Strategy?

China has vied for the role of a global leader on climate action after the withdrawal of the United States from Paris Climate Agreement in June 2017 under the Trump administration. However, carbon market as an idea is not new to the world, but coming from the world’s largest emitter is startling. China has promised that its carbon dioxide emission will peak by 2030 and the market may not produce a reduction in emissions immediately but in a way has been successful in sending signal to the world about China’s seriousness in dealing with the catastrophic climate change.

China has respected the timeline for announcing its carbon market but is being criticised for drifting from its original plan of covering all the eight broad industries to confining it to the power generation sector. At present, there is no hard cap emission on power sector, which can be pointed as China’s conservative approach to cushion the power sector and economy from sudden carbon shock. It can also be seen as ‘image-building’ process initiated by China to improve its image internationally from biggest emitter to one championing the carbon markets and also among its own people to restore their faith in new project as government’s action in dealing with broad environmental issue.

China’s carbon market would dwarf all the existing markets in the world. No official date has been announced for the actual start of the ETS but if successful, it could incentivize other nations to adopt emission-trading system and take a firmer stand on climate change and if it fails, it will dent China’s image and might impact many climate policies in different parts of the world.

China’s 19th CPC Congress: Redefining Economic Growth

Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

There are several aspects of the recently concluded 19th Congress of the Communist Party of China (CPC) that are noteworthy for India.

First, CPC General Secretary Xi Jinping has attempted to redefine what acceptable economic growth is in China. The expression ‘contradiction’ is an important one in the Chinese communist lexicon and until the 19th Party Congress, the ‘principal contradiction’ was the one between ‘the ever-growing material and cultural needs of the people and backward social production’ or, in other words, China’s inability to provide for the basic material needs of its people. Following nearly 40 years of economic reforms, this challenge has now been met with China eradicating poverty at the most massive scale and at the quickest pace in human history.

This process has, however, also resulted in rising income inequalities between individuals and between regions in China, and massive environmental damage and health crises across the country. Continue reading “China’s 19th CPC Congress: Redefining Economic Growth”

Sichuan-Tibet Railway: Growing Connectivity in PLA’s Western Theater Command

Atul Kumar, Visiting Associate Fellow, Institute of Chinese Studies.

On 27 January 2016, Losang Gyaltsen, Chairman of the Tibet Autonomous Region (TAR) government, announced in the TAR’s Tenth People’s Congress that his government would accelerate the construction of the Sichuan-Tibet Railway in the 13th Five Year Plan (2016-20) period. His government promised to start a preliminary survey and research to build the Nyingchi-Kangding railway section, in the current year. Yin Li, the acting Governor of Sichuan, sent out similar messages a week earlier at the Sichuan People’s Congress. These statements from the top leadership of both provinces reflect the importance of this rail project.

Continue reading “Sichuan-Tibet Railway: Growing Connectivity in PLA’s Western Theater Command”