UK, China react to US crisis

UK opposition Conservative Party Leader David Cameron made on Tuesday an emergency call on British parties to "stick together" and find ways to handle the economic crisis.

Cameron suggested placing the national priority at the moment to ensure a stable banking and financial system amid the deteriorating financial situation in the US following the overnight US rejection of a historical rescue plan.

The defeat of the $700B bail out proposal by the US House of Representatives on Monday has seen its effects on stock markets across the world.

The Dow Jones saw its largest one-day plunge in its 38-year history and the Nasdaq index dropped 9.1%, with markets in Asia and Europe also suffering heavy losses.

Though some revised plans could surface on Thursday for further discussion, it is feared that a domino effect might occur. As a result, banks around the world will see their assets fall, and more businesses will go bust. Individuals cannot escape this influence and some have cast doubt over capitalism.

In contrast, there is no immediate official response to the latest development of the US crisis in China, as the whole country is celebrating the National Day which falls on Oct. 1.

At the overnight National Day Reception to celebrate the 59th anniversary of the founding of New China, Premier Wen Jiabao said that 2008 has been an extraordinary year for China's development.

Premier Wen mentioned the snow and earthquake disasters, along with China's success of hosting the Olympics and completing its 3rd manned mission into space. However, he did not touch upon the recent milk scandal, which has heightened worldwide attention to made-in-China food safety.

Premier Wen emphasised last week in the US that "confidence is more important than gold and currencies" during a discussion with key figures from the US financial circle about the crisis in America.

Among the few reports on China's reaction to the economic problems in the West were comments by Qiao Xinsheng, director of the Social Development Research Institute at Zhongnan University of Economics and Law, based in Hubei, capital of central China's Hubei Province.

Facing the US crisis, the Chinese government feels unable to help, Qiao said. However, he strongly suggested that the Chinese government should readjust its financial policies, and solve problems facing Chinese banking companies.

"Efforts should be stepped up in China to restructure the assets of banking institutions," he warned, "Otherwise, China's financial markets will repeat what has happened in the US ."

The number of small and medium-sized banks is on the rise in China. However, they are financially fragile, and any bank run could lead to a chain reaction in China's financial markets, he said.

The Chinese government should be on high alert rather than ignore the situation and watch the burning fire as a bystander, Qiao warned.

After Lehman Bros filed for bankcruptcy protection, Bank of China, the leading Chinese bank engaged in overseas businesses, expressed confidence and ability to reduce any effects brought about by the Lehman Bros event. The bonds that Bank of China holds from Lehman Bros amount to 0.01% of the bank's total assets and 0.19% of net assets.

US urged to lead global climate change efforts

Two US former Secretaries of States have urged the United States to play a leading role in involving other big emitters in efforts to tackle global warming.

The comments were given during a recent television debate. "The Next President: A World of Challenges" came just few days prior to the first Presidential debate on September 26 between Republican Candidate John McCain and Democratic Candidate Barak Obama.

Joining the special programme were former Secretaries of State Madeleine Albright, James A. Baker III, Warren Christopher, Henry Kissinger and Colin L. Powell. They discussed the economy, national security, foreign affairs, global warming and other challenges facing the next US President.

Warren Christopher, who served as the 63rd Secretary of State during Bill Clinton's first term, said: "The new administration ought to take a forward-leaning position on climate change. We ought to be leaders there rather than hanging back.

We've had sort of a dog in the manger position in the past. We haven't been willing to move until China moves. We haven't been willing to move until India moves. And the United States needs to be in a position of leadership to do the next thing after Kyoto in a very meaningful, effective way."

Christopher's opinions were echoed by panellist James Baker, who was the Chief of Staff in Ronald Reagan's first administration and the 61st US Secretary of State during George W. Bush's term.

The United States needs to lead a global effort to round up all the countries that put carbon dioxide in the air, especially China, India and others, as they cannot be excluded, Baker insisted.

Baker emphasized that "you're not going to get it done if the President of the United States doesn't lead the charge."

However, Baker suggested that the new US president should do it in a way that doesn't destroy the US economy and is not detrimental to the United States in the way that the Kyoto treaty was, which excludes some of the biggest polluters. Baker still insisted that the Kyoto protocol is a bad treaty for the United States.

In another development, the US recently kicked off its first auction of emissions credits in New York, in an effort to fight global warming.

The programme, which was participated by 10 northeastern states, intends to stabilise the emissions level until 2014 and then reduce them gradually. Auction proceeds will be used for energy conservation and renewable energy development in the states.

Climate programme director of the Union of Concerned Scientists Lance Pierce has described the auction as "historic". He adds, "The carbon markets have arrived in the United States. And carbon markets, if designed correctly, hold the promise for development of cleaner energy ... and reductions in global warming pollution that benefit consumers, businesses and the environment, as well."

The Global impact on China’s environment

Is China being buried under the weight of environment concerns?


1. From economic threat to environmental threat

Today, when people talk about China, they often say, “this country will overtake the world” due to its fast economic growth. In fact, China has been described by much of the western media as an economic threat. Moreover, over the last few years, China has also been regarded as a threat to the global environment due to its swift industrial development.

China’s official figures indicate that the country is likely to overtake the United States by 2008 as the world's largest emitter of greenhouse gases.

In 2001, China's total greenhouse gas emissions were less than half (42 percent) of the U.S. level. But by 2006 the figure had risen to 97 percent.

It is clear that China faces a serious problem with pollution.

Here are just some statistics:

Of the 10 most polluted cities in the world, half are in China.

Seventy percent of rivers in China have been polluted at various levels.

At least 25% of the Chinese population have no access to clean drinking water.

One-third of the land in China is threatened by soil erosion

Less than 20% of rubbish in China is being treated with any consideration to the environment.

Every two days, a pollution accident happens in China.

China is perceived as ignoring environmental concerns in its effort to build its economy. Natural resources such as coal, oil, water and timber are being utilized at an alarmingly high rate to fuel China’s rapid development.

These raw materials are not only produced domestically. China also imports from many other countries.

Africa provides 30% of China’s oil imports and the continent as a whole accounted for more than $55 billion in bilateral trade last year. This has brought criticism and a sense of unease amongst many western nations. China is seen as over exploiting the natural resources of the African continent, while overlooking the environmental impact.

China is now under international and domestic pressure to transform its development model, to keep growing economically while reducing the impact on the environment.

Meanwhile, the country has started to recognize that continuing this unsustainable model of development is simply not viable.

2. China’s long march to go green.

So, what is the best solution to help China develop in the right direction? We first need to understand the country’s mindset, its history and culture. China has only recently entered the world stage, and so, for most westerners there is a lack of knowledge of both the country and its people.

It’s not all chopsticks, chow mein and Peking duck. The Chinese people are vastly different from province to province.

And there is not a common set of ideas that link them all. Ideas that the West takes for granted are as bizarre to the Chinese people as fish and chips.

Since 1978, China has been pursuing a policy with the focus set on economic growth. Similar to the Industrial Revolution 200 years ago in the West, China’s development gives priority to GDP growth rather than pollution control. The west took nearly 200 years to bring in laws to cut the pollution resulting from the Industrial Revolution.

In the UK, for example, the Clean Air Act was only introduced in 1956. In contrast, China has been quick to realize the need to tackle environmental issues.

Within thirty years of economic development China has implemented initiatives to protect the environment. One specific policy is the current Five Year Plan which aims to cut pollution by 10% by 2010.

It’s not so long ago that ‘pea-soupers’ covered London. Captured in films like Oliver Twist and A Tale of Two Cities, these images of dense fog are how Chinese people see London. But China is now beginning to suffer from the same problems faced by Britain less than half a century ago.

The West appears to have a short memory when it comes to criticizing others. There is also an element of hypocrisy when it comes to blaming China for polluting the world. Developed countries should also take responsibility for reducing their own emissions.

China must find solutions to the environmental problems it faces. But it cannot achieve this alone. Criticism of China’s environmental destruction MUST be countered by support and viable options to help China through this difficult period of development.

3. China faces many challenges as it makes its way along the green road.

a. Poor understanding of nature

In China there is a low public awareness with regards to environmental protection. For example, there is little concept of recycling within the minds of many Chinese. In China, when people dispose of their rubbish, few think about where it goes or about its environmental impact.

However, this is beginning to change, with cities like Shanghai rolling out massive recycling schemes. Segregated litterbins have been used increasingly in China to separate recyclable and non-recyclable rubbish.

There are differences in culture, education, and even the understanding of nature. Like all of us, people in China like to live in a clean environment, with clean air and water. But it will take time to motivate the people to become more green.

Poor environmental laws and inefficient administrative mechanisms fail to protect the environment and do not do enough to discourage polluters in the face of increases in GDP.

b. Restraints by limited resources

China accounts for more than one-fifth of the world’s population, but its GDP is 13% of the world total. The country’s further economic development is inevitable. But China’s shortage of resources is restraining its growth.

Here I’d like to focus on water and energy supply in China.

There is a shortage of both. But water supply and water pollution are of greatest concern.

a) Half of the water in China’s seven largest rivers is completely useless. About 400 out of 600 cities in China are short of water.

China is cooperating with bordering countries in developing joint hydro-electric projects. However disagreements persist between China and countries such as India and Kazakhstan over the exploitation of shared water resources.

b) Poor energy structure / Three Gorges Dam.

In 2006 China’s GDP rose by 10.7 percent, with energy consumption rising 9.3%.

China is the world’s largest coal producer and consumer. And coal accounts for 70% of the country’s energy consumption. The country is in dire need of improving its energy structure, but it may take a long time to achieve.

China has been encouraged to seek alternative energy sources to replace coal and to reduce coal’s share in the energy mix to 40% by 2030.

The country has set a target of increasing the use of renewable energy to 10% of energy consumption by 2010, and up to 15% by 2020, from 3 percent in 2003.

It is estimated that by 2050, solar energy will account for 10% of electricity generated in China.

Hydro-electricity will be a priority for a green China. So far, China has only developed one-third of its water resources for generating electricity, less than half the proportion of developed countries.

But these developments also draw strong criticism from the West. The Three Gorges Project, the world’s largest hydro-electric installation, has been heavily criticized by the western media for its ecological impact. Only recently, the Chinese press highlighted government concerns with the ecological impact the dam poses..

So the country is at the crossroads between balancing the demand for development and ecological protection.

4. Negative impacts of globalization.

Globalization is part of the reason for China’s worsening environment.

“Made-in-China” is now a commonplace. My British family members are always very excited whenever they come across an old product with the tag “Made-in-England”.

But whilst China is proud of being a world factory there is now increased concern that the “Made in China” label brings not only economic strength, but also damage to China’s ecology.

China has risen to the 3rd largest trading country in the world.

In 2006, China’s involvement in the processing of imported raw materials accounted for nearly half of China’s import and export total. This 2006 figure is more than 300 times the level in 1981.

Cheap labour and resources are often mentioned as factors in attracting overseas investment. But if China were to impose the same high standards of environmental protection, then many foreign companies might find that it was not cost effective to invest in China. In other words, Western countries are taking advantage of a lack of strict environmental laws.

Today, over 70% of overseas investment in China is involved in the manufacturing industry.

This year, about 100 overseas-funded companies have been blacklisted for their poor environment record. They include the big companies like Pepsi, Nestle, General Motors and Carlsberg.

Facts have shown that in areas where foreign companies are located -- cities like Shanghai, and especially Guangdong Province -- air and water pollution has significantly increased.

Former Chinese Foreign Minister Li Zhaoxing once said that pollution in China was partly due to international economic and trade divisions in the country. China remains one of the developing countries most affected by climate change.

Huguette Labelle, former president of the Canadian International Development Agency, once said that under the current international economic and trade system, China is not only the biggest user of resources but also the largest victim of self-inflicted pollution.

In order to reduce the number of companies using China as a dumping ground for pollution-creating industries, stricter policies are being considered, which would impose higher taxes and tariffs on exports of high-energy-consuming and pollution-causing items.

China imports a large amount of waste, including solid, electronic and medical waste. And the quantities increase annually. Processing these imports is creating a devastating effect on people’s health as well the environment as a whole.

China is only able to deal with 20% of its own waste, so for the country to take on the rest of the world’s garbage severely exacerbates the problem.

By 2020, China’s ‘fast-speed urbanization’ will increase its annual waste to more than 400 million tonnes.

China may soon be submerged by a mountain of its own rubbish.

Earlier this year, both British and Chinese media reported on UK rubbish exports to China. It shows a typical case of the environment-unfriendly side of world trade.

The UK produces more than 30 million tonnes of recyclable rubbish every year, 6% of which is shipped to China.

As such, China is rapidly becoming Britain's biggest rubbish dump.

Annually, China’s exports to the UK total £16 billion pounds.

In return, the UK ships 1.9 million tonnes of waste to China, up more than 160 times the figure of eight years ago.

The UK’s former Environment Minister Ben Bradshaw, has defended this “fair” trade, saying that it would be wasteful for ships bringing imports from China to return empty.

It is not good to our environment when we can only choose from imported products in our supermarkets. It is astonishing to see items shipped half way around the globe when they could be produced domestically.

UK-based New Economics Foundation Policy Director Andrew Simms told BBC last Friday (Oct. 5, 2007) that "Every time we hear a government minister talking about climate change, they seem to be drawn towards scapegoating China and its rising emissions."

He said: "But a big factor in that rise is that China has become the major factory for the western world, so their greenhouse gas emissions are largely driven by higher levels of consumption in the west."

Two years ago, US researchers calculated that 14% of China's CO2 emissions were accounted for by exports to the US.

So besides domestic will, a rational global economic and trade system should be formed to optimize the use of our natural resources and make it possible for global sustainable development.

5. Climate change is a global crisis, calling for a global solution.

Today, we should not doubt about global warming anymore. The evidence is clear that the global climate is changing. This year, we have seen millions of people in China, India and Bangladesh affected by floods. In Kenya we have seen major mudslides brought about by torrential rain.

We have also seen the worst summer for 30 years in France, devastating floods in the UK, a heat wave in the US (with temperatures soaring above 30 degrees Celsius), and typhoons sweeping Mexico and southeast Asia.

All these events have sent a signal that climate change is already at our doorstep. It is no longer something which may happen in the future, the effects of climate change are already being felt.

The tit-for-tat argument between developed and developing nations about who should take the lead to cut emissions has got to stop.

All countries, rich or poor, have to make their own changes towards a more sustainable society.

The West must lead by example to show the world how to tackle environmental issues.

UK Conservative leader David Cameron addressed the party's 2007 conference last week (Oct. 3) and said that those who say Britain should do nothing because of China’s shortcomings were wrong. He asked, “How will we be able to encourage China to act unless we act here at home?

The Chinese Government has maintained that all countries must take actions, with different but fair share of responsibilities to tackle global warming. Developing countries need to cut emissions and increase energy efficiency, while developed countries should try to decrease their per capita energy consumption and individual carbon footprint.

6. Conclusion:

The economic status among the population of China is changing rapidly. This has resulted in the increase of cars on China’s roads, rising consumption of consumer products and the surge of domestic flights. Meanwhile as China opens up to the world, it has led to a huge influx of tourists from all over the world.

We are not going to change people’s demand for cars, a wish to travel, and a desire to consume. And our living standards need not be lowered in order to be respectful to the earth.

However, it is the responsibility of governments, businesses and individuals to safeguard this planet.

Governments have the most important role to play in this regard, to change production methods and energy generation to more environmental-friendly solutions, and implement greener policies.

As individuals, we should be aware of our carbon footprints. We need to reduce our consumption, move towards a greener lifestyle and increase our responsibility towards our surroundings.


Copyright Dongying Wang 2007

For reproduction of this study, please email: wdy21century@gmail.com

China in Africa: a catalyst for change

Chinese working at Chambishi Copper Smelter in Northern Zambia

Rich natural resources and huge markets have turned Africa into a magnet for global investors. Which policies should the continent adopt in order to maintain its attractiveness as a lucrative investment spot whilst achieving sustainable development? Dongying Wang investigates.

As globalization deepens and the interaction among economies increases, Africa has become a focus for the world. Africa's natural resources and opening up of new markets are attracting interest from global companies.

China, a latecomer to Africa, has joined other countries in exploration of the continent to fuel its economy. China's involvement in Africa covers a wide range, including agriculture, manufacturing, construction, telecommunication, resource extraction, energy and social welfare. However, China's increased engagement in Africa has caused concerns and even fear from other competitors. It has also drawn criticism from the West over its lack of business and political ethics whilst investing in Africa.

China has become one of Africa´s important partners for trade and economic cooperation over the past few years, although Africa still accounts for only 3% of China´s outward foreign direct investment (FDI). During the first half of 2008, China's direct investment in Africa stood at 305 million dollars, less than 480 million dollars recorded during the first half of 2007.

China still remains a small investor in Africa compared to some Asian countries, not to mention those from the West like the UK, the US and France, according to a 2007 UN report (pdf).

The Sino-African bilateral trade amounted to 53.1 billion dollars during the first half of 2008, as against the 73.3 billion US dollars for the whole year of 2007, according to a seminar on investment in Africa, held recently in Xiamen southeast China. Bilateral trade has seen more than a 30% rise annually since 2000. China has become Africa's 3rd largest trade partner after the EU and the US.

Xinhua, China's state news agency, has reported that Sino-African trade has contributed 20% to economic growth of Africa. Chinese officials have also said that Sino-African businesses, based on mutual benefits, have become an impetus to economic development in Africa.

There is no doubt that China has a long list of achievements in Africa. These include the training of tens of thousands of Africans, relieving debts, offering of medical assistance, and the building of hydro-electric power plants in some 50 African states. In addition they have helped build thousands of kilometers of roads and railways throughout many parts of the continent.

All these achievements have been reported repeatedly by Chinese media. The mantra being promoted is one of mutual benefits and profitable gains. This differs from the past when the message was one of just developing bilateral ties.

Nowdays, Chinese investors have transformed from “comrades” to “capitalists” in less than half a century, says John Lungu, economics professor at the Copperbelt University in Kitwe, Zambia.

Professor Lungu’s view is echoed by Parkie Mbozi, regional director of Panos Southern African based in Lusaka, Zambia. Panos is an NGO promoting the participation of poor and marginalised people in national and international development debates.

"China, like all others, is now in Africa for business. It wants to present itself as a country that will give aid without strings attached, yet in essence it wants business. Unfortunately, state capitalism can be worse than individual capitalism," said Mr. Mbozi.

It is arguable that there is nothing wrong for Chinese people to make profits by investing in Africa. However, criticism is laid upon China's lack of consideration to environmental concerns and labour welfare. Chinese companies are reportedly developing oil fields, mines and dams in areas that are geographically remote, politically unstable and ecologically fragile, often ignoring the environmental and human rights impacts of their investments.

In a phone interview, Uwe Wissenbach, coordinator for relations with Asian countries in Directorate General Development of the European Commission, says that most negative reports on China's involvement in Africa were initially conveyed by media, which sometimes exaggerate these negatives. More recently reporting provides a much more nuanced picture. Rather than giving his opinion on China's presence in Africa, Mr. Wissenbach looks at the issues from a different perspective.

Mr. Wissenbach agrees with the argument that China should not be singled out for these problems. He says that some western companies maybe doing more harm to Africa than Chinese companies. However, he is dismissive of China's excuses that its status of being a developing country justifies its failures in protecting the environment and improving standards of business.

In the West, companies face pressure from media, civil society and other pressure groups to behave themselves abroad, but Chinese companies do not have similar organizations to keep their overseas operation in check, he says.

Mr. Wissenbach also points out that apparently China's private companies fare much better in Africa as opposed to state-owned companies in efforts to help improve the lives of Africans, as they are more efficient and fit well into African communities. On the contrary, state-owned companies, which enjoy favourable policies and government projects, often fail to fit into the reality of Africa and thus contribute less to local society.

According to the Export-Import Bank of China, of more than 800 Chinese companies investing in Africa, some 100 are state-owned.

Refering to Zambia, which sees China as a "genuine and all-weather" friend, Panos regional head Mr. Mbozi says that he can see the possible transformation of the Zambian economy by Chinese investment through jobs offered by Chinese investors, and permanent infrastructure.

However, Mr. Mbozi holds reservations about the quality of jobs offered by Chinese companies, saying that "Unfortunately, so far Chinese investment has been seen in a bad light due to poor working conditions for workers and low investment in essential services in areas their companies operate. China has fared badly in comparison to companies owned by western investors."

"We hope that the economic zone announced by Chinese President Hu Jintao, when he visited the country in 2007, will be modeled along the lines of Western investment, namely good jobs, investment in social services, including roads, hospitals and schools, that benefit the local people. So far this hasn't happened save for a few cases," he says. The Zambia-China Economic and Trade Cooperation Zone was the first of its kind ever launched by China in Africa.

This African quest for higher standards and quality is possibly part of the reasons why Mr. Wissenbach does not think that Europe faces competition from China in Africa except in aid and infrastructure projects.

However, he acknowledges that as Africa has more business options on the table than before, the EU development policy in the continent does not work as it did previously. Therefore the EU has had to change its African strategy and "its patronizing way of looking at Africa."

"China is the catalyst and one of the factors among others to urge the EU to change their policies in Africa," he says. "Most importantly, changes are needed from Africa itself to formulate a policy and set their own agenda in the face of globalization."

However, Africa cannot do so without help. This is why Africa, the EU and China should cooperate through better understanding and information exchange to help the continent develop sustainably. Mr. Wissenbach and his colleagues face the challenge of building trust and cooperation between the three parties.

"Ideally, our tasks are to cooperate between African governments, the EU and China to set up standards, socially and environmentally, for investment and development in Africa", Mr. Wissenbach adds.

Asked about how overseas investors should help Africa, Mr. Mbozi says that "genuine support and investment" is what Africa needs.

"They should teach Africa how to fish but not give it fish, transfer technology to Africa, help Africa build its capacity to do its own business, support manufacturing of goods in Africa as opposed to treating Africa as a net exporter of raw materials," he elaborates.

"Overall, they should respect Africa's priorities, and African solutions to African problems, " says Mr. Mbozi.

Flooding overseas investment offers a golden opportunity for Africa to fight its poverty and climb upon the economic ladder. However, African states must learn to set the ground rules so they can develop without over exploitation of both their resources and people.

Read other China-Africa articles:

Africa pivoted to setting its own agenda

China in Zambia: from comrades to capitalists?

Copyright World News Review 2008

For reproduction of the articles, please email: wdy21century@gmail.com