What's New

China releases 2020 action plan for air pollution

Feng Hao's article of 6th July in China Dialogue , an independent organization focussing on China's ecological challenges, outlines the import of China's latest 2018- 2020 Air Pollution Action Plan and catalogues some of the achievements and shortfalls of the antecedent Action Plan. 

The latter Plan only set PM2.5 targets for the three big city clusters of Beijing-Tianjin-Hebei and the Pearl and Yangtze Deltas. 

"In Beijing this meant reducing PM2.5 levels from 89.5µg/m³ (micrograms per cubic metre) down to 60. To do so, Beijing closed its coal-fired power stations, and banned people in surrounding areas from burning coal for heat. These measures were costly and controversial, but they enabled the city to achieve an annual average PM2.5 level of 58µg/m³ – a drop of 35%.

..... In the end, China’s three biggest city clusters (Beijing-Tianjin-Hebei, and the Pearl and Yangtze deltas) all beat their targets.

But even so, no Chinese city yet reaches the World Health Organization’s recommended annual average PM2.5 level of 10µg/m³. And as of the end of 2017, only 107 of China’s 338 cities of prefectural level or higher had reached the WHO’s interim standard of 35µg/m³."

Without setting new targets, the new Action Plan puts pressure on laggard cities and regions. Emphasis is placed on the rust-belt Fen-Wei Plains, which include Xi’an and parts of Shaanxi, Henan and Shanxi provinces. Also targeted is the worsening problem of ozone pollution, adding new reduction targets by 2020 of 10% for VOCs (volatile organic compounds) and 15% for nitrogen oxides emissions (on a 2015 baseline).

Trade war is part of push-back against China's challenge of a US-defined world order

An insightful analysis on Bloomberg Quint by Raj Bhala on 6 July 2018 explains why Why China’s Growth Doesn’t Work For America Anymore.  In addition to trade deficits, alleged predatory trade practices including intellectual property theft and forced IP transfers, the Trump administration's crosshairs make much play of "Made in China 2025", China's national roadmap to technological dominance. What is at stake appears to be not just trade, but America's national interest as rule-setter and custodian of an US-centric world order. 

Writing in Foreign Policy on 13 April, 2018, Philippe Legrain opines why China will win the trade war. China is deeply imbedded in the global supply and value chain. About 60% of US's tariffs would hit US products or businesses at home or abroad reliant on China's intermediate parts and components. As China's economy becomes less dependent on manufactured exports, its exposure to  Trump's tariffs is relatively limited. Oxford Economics, an economic consultancy, estimates that these tariffs will knock 0.1 to 0.2 % off China's growth this year. Click here

Net exports (less imported components) represents only 2% of China's GDP, while the United States accounts for only 19% of China's total exports. About two-thirds of the 25 largest exporting companies based in China are foreign owned. One-third of the value-added from all Chinese exports accrues to other countries, including American companies and business intermediaries in Japan, South Korea, Taiwan and Germany. Click here They are likely to bear the brunt of trade war tariffs. 

China has trade diversion and monetary means to cushion at least part of the impact. On the other hand, America businesses and consumers would be hard pressed to find sufficient and compatible substitutes at comparable costs. The real-life experience depicted in an award-winning journalist's 2008 book A Year without ""Made in China" is instructive. Click here

While there are no real winners in a trade war, a rule-of-thumb account of Who Wins, Who Loses is penned by Tom Holland of the South China Morning Post dated 6 July. His uptake suggests that the tariffs may well do more harm to the US economy than they do to hurt China. An analysis dated 27 June, 2018 on American Action Forum, a US center-right policy institute, thinks likewise. 

Nevertheless, much of America's complaint about China's economic and trade practices is shared by the European Union. There are similar dissatisfaction with China's intellectual property track record and lack of trade access reciprocity. 

Resolving this escalating confrontation with the United States therefore requires more than trade concessions such as buying more American goods and commodities (e.g. natural gas) as well as further opening up of the financial and service sectors. Much can be achieved by responding to the United States's strategic concerns, including legitimate safeguard of intellectual property and the extent and manner of state subsidies to technology firms. 

Could a comprehensive deal between the United States and China happen by way of a bilateral trade and investment agreement? Considering the clash of national interests, it is easier said than done. Only time will tell. 

What could complicate a possible trade deal is the perception that China is not playing fair in the South China Sea. While China's economic clout in the world has been ascendant, its soft power has considerably receded from a high watermark in the 2008 Beijing Olympics. Now, most Americans along with an increasing number of Western countries view China's rise negatively.

Apart from responding positively to concerns about China's trade practices and market access, China could do well by moderating its assertiveness in the South China Sea. Much goodwill could be gained by such initiatives as joint resource exploration with rival territorial claimants and partnerships with state and non-state stakeholders in ecological management of these waters.  

Last but not least, China should tune down the hype and triumphalism of China's Rise. As a ten-thousand-ton panda, it is no longer possible to hide under the bushel. Nevertheless, there is a great deal of wisdom in ancient Chinese adages warning of pride and hubris. Afterall, in the light of America's stranglehold in key strategic sectors including currency, finance, semiconductor and other technological fields, China's ascendancy is by no means assured. Click here