Recent publication of a nearly 900 page report in China preceded an upcoming debate by Chinese lawmakers on a resolution to cap emissions by 2050 and to accelerate CO2 reduction strategies as soon as possible. If the Chinese, who have shown greater discipline than the US in organizing its financial markets, can organize its industrialization processes this suggests a positive path forward for China as it continues aggressive development. While there has been significant discussion and debate in the US about climate change and global warming, the discipline and commitment to actually do anything concrete and constructive about the problem is at best questionable. President Obama has touted the development of “green industries” as a significant component in his plans to revive the economy. Yet the mobilization of opposition by the GOP and the Right Wing Conservatives to any measures that would change the status quo ante bode ill for effective change. This penchant for individualism, greed and arrogance may well serve as an important resource that China can use to build its competitive future.
In the past, debate about the Kyoto Protocol of 1997 has bogged down over the issue of differentiated responsibilities. The US negotiators, predominantly from the conservative camp, have demanded that lesser developed or industrialized countries like China should match emission reductions called for on the part of the US. In response, the developing countries have argued that the US got rich off of industrialization and pollution that has created the existing crisis and was in no position to deny those countries the right to develop as the US has done. In fact, they argue that the US has greater responsibility for emission reduction because it had a greater role in creating the mess that the world now must collectively address. At this point the discussion has broken down and the US has refused to sign the Kyoto Protocol. With the expiration of the Protocol comes the new conference in Denmark [U.N. Climate Change Conference that will be held in Copenhagen this December]. Subsequent developments in climate change and scientific evidence of accelerating deterioration lend urgency to the debate. In addition, the importance of climate change to sustainable economic growth has also risen.
The opportunity for the Chinese in this situation is to focus on the development of technologies that limit or reduce carbon emissions while providing manufacturing and industrial production capacity that is needed for economic growth. For example, the growth of the auto industry in China is staggering. More Chinese are able to own a car now than ever before. The development and production of alternative energy and low emission vehicles would not only further Chinese goals for CO2 limits, but would provide potential export capacity for those countries seeking to meet emission targets but that lack capacity to produce low emission vehicles. This is the “green industry” model that Obama refers to but which the US public is slow and resistant to embrace.
This arrogance on the part of the US public, including both politicians and consumers, will continue to be a weakness that developing countries can exploit. At present, the bulk of growth in sales for US based car manufacturers comes from overseas markets. Though stepping back from the brink of oblivion through bankruptcy, government bailouts and reorganization, these companies still have not been able to convince the US consumers to purchase energy efficient and low emission vehicles. Their near term future depends upon sales to non-US consumers of products manufactured by US workers. However, if China succeeds in developing a strong production capacity for alternative fuel and low emission vehicles, it can continue on its development path while competing effectively with the US for those foreign markets.
At the same time, China has nowhere near the saturation level that the US market has regarding automobile purchases. A recent study suggested that the US was approaching the point at which there was one vehicle owned for almost every licensed driver. In contrast, China may only have less than 10% saturation in the coming decade. If incomes rise to the level that allows more Chinese to purchase cars, the population provided an almost unlimited market potential. In any event, the demand will almost certainly outstrip supply and manufacturing capacity for quite some time. Think back to the US during the inception of Henry Ford and you can grasp a comparison. Yet the difference will be that the Chinese will start with the production of environmentally sensitive products while the US will still be in the process of retooling to manufacture a different type of vehicle that might satisfy US consumer tastes. At the same time the US manufacturers would be stressed with the duality of manufacturing cars to sell in foreign markets in competition with makers like Toyota, Kia and others who have been focused for years on manufacture of environmentally friendly vehicles.
The questions presented are whether the Chinese can take advantage of the economic opportunity presented by the arrogance of the US consumers, and whether the US public can recognize and overcome its arrogance and convert to a more environmentally conscious attitude before other developing countries like China can effectively take advantage of the weakness that current attitudes creates. Unless and until the US consumers and policy makers can get their collective act together, the greed and arrogance of the US public will serve as an attractive economic resource and competitive advantage for developing nations seeking to increase industrialization and prosperity.
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