“China is a true enigma in that it has its hands on the future but its feet are stuck back
in the past. One can but hope that the Chinese leaders truly understand the plight
of both the country and its people. However, the facts don’t give us much hope. On
average China only spends about 1.3 percent of GDP on environmental protection.”
scale, size and growth, as well as low
labor rates. The question to consider is
that with the plan to increase worker
wages combined with putting the brakes
on growth, will American companies be as
profitable in the future as they have been
in the past?
Summary remarks
Clearly, China has chosen growth over all
else and has paid a price both in terms of
its environment and the living standards
of its people. Having people who are earning more and living in less than desirable
conditions doesn’t seem to be working for
China. Although China had lots of examples from watching other countries pursue
growth objectives over the years it is fairly
clear that the lessons learned were not implemented inside China. Although I am
very optimistic about the long-term situation for China I am very pessimistic about
short-term change.
The Chinese Government has indeed
done too little too late to resolve their
tremendous pollution problems, the outcome of which is likely to haunt China for
many years to come. I do believe that
China will be able to curb its growth and
hopefully keep its spiraling inflation in
check. If not, I fully expect to see more citizen protest and most likely, more government crackdown on such protest.
In so many ways China is a true
enigma in that it has its hands on the future but its feet are stuck back in the past.
One can but hope that this time the Chinese leaders truly understand the plight of
both the country and its people. However,
the facts don’t give us much hope. On average China spends about 1.3 percent of
GDP on environmental protection, which
most scientists feel is not enough by half
to keep the pollution problem from getting worse, let alone improve.
Though it has grown in recent years,
The Ministry of Environmental Protection
still only has about 300 full time staff employees, compared with the nearly 9,000
employed by the U.S. Environmental Protection Agency. This lack of government
sponsorship has given rise to non-govern-mental organizations (NGOs). A number
of analysts say that NGOs have emerged
as more effective voices for change in recent years. According to a recent survey,
there are probably more environmental
NGOs than any other type though they do
face challenges from government regulations on registration, fundraising and membership numbers. In other words, rather
than assign resources to fix the problems
the Chinese government appears more inclined to assign resources to control, keep
in check and stifle the effectiveness of the
NGOs. As the old saying goes, “the more
things change the more they remain the
same.” Thus it is with China where control of the situation appears to be more important than fixing the situation.
It is clear that China has made remarkable growth over the past few
decades. What is not so clear is the extent
and magnitude of the price that China has
already paid and will continue to pay for
that growth. In America, we are still paying a price for many of our past pollution
problems. My suspicion is that China will
have a much longer list of “wish we hadn’t done that” items.
Regarding the IMF’s projection that
China will overtake and surpass the
U.S. economy by 2016, I have no doubt
that most in the Chinese leadership
would relish such a feat, perhaps if in
doing so means once again turning a
blind eye to the sins of the past. However, there are signs of reality creeping
into the Chinese growth strategy. With
the decision by Beijing to restrict the
number of vehicles to be registered by
two-thirds of the number registered in
2010 there is clear evidence that some
sort of correction is underway. If all
major Chinese cities adopt a similar restriction then the obvious has to happen
in the form of a cut back in total auto
production inside China.
If that happens there will be higher unemployment not only in the auto industry,
but for all the suppliers to that industry. If
the Chinese also start addressing their
many environmental woes with the objective of fixing them this will mean a genuine slowdown in development activities
and of course lower growth projections all
of which may increase the number of unemployed in China.
If there is a bright side to this happening it might be that such actions
would aid in controlling inflation, which
at the moment is poised to cause a lot of
serious problems in China. My bet is
that China will choose a middle road
whereby some environmental issues will
be addressed but that growth will still be
favored, however, not at greater than 10
percent. The Chinese leaders have indicated a scale back to about seven percent
in earlier statements but this seems to be
more of a ploy to allow them to attack
inflation, not correct or address their environmental woes.
What is happening is that China is
simply building a huge debit against future remedies for the environment they
have destroyed in their headlong charge
to secure growth. Somewhat similar to
the U.S. debt issue, China will have to address their environmental debit at some
point in time and that in itself may make
it impossible for them to overtake and
surpass the U.S. economy. That is unless
the U.S. refuses to get its spending and
debt under control. CW
