This is China! blog

Hundreds of residents recently protested the Guangzhou government’s plans to place a garbage incinerator in their neighborhood (Reuters). Apparently, residents of another such incinerator built in Likeng village, near Guangzhou, suffered mightiliy from the carcinogenic toxins the place spewed out. Of course, this all leads to the logical question: where and how to dispose of the waste of a billion and a half bodies on their way to a better life, Western-style? This isn’t just a question for Guangzhou, but for the entire Mainland Chinese society.

Of course, there’s always “other people’s” backyards. Way out West.

Remember: there is no “away”.

Whilst all eyes are gravitating toward the Copenhagen Summit on Climate Change, and China’s contribution to reducing carbon emissions that are changing the earth’s ecosystem, little is being said about the huge disruption to life and society in North China due to dramatic water shortages. Northern China makes up 19% of China’s water resources, with a little less than half all China’s population. What with Beijing sinking at 8mm per year because its sucked dry its own underground aquifers, and the farmers and fishermen of surrounding provinces stomping around on cracked, dessicated soil that was once farmland and fishing holes, rationing of water is becoming more commonplace.

China has just one-quarter the amount of water per person compared with the world average, and uses 65% of its water irrigating farmland that only yields 15% of the countries GDP. Yet, US$.31 per cubic meter, the cost of water in China is amongst the lowest in the world, at less than half the cost of the United States, and a tenth that of Germany. The cost of agricultural use of water in 2000 in China was a mere US$.01, compared to US$.15 for city dwellers and US$.16 for industrial use. The agricultural sector in the US uses water at US$.23 – still considered cheap by international standards. Cheap water has only encouraged farmers in the north to use water in abundance – and to waste accordingly: only 45% of this water allocation ever reaches the farm plots. Farmers waste nearly three-quarters of the water they use to irrigate their farms.

So, though, efforts to raise water prices will help somewhat with conservation, sustainable models of agriculture need to be developed and implemented. Quickly. Piping water from the south to north will simply buy the north some time – but not much, given the wasteful ways of northern farmers – and the climate catastrophe to its west.

The glaciers that provide the water to China’s greatest rivers are melting at an alarming rate. Indian and Chinese scientists estimate China (and India, as well) have merely 20 to 30 years more their societies can rely on melts from ice sheets. They are working together to see what can be done to stem the glacial recession. The Dalai Lama mid-November implored the Chinese government to set political differences aside to tend to the issue. According to Reuters, he said, ”
“A political solution (for Tibet) may take time, but that’s okay, we can wait.”

Much of the success of a sustainable model of water usage is in educating farmers on how to use the water, appropriate amounts and kinds of fertilizer and the kinds of crops that are appropriate to a geography that is rapidly changing.

Water – or rather, the lack thereof – is rapidly becoming the Chinese leadership’s greatest challenge. Not energy. Not even carbon emissions. Try to float your boat on that priority.

Further reading: Reuters, Daily Reckoning, WSJ, Green Leap Forward

Matthew Engel recently wrote a piece in the Financial Times I found quite funny in light of the way we in China live compared with the expectations for quality of life in the United States. It seems a woman in a small town in Pennsylvania has been told twice by city fathers her neighbors are upset with her hanging her clothes to dry in her yard – including her bloomers. Americans figure its weird, if not a bit distasteful, to be hanging your (albeit clean) laundry out to dry. Of course, when I was growing up in the sixties and seventies, that’s pretty much anyone ever did in the neighborhoods in which I was raised. In the Asian neighborhood in which I lived as a kid in Hawaii, there was even a public clothes line upon which all the neighbors in the block hung their underpants to dry.

Now, though, nearly every American has a dryer to do the job wind power once performed; ironically, on properties that on average are far larger than they were in the sixties and seventies. A battle of seemingly religious proportions has broken out Stateside, with non-electric drying types accusing electric-drying types that electric-dryers claim 6% of electricity usage in the USA.

Of course, in China, which has a smaller energy footprint per capita than the States, it would be odd to look at a bank of apartment buildings anywhere in China and NOT see rows of wet clothes saluting drivers and pedestrians alike. Including my own. It makes me think that if the U.S. really wants to gain a role as a world leader in a global green movement, it may find itself one day forced to air its laundry – clean, hopefully.

Get this answer right and you may qualify to replace the world leaders who cannot seem to come to grips with the dramatic rate of global climate change. In particular, the Obama administration has not been able to meet a deadline for coming to agreement with the Chinese on emissions goals; actually, the Chinese have dropped the ball, too. So, instead of announcing at the Copenhagen Summit on Climate Change a summary policy, the two greatest contributors to climate change in the world will declare victory by mumbling something about agreeing to a staged approach to tackling what has now become consensus: human industrialization of the world has created momentous adjustments to our ecosystem.

It seems the United States government right now is most concerned about the Chinese making an announcement about emissions targets for 2020 before the States can take the spotlight. It’s thought the Chinese will propose they look for reductions of 40% to 45% relative to economic growth by 2020. And since Hu Jintao in 2007 already made it a national goal for China to double the size of its economy by 2020, today’s reduction goals may leave the net effect at zero or less ten years from now.

Oh, well, there’s a good chance the raw materials the Chinese economy needs in order to grow will have become so expensive by that time that a slowing Chinese economy will be pumping less pollution into the environment as a matter of necessity. Not choice.

Read more: Guardian

I’ve been reading Thomas Friedman’s book Hot, Flat and Crowded. He cites a passage from Jared Diamond New York Times Op Ed piece in 2008 that the industrialized societies have a consumption factor of “32″. Analysts observed that in general most of the developed world consumes 32 times more materials and expels 32 times more waste than do countries in the developing world. So, the United States through its meat-heavy diet, its car culture, its relatively large abodes that require all manner of heating and lighting, use about 32 times more resources than the Bushmen of the Kalahari in Africa. That used to be the case in the ratio between the Western, developed countries and China, at least up until the mid-1990s, when China’s economy kicked into high gear. Diamond cited China in 2007 at 11 on the consumption/waste scale, and rising. The Chinese government and its citizens have their sights set on achieving as American as possible levels of the “good life”, as quickly as they can. And there seems little in the way of lessons learned from the economic rise of the Western nations – environmental and social costs, mostly – that are being observed or are deterring China’s march to realizing its goal of a “universal middle class”.

“”China’s catching up alone would roughly double world consumption rates. Oil consumption would increase by 106 percent, for instance, and world metal consumption by 94 percent.”

Diamond makes the point that if the developing countries were to match the American levels of consumption that it would be like the world supporting 79 billion people; not the 6.5 billion there are today. That stark reality seems in no way to slow the Chinese economic juggernaught (and it seems to have not impinged on American consciousness, either). Since China says all its doing is following the “American Model”, maybe it will follow the leader if the leader acts to dramatically change its consumption habits.

Global producers of wind turbines, electric cars, mobile phones and a host of other electronics goods have been nervous of late because of China’s publicized restrictions on the rare earth minerals it’s been sitting on for nearly twenty years. China essentially cornered the market on rare earth minerals through cutting corners on health and safety issues in the 1990s, and the rest of the world blithely followed along. Now, with China itself a major user of these metals, the domestic industry wants to make sure its got a lock on its own precious supply. China now consumes over 60 per cent of the world’s rare earth metals, up from just over 30 per cent in 2001, and exports the rest, according to the Dragonbeat blog.

Dragonbeat makes the point that the downturn in the global economy has meant that stockpiles of rare metals have not been touched. So, though there may be a speculative spike in the near term, countries have enough of the stuff to get through China’s stinginess until old mines in the States and Australia are brought back online, and new deposits exploited, which should be around 2012.

So, though there may be enough of the stuff over the next five years, an enlarged middle class in China and India, and the increased use of miniaturized, “leap-frog” technologies in Africa, Bangladesh, and rural India – like mobile phones and net books – will still mean increasing demand on rare earth inventories. So, though China may not corner the market, the stuff will become rarer – and dearer – still.

The border disputes between China and India have become more vocal of late, the volume of which has apparently been ratcheted up by the irrepressible Indian press. Most contentious right now is a slice of land through the Indian state of Arunachal Pradesh, which the Chinese call South Tibet. The protests in Tibet last year brought the region back onto the radar for the Chinese. The colorful and insightful language of the Indian press – with official Chinese articles and unofficial Chinese blogs lobbing insults back – have made discussions as emotionally charged as any since the countries went to war over the disputed territory in 1962. British colonial gerrymandering and the grand mythologies of both countries have blurred the issues to no end.

The melting glaciers in the Himalayas and the source to the greatest rivers in India and China will only serve to ratchet tensions over the next decade. The glaciers may disappear completely by 2035, due to global warming. Hydroelectric projects from both countries may prove flash points as the countries argue about which countries “own” the glaciers and their life-giving run-off. Look for tensions between the rising economies and their competing middle classes to get worse before they get better.

Further reading: CNN, BBC (Video report)

Last year Hong Kong lobbyists dislodged the largest foreign joint venture in China, a US$5 billion oil refinery that would have the capacity to process 300,000 barrels of oil a day. Sinopec and Kuwait gave in to environmental concerns about pollutants that would make their way to Hong Kong, as well as the destruction of unique wetlands from which the residents had already been relocated (Guardian). The provincial government had also given its go-ahead for the project, but backtracked because the investment flew in the face of Guangdong’s attempt to upgrade its investment environment from sneaker manufacturer to software outsourcing base. According to the Shanghai Business Review, the project has found a new home on an island off the coast of Guangdong called Donghai, and will now cost US$9 billion. The project should start construction in 2010. The move certainly gives China some credibility that some of its interests lay in preserving its environment.

I noticed recently Rio Tinto’s stock has been on the increase since July 2009, when the Chinese government snatched four of its employees in Shanghai and accused them of corporate espionage. The Company’s business is finding, mining and processing mineral resources. Its major products include aluminum, copper, diamonds, energy products, gold, industrial minerals (borates, titanium dioxide, salt and talc), and iron ore. The abduction of the employees shook the business world’s confidence in doing business in China, especially where the State has interests. Business, though, goes on: Rio’s stock on the FTSE is up 25% year-on-year. China is still holding the employees; theoretically, until contract negotiations with China steel makers have concluded – preferably with the 40% discount the Chinese steel producers have been looking for. With China buying from the spot market to meet demand born of the government fiscal stimulus, the near future is bright as gold for Rio. Let’s hope the same can soon be said for its Shanghai office.