Niall Ferguson: China’s war on nature
... Just as Americans have waged their War on Terror since 9/11, it seems the Chinese are now embroiled in a War on Nature. To grasp what is at stake in this strange war, it pays to travel away from the capital – indeed, away from the entire eastern region of China. The economic front line now lies in western China, in frenetically growing industrial centres such as Chongqing.
Far up the River Yangtze, to the west of the Three Gorges Dam, Chongqing is probably the fastest growing city in the world today. It exemplifies both the strengths and the weaknesses of what might be called China’s semi-planned economy. To be sure, much of the economic running is made by private enterprise. Among the foreign companies that have already invested in the region are Ford, BP, Ericsson, Carrefour, Isuzu and Suzuki, all attracted by the combination of generous tax breaks and labour costs about 40 per cent lower than in eastern China. Even more important are home-grown companies such as Lifan Industrial Group, one of a number that have made Chongqing the motor cycle manufacturing capital of Asia.
Yet the explosive growth of Chongqing’s industry would not be happening without a very large dose of central planning. Since 1997, Chongqing has been a municipality under the direct control of the government in Beijing. Its transformation from sleepy backwater into the economic hub of western China has been an objective of national policy. That has meant a state-led bonanza of fixed investment, which has grown at an average annual rate of 20 per cent over the past decade. Local officials beam as they reel off the statistics: there will be 30 new bridges over the river, 10 new light railway lines, 2,000km of new highway and millions of square metres of new office space. On the long drive from the airport to the city centre, it is impossible to keep count of the number of new tower blocks under construction or the number of cranes perched on the city’s hills.
The trouble with a semi-planned economy, as soon becomes clear to the visitor to Chongqing, is twofold. First, in the absence of rule of law and meaningful private property rights, there are no real limits to the “negative externalities” of economic development. The air in Chongqing is as thick with pollutants as the local food is thick with hot chili peppers, frequently turning the city’s natural mists into dense pea-soup fogs. Second, the semi-planned economy allocates resources to infrastructure investment but does nothing to mitigate social inequality. The economic gulf between insiders (officials and entrepreneurs) and outsiders (construction workers and the rest) is now huge. If this is the “harmonious society” of which China’s leaders boast, then São Paulo is an egalitarian paradise.
China’s war on nature is bound to generate conflicts. But what form will they take? It certainly seems inevitable that external pressure will increase as the rest of the world seeks to rein in China’s surging emissions of carbon dioxide. Indeed, environmental concerns may soon replace human rights as the principal bone of contention between China and the west, now that the People’s Republic has overtaken the US as the world’s biggest annual emitter of CO2.
The much bigger question, however, is what form China’s internal conflicts will take. Clearly, if the central government is to have any success in mitigating the environmental damage arising from industrialisation, it will have to increase its control over provincial and local authorities. Few other big cities are as readily ruled from the centre as Chongqing.....
Read entire article at Financial Times
Far up the River Yangtze, to the west of the Three Gorges Dam, Chongqing is probably the fastest growing city in the world today. It exemplifies both the strengths and the weaknesses of what might be called China’s semi-planned economy. To be sure, much of the economic running is made by private enterprise. Among the foreign companies that have already invested in the region are Ford, BP, Ericsson, Carrefour, Isuzu and Suzuki, all attracted by the combination of generous tax breaks and labour costs about 40 per cent lower than in eastern China. Even more important are home-grown companies such as Lifan Industrial Group, one of a number that have made Chongqing the motor cycle manufacturing capital of Asia.
Yet the explosive growth of Chongqing’s industry would not be happening without a very large dose of central planning. Since 1997, Chongqing has been a municipality under the direct control of the government in Beijing. Its transformation from sleepy backwater into the economic hub of western China has been an objective of national policy. That has meant a state-led bonanza of fixed investment, which has grown at an average annual rate of 20 per cent over the past decade. Local officials beam as they reel off the statistics: there will be 30 new bridges over the river, 10 new light railway lines, 2,000km of new highway and millions of square metres of new office space. On the long drive from the airport to the city centre, it is impossible to keep count of the number of new tower blocks under construction or the number of cranes perched on the city’s hills.
The trouble with a semi-planned economy, as soon becomes clear to the visitor to Chongqing, is twofold. First, in the absence of rule of law and meaningful private property rights, there are no real limits to the “negative externalities” of economic development. The air in Chongqing is as thick with pollutants as the local food is thick with hot chili peppers, frequently turning the city’s natural mists into dense pea-soup fogs. Second, the semi-planned economy allocates resources to infrastructure investment but does nothing to mitigate social inequality. The economic gulf between insiders (officials and entrepreneurs) and outsiders (construction workers and the rest) is now huge. If this is the “harmonious society” of which China’s leaders boast, then São Paulo is an egalitarian paradise.
China’s war on nature is bound to generate conflicts. But what form will they take? It certainly seems inevitable that external pressure will increase as the rest of the world seeks to rein in China’s surging emissions of carbon dioxide. Indeed, environmental concerns may soon replace human rights as the principal bone of contention between China and the west, now that the People’s Republic has overtaken the US as the world’s biggest annual emitter of CO2.
The much bigger question, however, is what form China’s internal conflicts will take. Clearly, if the central government is to have any success in mitigating the environmental damage arising from industrialisation, it will have to increase its control over provincial and local authorities. Few other big cities are as readily ruled from the centre as Chongqing.....