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China’s inside-out climate leadership

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Tourists hold umbrellas as they stand in front of the Tiananmen Gate and a giant portrait of Chinese late Chairman Mao Zedong on a day of heavy rain in Beijing, China, 20 July 2016 (Photo: Reuters/Thomas Peter).

In Brief

When the Bush administration rejected the Kyoto Protocol in the 2000s, China was one of many countries that invoked US recalcitrance to justify its own inaction on climate change. But when President Trump announced on 1 June this year that he will withdraw the United States from the Paris Agreement, China’s response was strikingly different.


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Chinese state media strongly criticised the move. Premier Li Keqiang reaffirmed China’s own commitment to the Agreement. And, in quick succession, the nation’s leaders showcased new international cooperative initiatives on climate and energy with the EU and California. In an apparent snub to President Trump, California Governor Jerry Brown was received by Chinese President Xi in the Great Hall of the People. It was also recently announced that China will convene a ministerial-level meeting on implementing the Paris Agreement with the EU and Canada in September.

What explains China’s change of tune?

Much of it can be explained by domestic changes in China. In the 2000s, most countries perceived climate action as a costly burden. China and other fast developing countries were particularly strident in their insistence that rich countries must take the lead in cutting emissions. But even among rapidly industrialising nations, China was dependent on fossil fuels to an unusually high degree.

In the period 2000 to 2013, China’s economic growth strategy centred on staggering investment in: infrastructure and property construction; the production of the energy-intensive materials used for such construction; and the production of the coal, oil, gas and electricity needed to power that heavy industry. By 2013, China accounted for around half of the world’s annual production of steel, 60 per cent of world cement production and half of global coal consumption. China’s greenhouse gas emissions soared over this period, with around two-thirds of the growth attributable to industry.

But this heavy industry-focused economic strategy created immense economic, financial, social and environmental problems. And gradually, China’s leadership came to understand that many of the domestic responses to these problems also happen to mitigate its greenhouse gas emissions.

First, the rapid expansion in energy use, and hence imports, in the 2000s led to concerns about energy insecurity, prompting systematic energy conservation policies beginning in the mid-2000s and ratcheting up in subsequent years. These have contributed to large improvements in energy efficiency at the firm level.

Second, China’s wider economy has begun a process of fundamental structural change. This involves a shift away from investment in construction and heavy industry toward domestic consumption,  services and high-tech manufacturing. The effect has been a slowing in the rate of economic growth and at the same time a dramatic reduction in the energy intensity of economic growth.

Consequently, China’s energy demand growth over the last three years has been dramatically slower than in the previous phase of heavy industry-based growth.

At the same time, renewable and nuclear energy production have been reducing the share of fossil fuels — especially coal — in China’s energy supply. The renewable energy expansion is especially striking. China has for many years used industrial policy to develop its wind and solar photovoltaic industries, and now has the largest installed capacity of both forms of energy. It continues to set and beat its own ambitious targets for renewable energy production, while also boasting a number of leading global producers.

Growing public anger over air pollution, which kills an estimated 4000 Chinese people per day, has prompted more aggressive regulatory controls on coal consumption, reinforcing the decline of coal in China’s energy mix.

Together, all of these domestic changes produced an extraordinary turnaround in China’s greenhouse gas emissions, which have likely been flat or declining year-on-year since 2013.

This new domestic outlook has facilitated a change in foreign policy. In effect, China has packaged its wide-ranging domestic transformations as a climate change mitigation strategy. This has enabled China to adopt a more cooperative stance in international climate negotiations, deflect international criticism over its emissions, and generally position itself as a leader and ‘rule-shaper’ on climate change.

This more cooperative stance was reflected prominently in the run-up to and during the 2015 Paris negotiations, including via a series of diplomatic initiatives with the United States under President Obama. President Trump’s recent withdrawal from the Paris Agreement has provided an opportunity for China to reinforce its newfound global leadership role, which Beijing has seized.

Because the domestic trends discussed above look set to continue, we should expect China to strengthen its commitments under the Paris Agreement, expand its dominance in clean energy, and hence strengthen its international claims to climate leadership over the medium term, at least.

But there are risks and challenges associated with the socio-economic transition on which China has embarked, and these hold the potential to slow or undermine the domestic trends on which China’s claim to climate leadership rests. These include political resistance to new policies from the heavy industries and the provinces in which they are concentrated.

The inevitable stranding of assets and shedding of jobs associated with the unwinding of these over-capacity industries, which has begun in earnest, has already provoked such resistance. Political pressure for countervailing stimulus measures to prop up the ailing heavy industries is strong, and was no doubt behind the recent industrial stimulus package of late 2016–17.

Major challenges also lie ahead for China in reforming its wasteful electricity sector, quelling investment in new polluting industries such as coal-to-chemicals, and ensuring its audacious overseas investment plans cohere with its self-styled ‘green’ image.

With the mantle of global climate leadership will come heightened international expectations and stricter scrutiny of the climate implications of China’s policies and practices, at home and abroad. This could assist central government reformers trying to push the country down a greener path. But it also raises the costs of failure. Global leadership is not all upside.

Fergus Green is a researcher and climate policy consultant based at the London School of Economics & Political Science.

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