Wednesday 23 December 2009

Is China going off the rails?

The New York Times have an interesting article on China's break neck rail growth. I have an interest in this article as I recently took the 30 minute Beijing - Tianjin train. It was great. Very fast, relatively cheap (this is a moot point) and similar in comfort to a first class air flight. I should add that the train was full when I travelled - see point in the article below.

Pettis is very good. He is also correct about China's level of infrastructure relative to its level of development. He should not underestimate the power of a trophy however.

A five hour train journey from Beijing to Shanghai would also be fantastic. Such links will improve growth and oddly allow more divergence of economic growth instead of the current clustering in the coastal and big city areas.

When you compare train investment with road investment it does make sense. Sure, this is costly and a potentially inefficient use of stimulus funds. It one reads about the growth of railways in the US over a century ago you will see the same story unfolding. The railways opened up the US and lead to huge growth. What happened to the railways companies - they all went bust and shareholders lost everything. This cannot happen in China. So what will happen?

Is China's Economy Speeding Off the Rails? [New York Times]

BEIJING — Train C2019 covers the 120 kilometers between Beijing and Tianjin in 30 minutes, passing peasants in fields burning corn stalks and warrens of shacks occupied by people who are not sharing in China’s economic boom.

The line is part of China’s 2 trillion renminbi, or $292.9 billion, investment in a nationwide high-speed passenger-rail network that may be too much train, too fast.

The time savings that the new system delivers may not justify the cost, creating a potential drag on long-term growth, said Michael Pettis, former head of emerging markets at Bear Stearns. The losers are Chinese consumers, who will have to wait for new health care and old-age benefits while the government focuses on public works spending, he said.

While the expanded service will be a “trophy” for China, the country “already has probably the best infrastructure in the world for its level of development,” said Mr. Pettis, now a finance professor at Peking University.

China accelerated its high-speed-rail development plan last year in the wake of the global financial crisis, saying it would increase the passenger network by a third to 16,000 kilometers, or about 10,000 miles, by 2020.

Bombardier, the Montreal-based company that is the world’s largest maker of passenger locomotives, and Munich-based Siemens are helping to build the system. Bombardier’s Chinese joint venture won a $4 billion contract in September to build 80 high-speed trains. Siemens, the largest European engineering company, and Chinese partners received a €750 million, or $1.08 billion, order in March for 100 trains.

The centerpiece of the service is a 1,318-kilometer line with 16 kilometers of tunnels that will cut the trip between Beijing and Shanghai to five hours from 10.

Set to open by 2012, the 221 billion renminbi project currently employs 127,000 workers and is the most expensive engineering program in Chinese history, eclipsing the Yangtze River’s Three Gorges Dam, the world’s biggest hydroelectric project, which cost 203.9 billion renminbi.

Spending on railroads is growing faster than on any other area of investment, rising 80.7 percent to 464.6 billion renminbi in the first 11 months of the year from the same period in 2008, according to China’s National Bureau of Statistics.

Investment in fixed assets like factories and the rail network accounted for more than 95 percent of China’s 7.7 percent growth in the first three quarters of 2009 and made up 45 percent of gross domestic product, which is higher than any major economy in history, according to Stephen Roach, chairman of Morgan Stanley Asia.

Without a surge in consumer spending and with export growth stalled, investment must rise even further to stoke growth, he said in a Dec. 18 speech in Beijing.

“These are ridiculous, unsustainable numbers for any economy,” Mr. Roach said.

China may be hit with a slowdown next year as the impact of the investment-led expansion wears off and shipments to the United States, the traditional external source of growth, fail to pick up, Mr. Roach said in an October report. He did not specify how much he thought growth might slow.

Some economists say the high-speed network is symbolic of a stimulus program that places too much emphasis on infrastructure spending and not enough on raising living standards. The average urban Chinese worker made 28,898 renminbi last year, a tenth of the $39,653 average wage in the United States, according data from the U.S. and Chinese governments.

Most Chinese rail travelers will not pay the premium to ride on the fast trains, Zhao Jian, a professor of economics at Beijing Jiaotong University, said in a September interview on Chinese television.

A second-class one-way ticket for the half-hour Beijing-Tianjin trip costs 58 renminbi, about three-quarters of the workers’ average daily pay. A so-called hard-seat ticket on a slower train, which covers the distance in two hours, sells for 11 renminbi.

Passenger reluctance means revenue from the high-speed lines will not be enough to service the debt if railway expansion continues at its current pace, Mr. Zhao said in the TV interview. The Ministry of Railways has 383 billion renminbi in bonds outstanding.

“If America had its subprime crisis, in China we have a railroad-debt crisis, or you could call it a government-debt crisis,” Mr. Zhao said in the TV interview.

The Chinese Railway Ministry says that the new system makes economic sense: A two-track bullet train can transport 160 million people a year, compared with 80 million for a four-lane highway, it said in a Dec. 21 faxed statement.

“The safest, fastest, most economical, most environmentally friendly, most reliable mode of transport is high-speed rail,” the ministry said.

The fast trains leave from Beijing South railway station, a new glass and steel structure that looks like a flying saucer. The slower trains depart from the half-century-old Beijing Station, where the clock tower marks the hour by playing “The East is Red,” a tribute to Mao Zedong that was popular during the Cultural Revolution.

Sitting on the stiff green benches in car 13 of train 4401, Yuan Hong, 40, says she does not mind that the old line takes an extra 90 minutes.

“It’s a huge price difference,” says Ms. Yuan, who works as a cleaner in Tianjin. “This is the train the common people take.”


Did China kill hope and the planet at Copenhagen?

Copenhagen was never going to up with a decent environmental agreement. The result is better than nothing but only just. Are China really the bad guys in all this?

The left leaning Guardian puts the boot in. It is a surprise that they think it is a surprise that China would act in this way.

China are flexing their muscles and toughing it out - they can afford to do so without voters and upcoming elections. China's stance has internal and external logic. China will cut emissions and they will probably do a lot better then the West at hitting them but will do so on their own terms.

At least the Guardian accepts Copenhagen was a disaster. It always was. If you read previous posts on this blog such a disaster was inevitable. Can I provide a solution? No.

Did China wreck the deal? Very possibly. I will say again, the West never ceases to amaze me how it underestimates China's leaders and the level of political acumen that the government is happy to employ when the time is right. To get to a position of political leadership in China requires great skill (and some luck) not just a lot of money as in the US (although that also helps).

The West will learn some expensive mistakes in the meantime. Tguis good article is from Mark Lynus. The story they tell of the meeting and China sending a 2nd tier official is standard practice - has Mark Lynus not read his Chinese history? Why would they expect anything less? Why was Mark shocked?

The one point that they do get "China does not need a deal". Once one understands that the rest falls into place.

Mark Lynus was depressed at the result of Copenhagen. My reply is that he should never have been so optimistic in the first place.

Being an economist helps keep things into perspective. Rant over.

How do I know China wrecked the Copenhagen deal? I was in the room [Guardian]

Copenhagen was a disaster. That much is agreed. But the truth about what actually happened is in danger of being lost amid the spin and inevitable mutual recriminations. The truth is this: China wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful "deal" so western leaders would walk away carrying the blame. How do I know this? Because I was in the room and saw it happen.

China's strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world's poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait. The failure was "the inevitable result of rich countries refusing adequately and fairly to shoulder their overwhelming responsibility", said Christian Aid. "Rich countries have bullied developing nations," fumed Friends of the Earth International.

All very predictable, but the complete opposite of the truth. Even George Monbiot, writing in yesterday's Guardian, made the mistake of singly blaming Obama. But I saw Obama fighting desperately to salvage a deal, and the Chinese delegate saying "no", over and over again. Monbiot even approvingly quoted the Sudanese delegate Lumumba Di-Aping, who denounced the Copenhagen accord as "a suicide pact, an incineration pact, in order to maintain the economic dominance of a few countries".

Sudan behaves at the talks as a puppet of China; one of a number of countries that relieves the Chinese delegation of having to fight its battles in open sessions. It was a perfect stitch-up. China gutted the deal behind the scenes, and then left its proxies to savage it in public.

Here's what actually went on late last Friday night, as heads of state from two dozen countries met behind closed doors. Obama was at the table for several hours, sitting between Gordon Brown and the Ethiopian prime minister, Meles Zenawi. The Danish prime minister chaired, and on his right sat Ban Ki-moon, secretary-general of the UN. Probably only about 50 or 60 people, including the heads of state, were in the room. I was attached to one of the delegations, whose head of state was also present for most of the time.

What I saw was profoundly shocking. The Chinese premier, Wen Jinbao, did not deign to attend the meetings personally, instead sending a second-tier official in the country's foreign ministry to sit opposite Obama himself. The diplomatic snub was obvious and brutal, as was the practical implication: several times during the session, the world's most powerful heads of state were forced to wait around as the Chinese delegate went off to make telephone calls to his "superiors".

Shifting the blame

To those who would blame Obama and rich countries in general, know this: it was China's representative who insisted that industrialised country targets, previously agreed as an 80% cut by 2050, be taken out of the deal. "Why can't we even mention our own targets?" demanded a furious Angela Merkel. Australia's prime minister, Kevin Rudd, was annoyed enough to bang his microphone. Brazil's representative too pointed out the illogicality of China's position. Why should rich countries not announce even this unilateral cut? The Chinese delegate said no, and I watched, aghast, as Merkel threw up her hands in despair and conceded the point. Now we know why – because China bet, correctly, that Obama would get the blame for the Copenhagen accord's lack of ambition.

China, backed at times by India, then proceeded to take out all the numbers that mattered. A 2020 peaking year in global emissions, essential to restrain temperatures to 2C, was removed and replaced by woolly language suggesting that emissions should peak "as soon as possible". The long-term target, of global 50% cuts by 2050, was also excised. No one else, perhaps with the exceptions of India and Saudi Arabia, wanted this to happen. I am certain that had the Chinese not been in the room, we would have left Copenhagen with a deal that had environmentalists popping champagne corks popping in every corner of the world.

Strong position

So how did China manage to pull off this coup? First, it was in an extremely strong negotiating position. China didn't need a deal. As one developing country foreign minister said to me: "The Athenians had nothing to offer to the Spartans." On the other hand, western leaders in particular – but also presidents Lula of Brazil, Zuma of South Africa, Calderón of Mexico and many others – were desperate for a positive outcome. Obama needed a strong deal perhaps more than anyone. The US had confirmed the offer of $100bn to developing countries for adaptation, put serious cuts on the table for the first time (17% below 2005 levels by 2020), and was obviously prepared to up its offer.

Above all, Obama needed to be able to demonstrate to the Senate that he could deliver China in any global climate regulation framework, so conservative senators could not argue that US carbon cuts would further advantage Chinese industry. With midterm elections looming, Obama and his staff also knew that Copenhagen would be probably their only opportunity to go to climate change talks with a strong mandate. This further strengthened China's negotiating hand, as did the complete lack of civil society political pressure on either China or India. Campaign groups never blame developing countries for failure; this is an iron rule that is never broken. The Indians, in particular, have become past masters at co-opting the language of equity ("equal rights to the atmosphere") in the service of planetary suicide – and leftish campaigners and commentators are hoist with their own petard.

With the deal gutted, the heads of state session concluded with a final battle as the Chinese delegate insisted on removing the 1.5C target so beloved of the small island states and low-lying nations who have most to lose from rising seas. President Nasheed of the Maldives, supported by Brown, fought valiantly to save this crucial number. "How can you ask my country to go extinct?" demanded Nasheed. The Chinese delegate feigned great offence – and the number stayed, but surrounded by language which makes it all but meaningless. The deed was done.

China's game

All this raises the question: what is China's game? Why did China, in the words of a UK-based analyst who also spent hours in heads of state meetings, "not only reject targets for itself, but also refuse to allow any other country to take on binding targets?" The analyst, who has attended climate conferences for more than 15 years, concludes that China wants to weaken the climate regulation regime now "in order to avoid the risk that it might be called on to be more ambitious in a few years' time".

This does not mean China is not serious about global warming. It is strong in both the wind and solar industries. But China's growth, and growing global political and economic dominance, is based largely on cheap coal. China knows it is becoming an uncontested superpower; indeed its newfound muscular confidence was on striking display in Copenhagen. Its coal-based economy doubles every decade, and its power increases commensurately. Its leadership will not alter this magic formula unless they absolutely have to.

Copenhagen was much worse than just another bad deal, because it illustrated a profound shift in global geopolitics. This is fast becoming China's century, yet its leadership has displayed that multilateral environmental governance is not only not a priority, but is viewed as a hindrance to the new superpower's freedom of action. I left Copenhagen more despondent than I have felt in a long time. After all the hope and all the hype, the mobilisation of thousands, a wave of optimism crashed against the rock of global power politics, fell back, and drained away.


Wednesday 16 December 2009

China bank fraud shock - not

When I saw the headline that the Royal Bank of Scotland was investigating fraud at its China operations my initial thoughts are "what took so long".

All banks in China have to accept fraud as an occupational hazard. This is a problem that will not go away quickly.

If UK and US banks expect bank workers to have the same ethos and culture as their UK counterparts then they have a lot to learn.

Each bank should have a specialist fraud team working continuously. The costs will more than compensate. Banks also need to ensure that the anti-fraud team is changed every three years otherwise you can all guess what will happen.

Foreign banks cannot say they have not been warned.

RBS investigates ‘irregularities’ in its China unit [FT]

Royal Bank of Scotland is investigating suspected fraud in its China unit after recently discovering “potential irregularities” in its commercial banking business.

The bank on Wednesday said the probe related to a small number of accounts within the small and medium size banking business at ABN Amro China.

Local media reported last month that the alleged fraud may have resulted in client losses of up to Rmb20m ($3m).

ABN Amro China declined to comment on the scale of the potential losses. The bank has reported the matter to China’s banking regulator, which is also investigating.

People familiar with the matter said that the individual concerned had been suspended pending the outcome of the inquiry.

“Any dishonest behaviour by bank staff is completely unacceptable... and will be taken extremely seriously,” one person close to the bank said. “Safeguarding the interests of our clients is our top priority and, as an international bank, the controls we have in place are in line with the widely accepted industry standards.”


Banks in China have suffered a number of fraud cases in recent years, leading to frustration among regulators.

The AFP news agency this month reported that Yan Qingmin, head of the Shanghai branch of the China Banking Regulatory Commission, had criticised foreign banks during a recent meeting for ignoring risk in their local operations and urged them to carry out better internal checks.


Tuesday 15 December 2009

"Open cities", pollution and FDI in China

Matthew Kahn and co-authors have published an interesting paper in Regional Science and Urban Economics. Matt Khan is a fellow blogger and does very good work on the urban-environment nexus (he is also the author of the excellent "Green Cities".

To cover FDI, pollution and house prices in one 10 page paper is impressive.

I am skeptical that migration patterns will be influenced by pollution at this stage of China's development. The paper does point out the impediment caused by the "Hukou" system. I think they underestimate the importance of hukou as a distortion on migration and the speed by which cities can develop.

The "housing bubble" during this period also distorts the market especially in Beijing.

Finally, this paper is related to the standard Kuznet's curve literature (as acknowledged in the paper). This literature suggests that China has yet to reach the turning point for many pollutants. The conclusions of this paper are optimistic although I am not sure I share this optimism. It is unlikely that any Chinese city in the next 10 years will move from a "producer" to a "consumer" city. The authors are right to state in the last line of the paper that any improvement will be part of a "long term trend".

Towards a system of open cities in China: Home prices, FDI flows and air quality in 35 major cities

Siqi Zheng, Matthew E. Kahn and Hongyu Liu


Over the last 30 years, China's major cities have experienced significant income and population growth. Much of this growth has been fueled by urban production spurred by world demand. Using a unique cross-city panel data set, we test several hypotheses concerning the relationship between home prices, wages, foreign direct investment and ambient air pollution across major Chinese cities. Home prices are lower in cities with higher ambient pollution levels, and the marginal valuation for green amenities is rising over time. Cities featuring higher per-capita FDI flows have lower pollution levels. These findings may indicate that major Chinese cities are making the transition from “producer cities” to “consumer cities”, which raises the prospects of sustainable economic development in China.

Keywords: China; Urban growth; FDI; Air pollution; Quality of life


Copenhagen: "Neither a lender nor a borrower be"

I have kept my Copenhagen coverage to a minimum given that I have covered these issues throughout the year.

However, it is interesting to note the recent spat between the US and China. First, or was it second, we have the US saying that they will not give money to China to combat climate change and then we have China saying that they do not want any money anyway or did they say they didn't want it first.

It could be argued that this is just both countries playing to their domestic audience as part of the negotiations but it marks a significant change in China's stance. China is still very poor in terms of GDP per head but it has grown up fast and is not prepared to flex its muscles on the international stage.

I am impressed by China's position. It shows China makes a major concession and yet appearing more powerful on the international stage. Top marks.

The arguments have been rehearsed in many other articles but the fact remains:

1. Developed nations caused the current high CO2 levels
2. Developing countries will suffer the most from climate change
3. Developing countries have the same right to grow and to develop as the West did
4. Developing country pollution levels are increasing rapidly (due to the scale effect).
5. A proportion of the pollution in developing countries is caused by Western multinational companies producing to export back to the West or domestic firms producing to satify the consumerism of the West.

Any solution will be very difficult to find. The environmental problems in China are severe. China is acting and acting quickly in terms of regulation and enforcement but a lot remains to be done.

The world needs an agreement but I have very low expectations.

China signals climate funds shift [FT]

China signalled on Sunday that it had abandoned its demand for funding from the developed world to combat climate change, the first apparent concession by one of the major players at the Copenhagen climate talks.

However, in the same interview with the Financial Times, the most senior Chinese negotiator accused rich countries of preparing to blame a failure at Copenhagen on Beijing.

As the talks entered their critical final week, He Yafei, Chinese vice-foreign minister, said financing from rich countries should be directed to poorer countries.

“Financial resources for the efforts of developing countries [to combat climate change are] a legal obligation,” he said. “That does not mean China will take a share – probably not.

“We do not expect money will flow from the US, UK [and others] to China.”

China has committed itself to cut emissions per unit of gross domestic product by 40-45 per cent by 2020 but had demanded financing from the developed world to take further steps to tackle climate change.


Wednesday 9 December 2009

Wolf on the China currency problem

The US and the EU continue to moan about the heavily managed exchange rate. So why is it such a problem?

Martin Wolf explains. He correctly points out that China resents the continuous Western pressure. However, the extent of the undervaluation is main clear - this cannot go on.

Is increased protectionism inevitable? I am not so sure. China still imports vast quantities and pays more for these goods as a result of a devalued currency. A managed ER is a subsidy to exporters that is true but I think outright protection is some way off.

Wolf does a good job of highlighting some of the problems that lay ahead. There is no simple solution.

Why China’s exchange rate policy concerns us [FT]

A country’s exchange rate cannot be a concern for it alone, since it must also affect its trading partners. But this is particularly true for big economies. So, whether China likes it or not, its heavily managed exchange rate regime is a legitimate concern of its trading partners. Its exports are now larger than those of any other country. The liberty of insignificance has vanished.

Naturally, the Chinese resent the pressure. At the conclusion of a European Union-China summit in Nanjing last week, Wen Jiabao, the Chinese premier, complained about demands for Beijing to allow its currency to appreciate. He protested that “some countries on the one hand want the renminbi to appreciate, but on the other hand engage in brazen trade protectionism against China. This is unfair. Their measures are a restriction on China’s development.” The premier also repeated the traditional mantra: “We will maintain the stability of the renminbi at a reasonable and balanced level.”

We can make four obvious replies to Mr Wen. First, whatever the Chinese may feel, the degree of protectionism directed at their exports has been astonishingly small, given the depth of the recession. Second, the policy of keeping the exchange rate down is equivalent to an export subsidy and tariff, at a uniform rate – in other words, to protectionism. Third, having accumulated $2,273bn in foreign currency reserves by September, China has kept its exchange rate down, to a degree unmatched in world economic history. Finally, China has, as a result, distorted its own economy and that of the rest of the world. Its real exchange rate is, for example, no higher than in early 1998 and has depreciated by 12 per cent over the past seven months, even though China has the world’s fastest-growing economy and largest current account surplus.

Do these policies matter for China and the world? Yes, is the answer. Mark Carney, governor of the Bank of Canada, notes in a recent speech, that “large and unsustainable current account imbalances across major economic areas were integral to the build-up of vulnerabilities in many asset markets. In recent years, the international monetary system failed to promote timely and orderly economic adjustments.”* He is right.

What we are seeing, as Mr Carney points out, is a failure of adjustment to changes in global competitiveness that has unhappy precedents, notably during the 1920s and 1930s, with the rise of the US, and, again, during the 1960s and 1970s, with the rise of Europe and Japan. As he also notes, “China’s integration into the world economy alone represents a much bigger shock to the system than the emergence of the US at the turn of the last century. China’s share of global gross domestic product has increased faster and its economy is much more open.”

Moreover, today, China’s managed exchange rate regime is quite different from those of other big economies, which was not true of the US when it rose to prominence. Thus, China’s managed exchange rate is shifting adjustment pressure on to other countries. This was disruptive before the crisis, but is now worse than that in this post-crisis period: some advanced countries, notably Canada, Japan, and the eurozone, have already seen big appreciations of their currencies. They are not alone.

Unfortunately, as we have also long known, two classes of countries are immune to external pressure to change policies that affect global “imbalances”: one is the issuer of the world’s key currency; and the other consists of the surplus countries. Thus, the present stalemate might continue for some time. But the dangers this would create are also evident: if, for example, China’s current account surplus were to rise towards 10 per cent of GDP once again, the country’s surplus could be $800bn (€543bn, £491bn), in today’s dollars, by 2018. Who might absorb such sums? US households are broken on the wheel of debt, as are those of most of the other countries that ran large current account deficits. That is why governments are now borrowers of last resort.

Chinese exchange rates

For the external deficit countries, the concern is how to lower fiscal deficits without tipping their economies back into recession. That will be impossible unless they are either able to get their private sectors spending and borrowing as before, or they enjoy rapid expansion in net exports. Of the two, the latter is the safer route to health. But that in turn, will only happen if surplus countries expand demand faster than potential output. China is the most important single player in this game.

Fortunately, these adjustment are in the long-term interests of both sides, including China. As a recent report from the European Chamber points out, China’s external surpluses have been a by-product of misguided policy.** Thus, capital was priced too cheaply in the 2000s, via cheap credit and low taxes on corporate profits, while foreign exchange was deliberately kept too expensive by currency interventions. In the process, income was transferred from households to industry. The result was an extraordinary surge in exports and capital-intensive heavy industry, with little job creation. Household disposable incomes fell to an extremely low share of GDP, while corporate investment, savings and the current account surplus soared. The short-term response to the crisis, with soaring credit and fixed investment, while successful in sustaining demand, reinforced these tendencies, rather than offset them. Another round of huge increases in excess capacity and current account surpluses seems inevitable.

China’s exchange rate regime and structural policies are, indeed, of concern to the world. So, too, are the policies of other significant powers. What would happen if the deficit countries did slash spending relative to incomes while their trading partners were determined to sustain their own excess of output over incomes and export the difference? Answer: a depression. What would happen if deficit countries sustained domestic demand with massive and open-ended fiscal deficits? Answer: a wave of fiscal crises.

Neither answer is acceptable; we need co-operative adjustment. Without it, protectionism in deficit countries is inevitable. We are watching a slow-motion train wreck. We must stop it before it is too late.


Tuesday 8 December 2009

The "Chinaistation" of Africa

Whilst the word "Chinaisation" is objectional as a word in the English dictionary the topic of the Chinaisation of Africa is an interesting one and something I want to work on in the near future. The word "Chinisation" of Africa is even worse.

Which do people prefer?

The World Economy have an excellent special issue.

World Economy

Volume 32 Issue 11 , Pages 1499 - 1655 (November 2009)

The Asian Drivers and Africa: Learning from Case Studies (p 1538-1542)
Andrea Goldstein, Nicolas Pinaud, Helmut Reisen, Dorothy McCormick
Published Online: Dec 3 2009 9:17AM
DOI: 10.1111/j.1467-9701.2009.01248.x

The Chinisation of Africa: The Case of Angola (p 1543-1562)
Renato Aguilar, Andrea Goldstein
Published Online: Dec 3 2009 9:17AM
DOI: 10.1111/j.1467-9701.2009.01249.x

The Developmental Impact of the Asian Drivers on Senegal (p 1563-1585)
Eric Hazard, Lotje De Vries, Mamadou Alimou Barry, Alexis Aka Anouan, Nicolas Pinaud
Published Online: Dec 3 2009 9:17AM
DOI: 10.1111/j.1467-9701.2009.01250.x

The Developmental Impact of Asian Drivers on Kenya with Emphasis on Textiles and Clothing Manufacturing (p 1586-1612)
Paul Kamau, Dorothy McCormick, Nicolas Pinaud
Published Online: Dec 3 2009 9:17AM
DOI: 10.1111/j.1467-9701.2009.01251.x

The Developmental Impact of Asian Drivers on Ethiopia with Emphasis on Small-scale Footwear Producers (p 1613-1637)
Tegegne Gebre-Egziabher
Published Online: Dec 3 2009 9:17AM
DOI: 10.1111/j.1467-9701.2009.01252.x

The Asian Drivers and SSA: Is There a Future for Export-oriented African Industrialisation? (p 1638-1655)
Raphael Kaplinsky, Mike Morris
Published Online: Dec 3 2009 9:17AM
DOI: 10.1111/j.1467-9701.2009.01253.x


Chinadialogue does Copenhagen

Instead of endless Copenhagen coverage I point readers to Chinadialogue who are providing excellent coverage from a "China perspective".


Hello from Copenhagen, Beijing, London and San Francisco and welcome to The Daily Planet chinadialogue’s unique bilingual blog of the Copenhagen climate change summit. Over the next two weeks we will post blogs, video and links to the best articles on the talks in Chinese and English.


Wednesday 2 December 2009

Global warming and the Chinese grain harvest

On the eve of the Copenhagen conference on climate change it is timely to remember that the countries that will suffer the most from climate change and developing countries. Whilst China and India may protest, quite correctly, that they did not emit the greenhouse gases that are now causing the world's temperatures to increase, they will be the ones to suffer the most.

Regular readers of this blog will be aware of this difficult position that China is currently in. They need to make some very tough decisions and are the key player at Copenhagen in my view.

This is while China is making great strides despite taking over as the world's largest emitter of CO2.

China and India need a deal but they also need to be allowed to grow. There will be no agreement at Copenhagen and the poker game will continue.

Planet Ark have an interesting article on the impact of climate volatility on potential grain harvests in China.

Global Warming Threatens China Harvests: Forecaster [Planet Ark]

BEIJING - Droughts and floods stoked by global warming threaten to destabilize China's grain production, the nation's top meteorologist has warned, urging bigger grain reserves and strict protection of farmland and water supplies.

Extreme weather damage can now cause annual grain output in China, the world's biggest grain producer, to fluctuate by about 10 to 20 percent from longer-term averages.

But with global warming intensifying droughts, floods and pests, the band of fluctuation in annual production could widen to between 30 and 50 percent, Zheng Guoguang, head of the China Meteorological Administration, wrote in a new essay. He did not say how long it might be before that could happen.

A stretch of especially bad weather for farming conditions could be disastrous for the world's most populous nation, Zheng wrote in the latest issue of Seeking Truth (Qiushi), the ruling Communist Party's main magazine, which was published on Tuesday and reached subscribers on Wednesday.

"If extreme climatic disasters occur twice or more within five years -- for example, major drought over two or three years -- then the impact on our country's economic and social development would be incalculable," wrote Zheng, who plays a role in developing China's climate change policies.

Zheng's warning appeared days before governments gather in Copenhagen seeking to forge the framework of a new agreement on fighting global warming.

As the world's biggest greenhouse gas emitter, China will be a crucial player in those talks. Last week the government announced emissions goals for the next decade.

Zheng's blunt words underscored the hard choices facing Beijing, as both a big polluter and a vulnerable victim of global warming. He is a member of a "leading small group" charged with developing the government's policies on climate change.


A vast developing country with a farming population of some 750 million, China is also one of the nations most vulnerable to global warming, wrote Zheng. He urged greater attention to adapting to unstoppable shifts in temperatures, rainfall and extreme weather.

China should make a priority of "reducing the impact of global warming on the country's food security, and strengthening the capacity of agriculture to withstand climatic risks," wrote Zheng.

China's grain production has recently reached record levels, despite damage from droughts, floods and frost. In 2008, China enjoyed a fifth straight year of bumper harvests, with grain output at a record 525 million tonnes. U.S. output over the 2007-08 growing year was 412 million tonnes.

Citing previously published research, Zheng wrote that by 2030, China's crop productivity could be 5 to 10 percent lower than it would be without global warming.

While rising temperatures may extend potential growing times and areas for some crops, especially in northeast China, the accompanying rise in evaporation rates is likely to reduce water supplies, undercutting any increases in crop yields, wrote Zheng.

Without adequate adaptive measures, in the second half of the century wheat, rice and corn production could fall by as much as 37 percent of recent averages, he wrote, citing earlier research.

But China "cannot depend on the international marketplace" to make up for these potential shortfalls, because global warming would also erode farming productivity in many parts of the globe, Zheng wrote.

Instead, the government should focus on expanding domestic grain reserves, protecting farmland, developing water-saving technology for farms, and boosting farmers' productivity, he wrote.