China’s Paradox: Economic Stimulation vs. Climate Catastrophe Aversion

Environmental inspectors in northern China have found that seventy percent of the businesses they examined failed to meet environmental standards for controlling air pollution. (Photo by Ella Ivanescu)

by Rachel Chiang
Staff Writer

This is a familiar story: China is to blame for climate change, with twenty-seven percent of global greenhouse gases emanating from within its borders. Operating under the desire to generate capital, the “authoritarian” Chinese state condones crippling levels of pollution, to the point at which face masks are daily necessities embraced by residents of Beijing. Any efforts to be environmentally conscious in the United States are futile since China will continue the reckless expansion of its carbon footprint.

China faces a daunting challenge: shifting away from their status as the second largest contributor of greenhouse gas emissions towards more climate-friendly policies. Having undergone rigorous reforms over the last thirty years, China has become, and is still advancing as, one of the largest and fastest growing economies in the world. In face of this rapid growth, however, China must now consider policies to align its trajectory of economic growth with efforts to be environmentally sustainable, and placate inflaming concerns about climate change. 

It is no secret that citizens of some Chinese provinces reside under black skies, hazy horizons, and breathe in sooty air. Air pollution has become so problematic that some operations of solar panels have been hindered. Researchers at the Chinese University of Hong Kong have discovered that premature deaths and lost food production as a result of air pollution is costing China 267 billion yuan (US$38 billion) each year. Fortunately running counter to the “airpocalypse,” the Chinese government, despite not being held by any international treaty, has initiated measures to alleviate environmental crises. Contrary to popular belief, China leads the globe in clean energy investment which, when taken as a percentage of GDP, is ten times that of the United States. Waging a “War on Pollution” in 2013 , the CCP has henceforth given environmental sustainability the attention it deserves, carrying almost equal importance as other traditional Chinese policies, such as alleviating poverty. China also took the lead in green financing– according to the International Energy Agency (IEA), China is accountable for 40 per cent of global growth in renewable resources and has already exceeded its 2020 photovoltaic energy goal (the CCP’s 2020 photovoltaic goal is 105GW, which was surpassed in 2017). It is currently the world’s largest solar market with solar finance last year equaling that of the whole of Europe at $23.5 billion. Jonas Nahm, an energy expert at Johns Hopkins University, states that China’s clean energy supply chain is indispensable in the world’s efforts to meet the climate targets by 2030, and to curb the acceleration of the climate catastrophe. 

Masks are the norm for Chinese residents. (Photo by Arran Smith)

Amid all this, however, China faces two dilemmas. For Chinese political elites, economic growth is the only viable route towards amerioliating the quality of lives, increasing employment rate, and ending poverty. Unfortunately, pursuing economic growth is often at odds with the flourishing climate action movement. On one hand, China, the largest global consumer of energy and greenhouse gas emitter, staunchly refuses to commit to any binding international treaty for emission reduction. On the other hand, the country invests heavily in alternative energy and has made great strides in energy transition. While environmental depredations pose a serious threat to China’s economic growth, costing the country roughly three to ten percent of its gross national income ($227 billion), according to China’s Ministry of Environmental Protection, the polluting coal industry in China stimulates the most economic growth. The principle challenge for the future development of the coal industry is how to deal with carbon dioxide emissions and climate change. Options such as a carbon tax, clean coal power plants, and increasing the price of fossil-fuel energy are considered to allow greenhouse gas emission reduction technologies to become economically viable and reduce the nation’s carbon footprint. 

The second paradox in China’s climate diplomacy and politics is the struggle to balance state interest and international role. As anthropogenic activities continue to accelerate the occurrence of extreme climatic events, whether or not China can continue adhering to the principle of “common but differentiated responsibilities” is a gray area. On one hand, if China remains unwavering in its reluctance to commit to international treaties and obligations to tackle climate change, it will be recognized as the “culprit of global warming,” thus risking the ruination of China’s reputation as a “responsible power,” and threatening China’s stance as an indispensable leading authority in international affairs. On the other hand, if China caves in to international pressure and prioritizes the environment over the economy, its rise to power may be thwarted as a result of economic stagnation that they believe would follow. International pressures may thus be imposed on China in the form of sanctions. It will be interesting to observe how China maneuvers this growth dilemma. 

China must decide whether to prioritize economic growth or developing more comprehensive environmental policies in the coming years (Photo by Markus Spiske).

Combating climate change must be a global effort and China’s engagement in climate diplomacy in this battle is critical. An EU delegate at the COP twenty-five meetings in Madrid observes, “If we get China, the rest of Asia will follow.” If nations do not cohesively advance towards  a climate change mitigation trajectory, the 2030 climate target will likely not be met in time. China’s direction of development will be crucial for global climate change in the next two decades. The strategies and role in international negotiations will be shaping the global response to climate change ever more profoundly. With its vast size, economic output and capacity to develop new models and technologies, China’s efforts will, by far, have the most profound impact on the global initiative to prevent a climate catastrophe.

UBI: The Global Antipoverty Experiment

by Tenzin Chomphel
Editor in Chief

The back and forth of the best way to resolve extreme poverty, wealth inequality, and just taxation, may often appear endless to most. While global poverty is lowering at a rate of roughly sixty-eight million people per year, that still leaves an unacceptably high level of poverty around the world. Domestically, the United States experiences an estimated thirty-eight million still in poverty, and inequality has additionally been on the rise, with the bottom ninety percent of households accounting for less than a quarter of the total wealth.

Continue reading “UBI: The Global Antipoverty Experiment”

The Closure of the WTO Appellate Body: The End of World Trade As We Know It?

by Pankhuri Prasad
Staff Writer

Is the world coming to an end? Hopefully not. But it could be the end of world trade as we have known it for the past two decades. During a course I took in the winter of 2018, my International Economics and Politics professor mentioned how the World Trade Organization (WTO) may face a severe crisis in the near future. At the time, the likelihood of such a crisis seemed low and distant. However, with the end of 2019 looming near, international trade is quickly heading into uncharted waters as the Appellate Body of the organization is facing extinction. The World Trade Organization (WTO) can be understood as the only global organization mediating nations by establishing the international rules of trade. At its core, the WTO is held up by the many multilateral agreements that are signed and negotiated by a majority of the world’s trading nations. The WTO is unique from other major international organizations because it yields effective enforcement through its dispute settlement mechanism. The dispute settlement mechanism, as the name suggests, is a system of solving disputes that may arise when one country or a group of countries believe that another country’s trade policies could be considered as a violation of WTO policies and principles. If the dispute cannot be settled through negotiations, an impartial panel of experts issue a ruling on the matter. 

The Appellate Body essentially acts as a supreme court and hears appeals about rulings issued by panels. This translates into a strong enforcement mechanism because the ruling goes into effect unless all WTO members vote unanimously to block the ruling. The defendant must then end the offending policy or pay compensation to the complainant. If no agreement can be reached on compensation, the injured party is authorized to impose retaliatory tariffs. Thus, this system differentiates the WTO from other international organizations because it imposes real economic consequences for flouting rules. 

As mentioned before, the Appellate Body may shut down at the end of this year. How did this happen? The answer is complicated. The immediate reason is that the United States vetoed the appointment of judges to such body. On December tenth of this year, two of the three remaining members will retire. Without them, the body will not be in quorum and will be forced to stop operations. The body typically consists of seven people but needs a minimum of three judges to hear cases and issue rulings. It is important to note that WTO panels will still be functional, but there will be no finality on issues since appeals to these decisions will be impossible.  

Why has the United States blocked appointments of judges? They have a long-standing list of complaints and criticisms of the WTO. Most importantly, the United States believes the Appellate Body has strayed away from its original mandate of a body that simply clarified existing rules. Instead, in many cases the system has been accused of “judicial activism”—taking decisions that are not grounded in preexisting rules of the organization. The reason for this is that the original rules of the WTO have seen almost no revision since the organization was created twenty-four years ago. Negotiations on new rules have been slow. The last round of negotiations started in 2001 and ended in failure in 2015. Other than asserting that the body is overly deliberative, the United States also believes the dispute mechanism process simply takes too much time. The 2019 Annual Report presented by the body showed that the average trade dispute takes about three and a half years, in total, before it is settled. 

How are other countries reacting to this? Canada and the European Union have agreed on a “shadow Appellate Body” that will operate similar to the current body. The United States expressed concern that other WTO members, including the European Union, are not as concerned about how the body has overstepped its jurisdiction. Although the Trump administration has been more assertive about the issue than other administrations, America’s grievances with the organization go back to President Obama’s term when his administration blocked the appointment of judges in 2016. 

The possibility of resolution seems low when there is disagreement among members on whether a problem exists or not with the dispute settlement mechanism itself. Furthermore, the United States has not signaled that it would be willing to lead reforms that might save the Appellate Body. Any leverage the White House might have will be substantially lowered once the body ceases to function in December. In fact, quite the opposite direction, as they are going from leading reform to threatening to block the passing of the international organization’s budget. 

Photograph of the second WTO Ministerial Conference which was held in Geneva, Switzerland in May of 1998.

What will this mean for world trade? Some have argued that dispute settlements should proceed as usual, only without America’s involvement, but that comes at the risk of ostracizing the system’s most frequent user. Disputes will still be decided by the panels. Without an appeals system however, the decisions could be used by countries to pressure trade rivals. Without a functional appeals system, international trade disputes could evolve into tit-for-tat tariff wars. Countries may feel emboldened to flout trade laws. 

There is no question that the WTO needs structural reform, but the United States will not lead this reform unless other countries concede that the international organization has overstepped its jurisdiction. This is yet another example of the country’s decreasing appreciation of international organizations. Earlier this year, the United Nations declared a cash crisis, partly due to lack of funding from its largest contributor, the United States. The question remains whether the economic hegemon sees these global regimes as worth saving. Do they see the WTO as vital to strengthening the global trading system and thus the American economy? The verdict is out. Meanwhile, what is certain is that global trade is entering a period of unprecedented uncertainties. 

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World Trade Organization