China: the green and the black
Friday, January 29, 2010 at 10:06PM WORLD NEWS: "Chinese Law Aims to Increase the Use of Renewable Energy," by Shai Oster, Wall Street Journal, 28 December 2009.
FRONT PAGE: "Earth-Friendly Elements, Mined Destructively," by Keith Bradsher, New York Times, 26 December 2009.
WORLD NEWS: "Gangster Trials Highlight China's Crime Battle," by Sky Canaves, Wall Street Journal, 29 December 2009.
The Chinese announce new regs to increase the employment of renewables, ones that basically force electricity generators to prove they are prioritizing solar, wind, etc. over the more intense carbon creator coal.
On paper, very impressive, but if you know anything about command economies (and China retains a lot of such protocols and ingrained habits, if for no other reason that the economy is populated with loads of state-run enterprises), the capacity of players inside the system to work around rules essentially defines their success. So put aside any ideas you may have that a command-ish economy can automatically tackle this problem better. The CCP is definitely in charge of politics, but wields immensely less power over economics--not because they lack power but because they lack sufficient levers as their economy grows more complex and interconnected with the larger world. Americans have this odd tendency to assume political control consistently trumps the need for economic control, when history says otherwise, especially once you head down the path of markets.
So yeah, we praise the Chinese for passing their "law," but this is not a system based on laws, so don't expect monitoring or enforcement (where the Chinese are notoriously crude--as in, round up some egregious suspects and hang them all on TV) or the incentive structure to be similarly impressive. Those attributes of a well-ordered system simply cannot be willed into existence. They are grown, in a social contract among the government, the population, and business--and not overnight.
So what matters here is not, did China pass a law or announce some target? What matters here is how the system as a whole responds, and there the CCP has little actual control. It's great for shutting up those who call for democracy, but that ain't exactly a transferable skill to this problem-set--hence the party's tolerance for grass-roots activity in environmentalism. Absent such data inputs, the Party is deaf-dumb-and-blind for the most part. It just wants its sacred 8 percent (and you have to know Chinese to know how magical the number "8" is to them).
But eight ain't enough, so to speak. It's more problem than solution in this realm.
Good example being the second story: China has a lock, right now, on most Rare Earth elements production in the world. If it plays its cards right (meaning OPEC-like), it can do well. But the more it scares the rest of the world over perceived vulnerability of access, I guarantee you the rest of the world will go down other paths--no matter the cost. And China will thereupon lose--big-time.
Again, remember: supply does not determine power, demand does. People will always want certain capabilities; how we deliver them can be rearranged in countless ways.
But the larger point: in pushing for the sacred 8 percent, look at the short-cuts China takes in its amazingly destructive mining of Rare Earth elements--the irony being their crucial role in some of the greenest technology now coming down the pike.
Then check out the tertiary problem of criminal gangs having a huge hand in that sector and China's Italian-like efforts (mass trials) to start tackling that huge mess. The further you go from the coast and especially the further you go from Beijing, the more the gangs rule economic transactions.
Which takes me back to the original point: this is still a very command-ish economy in behavior, and in a universe dominated by skills involving workarounds, you naturally find a huge and very profitable criminal sector.
So please, hold your applause on this noble law.
(Thanks: Louis Heberlein on the Chinese law cite)
