Low Carbon: 'The Long-Term Interest of The Chinese Nation'

China's National Development and Reform Commission--the most powerful central bureaucracy (imagine macroeconomic planner, energy administrator, price setter, and climate change policymaker all under one roof)--announced that it has designated about a dozen provinces and cities as pilot areas for "low-carbon development". Notable in the plan is the intention to test small and limited "carbon trading" schemes in some of the pilot cities. According to China's chief climate change negotiator Xie Zhenhua

For the long-term interests of the Chinese nation as well as all human beings, the Party Central Committee and the State Council regard addressing climate change as one of the important strategies of China's economic and social development, and has set goals to control the emissions of greenhouse gasses until 2020. China will include the goal into the medium and long-term plan of the national economic and social development.

The goals to which Xie is referring are of course the carbon-intensity cuts (reduction of 40-45% per unit of GDP from 2005 levels by 2020) that China voluntarily set for itself before last year's uninspired but politically-charged Copenhagen conference. Skepticism abound on China's capacity to meet these technically non-binding targets, and given Beijing's struggle this year to meet its energy-intensity reduction target, doubts over China's commitment are understandable. 

Without dwelling on whether China's targets are credible, I think these new pilot programs suggest several important things about addressing the carbon issue in China:

1. Beijing recognizes that it needs more market-based actions (i.e. carbon trading, taxes, etc) rather than administrative measures (i.e. ordering factories to close) to achieve its loftier goals. The low-hanging fruit has been picked. 

2. China may be smartly attempting to synchronize its prerogative to accelerate urbanization with a focus on low-carbon urbanization. Chongqing--China's "Chicago"--is one of the mega-cities selected for the pilot program. And judging by how fiercely it has grown in the last decade, Chongqing makes sense as a subject in China's low-carbon laboratory. 

3. China feels a lot of pressure domestically and internationally on this front. The fact that China's #2 economy news was accompanied or even eclipsed by tragic landslides, yet more flooding, and rising energy consumption (and economic costs too) is not lost on Beijing. 

I will give many of these issues lengthier treatment later. But for now, to end on a lighter note, I give you the world's largest human domino chain (this is clearly an achievable target that plays to China's strengths and competitive advantages):  
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Damien Ma is a fellow at the Paulson Institute, where he focuses on investment and policy programs, and on the Institute's research and think-tank activities. Previously, he was a lead China analyst at Eurasia Group, a political risk research and advisory firm.

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