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Dealing With the Dragon

Paul Krugman, New York Times
On both Wednesday and Thursday, the price of oil briefly hit $100 a barrel. The new record made headlines, as well it should have. But what does it mean, aside from the obvious point that the economy is under extra pressure?

Well, one thing it means is that we’re having the wrong discussion about foreign policy.

Almost all the foreign policy talk in this presidential campaign has been motivated, one way or another, by 9/11 and the war in Iraq. Yet it’s a very good bet that the biggest foreign policy issues for the next president will involve the Far East rather than the Middle East. In particular, the crucial questions are likely to involve the consequences of China’s economic growth.

Turn to any of several major concerns now facing America, and in each case it’s startling how large a role China plays.

Start with the soaring price of oil
(4 January 2008)

China to ban plastic bags

Katie Coyne, Plastics Industry News
China has issued a ban on the production of ultra-thin plastic bags and their free distribution by supermarkets and shops effective from June. Too many plastic bags are used in China, which are not disposed of properly, wasting oil and littering the country, according to China’s cabinet, the State Council.

The cabinet added that the country’s financial authorities should use taxes to discourage the production and sale of plastic bags and encourage recycling. It also urged rubbish collectors to separate out plastic for reprocessing and reduce the amount burnt or landfilled.

The cabinet made the announcement and recommendations in a notice posted on the central government web site (
(9 January 2008)

Huge energy subsidies fuel China steel export-study

Doug Palmer, Reuters
Massive government energy subsidies have fueled China’s transformation into the world’s largest producer and exporter of steel, according to a new study released on Tuesday.

“In 2007, energy subsidies to Chinese steel are estimated at approximately $15.7 billion, showing a 3,800 percent increase since 2000,” the study prepared for Alliance for American Manufacturing, a U.S. industry group, said.

The report provides new ammunition for U.S. steel companies that complain Chinese government subsidies are responsible for a surge in steel imports from that country.
(8 January 2008)

A Green Bulldozer?

John Feffer, Korea Times
South Korea’s new president underwent his own personal green revolution when he became mayor of Seoul. In charge of major construction projects at Hyundai for three decades, Lee Myung-bak reversed himself in the new millennium. He made rivers spring from concrete and grass grow where there had once been only cars.

President-elect Lee now has a golden opportunity to accomplish this same trick for South Korea as a whole.
South Korea led the world in information technology in the 1990s. It put a cell phone in everyone’s pocket and a flat-screen monitor on everyone’s computer.

It is now time to harness the tremendous innovation and industriousness of South Korea’s workforce to meet the twin challenges of the 21st century: global warming and the looming energy crisis.

Lee is perfectly positioned to paint the South Korean economy green. He has the industry background, and he has new eco-credentials. He also has a reputation for persistence. And he’s going to need it every ounce of this persistence to pull his country kicking and screaming into the new global green economy.

John Feffer is co-director of foreign policy in focus at Institute for Policy Studies in Washington, D.C.
(8 January 2008)

$2,500 cars = $200 oil?

Loren Steffy, Houton Chronicle
… On Thursday, the Indian automaker Tata Motors is expected to unveil a car that sells for $2,500. … The car, of course, is not something most Americans would want to drive. Tata’s design codifies cheap, and the sacrifices are legion, according to a description in the New York Times. Standard safety equipment for most U.S. vehicles, for example, costs more than $2,500.

The new Tata will not, by our standards, be safe or environmentally friendly, and it probably won’t be fun to drive. It has a maximum horsepower of about 35, the Times reported, so it’s more lawn mower than muscle car.

But that’s not the point. Tata knows that most people who already own cars won’t be interested in its new model, whose name hasn’t been revealed.

It’s targeting the hundreds of millions of people in the developing world who now ride scooters or bicycles or walk.

If it succeeds, crude prices may continue their climb of the past year. The Tata probably will consume far less gasoline than the sport utility monstrosities common on American highways, but even the addition of several hundred million lawn mowers would rattle the markets.
(9 January 2008)

South Asia hit by food shortages

People across South Asia are struggling to cope with a severe shortage of affordable wheat and rice.

There have been queues outside Pakistani shops in towns around the country, and flour prices have shot up.

Wheat flour is a staple foodstuff in Pakistan, where rotis or unleavened bread are eaten with almost every meal.

Last week Afghanistan appealed for foreign help to combat a wheat shortage while Bangladesh recently warned it faced a crisis over rice supplies.

Global wheat prices are at record highs. Problems have been compounded by crop failures in the northern hemisphere and an increase in demand from developing countries.
(9 January 2008)