A Pearl River tale, power and pride in China
For a few days last week, global news agencies pursued the peculiar story of the world's worst traffic jam, which was reported to have lasted for around nine days and stretched across about 100 kilometres of a major highway leading to Beijing.
The human interest points of this very 21st century tale were presented as truck drivers bathing next to their vehicles and villagers from nearby settlements scalping the marooned travellers for food and beverages. This monstrous chain of immobilised vehicles served as a dramatic cameo about how the world's biggest carbon emitter, energy consumer and now auto market actually lives from one day to the next.
There was a time when images of China, whether urban or rural, were defined by the bicycle. It was the world's biggest bicycle maker and user, and the few photographs of China in the 1970s that focused on street life in Shanghai or Beijing showed why this was so. Pedal power was what China ran on, 40 years ago, a time when 'CO2' and 'emissions' were yet to figure in national calculations of total energy use and the atmospheric impact of that use.
The bicycle has long since passed into dotage as an East Asian icon, being replaced first by the two-stroke moped and in the last decade, by the automobile. The district roads and urban thoroughfares of developing Asia were utterly different a generation earlier, cleaner, slower and far more human.
The contrast between then and now is brought home forcefully by this news report:
"A 30-kilometer long jam formed today on the Beijing-Tibet Expressway used to transport coal from China's hinterlands to its eastern ports. More than 2,000 vehicles are stuck at the Badaling section of the expressway in Hebei province, China National Radio said on its website. The congestion, about 250 kilometers northwest of downtown Beijing, began about 2 am local time and came four days after the last jam, according to the report. Traffic on the Beijing-Tibet Expressway has surged as Inner Mongolia passed Shanxi province last year to become China's biggest coal supplier after the government shut mines in Shanxi on safety concerns."
('Traffic Jam on Chinese Expressway Stretches 30 Kilometers, Radio Reports', Bloomberg News, 27 August 2010.)
China's latest instance of leading the world, now in the scale and size of traffic jams, is a direct consequence of the modern uses and abuses of energy, as this and many other news reports have indicated.
China's industrial economy depends on the movement of fuel, and it takes energy to move fuel. Electricity usage has surged in China as the numbers that describe its economic growth continue to delight investors and the financial markets - 10.3% in the second quarter and 11.9% in the first three months of 2010. What these numbers mean is enacted on China's highway G110, the stage of the record traffic jam.
Coal is the fuel that 80% of China's power plants use and the insensate appetite for coal has also led to China having, for several years running, the world's worst coal-mine safety record, with an average of seven deaths each day in accidents last year.
This dreadful direct human toll that underlines China's dependence on fossil fuel is insulated from its demand for automobiles, also a subject of much celebratory reporting in the world's business press, but which has far-reaching consequences. "Last year, China overtook the US as the world's largest car market, with an estimated 75 million new vehicle owners by the end of this year," noted one recent news analysis.
The world's largest car market signals a swelling of individual consumption. The bulk of China's energy demand comes from industry and infrastructure, but its citizens are purchasing more air conditioners, microwave ovens, TV sets and computers than ever before.
According to the International Energy Agency, China's use of coal, oil, wind and other sources of power more than doubled in the past decade to reach the equivalent of 2.26 billion tons of oil in 2009, surpassing the US total of 2.17 billion tons. The Chinese government has challenged the figure, for political reasons, but the data is clear - this is a major turning point for Asia. Energy use is closely related to carbon dioxide emissions, economic expansion and of course the global balance of power.
China's dependency on imported oil reached 50% for the first time last year. In recent years, the country has also become a major importer of coal from Australia and its nuclear power plans have helped to push the price of uranium to unprecedented highs. "When China sneezes, the whole world panics," Wu Changhua, China director of The Climate Group, told the British newspaper The Guardian.
"There are contradictory attitudes about China's rise in international society. On one hand, people want China to boost the global economy. On the other, they hope China will not emit too much greenhouse gas. Decision-makers here have a clear idea that they want to pioneer a new path away from the current dangerous model of development. But it is unprecedented in human history for a nation to deal with this challenge, while coping with a huge population and relatively little land and resources."
A "new path" away from "the current dangerous model of development" is not at all in evience in provinces like Ganzhou. Here, as Reuters has reported, manufacturers are building huge factories in the provinces to escape rising costs in the coastal zones that helped China become the world's largest exporter. "Big customers such as Wal-Mart are buying more goods from the new inland factories in a relentless quest to find low-cost suppliers," reported Reuters.
"New high-speed rail links are shrinking distances for shuttling goods in and out of China's heartland. The move inland by manufacturers coincides with a parallel trend in urbanisation. Local governments are competing ferociously to build and expand cities on farmland to lure back millions of migrants from the coast in a project that could absorb more residents than the entire population of the United States in the coming decades."
China's central planners in Beijing are, as Wu said, dealing with an extraordinary set of circumstances. They want to engineer a shift to rebalance China's economy, to rely less on exports for future growth and more on domestic consumption.
Factories in coastal China have been powered by an army of 130 million or so migrant workers streaming in annually from inland Chinese provinces to three of southern China's most economically vibrant provinces; Guangdong, Fujian and Hunan. The number of enterprises with annual revenues of over five million yuan ($736,000) in Guangdong province near Hong Kong grew by an average of some 24% in 2008 to 52,574 firms. The same figures for Henan were 38% and 18,700 firms whereas the year earlier it had only been 13.6%. Hence the engineered shift to Ganzhou.
In the calculus of the planners, Ganzhou's surrounding counties are home to nearly 8 million residents with minimum wage levels around 40% cheaper than in Guangdong, making it an attractive (to the investor, not the worker) "spillover region" for factories from the crowded and expensive Pearl River Delta. Here again, the patterns of labour and employment from a generation ago have been entirely replaced. Workers in Guangdong (as elsewhere in the Pearl River Delta) are not given permanent resident rights, and often move on.
China's latest instance of leading the world ... in the scale and size of traffic jams is a direct consequence of the modern uses and abuses of energy ...
Labour shortages have begun to be a problem for these traditional export centres as the growth of the working-age population slows. Moreover, a younger generation of migrant workers, better educated, more tech-savvy, and less accepting than their parents were of life in the factories - low pay, gruelling hours and martial workplace rules - have launched wildcat strikes and protests. That is why statistics now show that the pace of industrialisation in a few inland provinces is matching or surpassing the trend in established manufacturing hubs such as Guangdong.
Wherever the manufacturing centres take hold, the demands on energy will only become more intense. The IEA forecasts that China's dependency on imported oil will rise to 75% by 2030 without a big push for renewable sources of energy. That grim picture can combine with severe infrastructure deficits (required for an economy following "the current dangerous model") - a major cause of this August's record traffic was a dearth of rail capacity from Inner Mongolia (where the coal mines are) to ports such as Caofeidian, Qinhuangdao and Tianjin, from where where coal is shipped to power plants in southern China, hence the use of trucks.
This gigantic cross-country movement of fuel underlines the inequities of China's development - it is an already relatively under-developed northern region which is being stripped of its natural resources to fulfil the energy needs of thousands of factories in the south-eastern coastal zone, which is in turn used by thousands of companies in the USA and western Europe to make consumer goods large and small for western and other Asian markets. The shocking daily average of deaths in the coal mines of Inner Mongolia is the worst of many costs externalised by the global model of production.
But far from the murky, deadly mines, China's cityscapes have been transformed. Several Beijing skyscrapers have turned into 30- and 40-storey LED screens in the wake of the ancient capital's Olympic makeover into a super-modern urban metropolis. That was in 2008, when no price was too high to pay for national pride on the world stage.
Now the government is trying to reduce the impact of this and similar expansions by promoting renewable energy, such as wind, solar and geothermal power. Also this month, state media said China would support clean energy in the next decade and reduce its dependency on coal from 70% to 63% by 2015.
China's tremendously ambitious US$736-billion push to harness nuclear, wind, solar and biomass energy hinges on making the cleaner fuels competitive with cheap and CO2-intensive coal without harming industrial growth. China has pursued new sources of power generation for decades from the world's largest hydro power project at Three Gorges on the Yangtze River to a 2007 plan of 2 trillion yuan (US$294 billion) that set the 15 percent target for renewables by 2020.
State energy giant PetroChina, for instance, is leading the foray to develop cleaner burning gas sources to supply nearly 10% of China's total energy needs by 2020, from 4% now, to help achieve the CO2 target. Beijing aims to cut carbon intensity as much as 45% from 2005 levels by 2020 and increase the share of renewables to 15% of primary energy consumption. That is nearly double the current ratio and would make the country a leader in green energy manufacturing and use.
How will this be achieved and what are the signs that China is working on these problems right now? The Cleantech group has reported that the government has several goals in its five-year Science and Technology Plan to reduce China's reliance on foreign technology and increase domestic contributions to technology and the number of Chinese working in the field.
China is said to have over 1,600 government-supported incubators and science parks - many involving cleantech projects. Incentives such as preferential tax treatments, favorable financing policies, and government procurement policies encourage R&D institutions to partner more with the private sector. "This new structure prepares China to be especially competitive in the world market," said the Cleantech report. "The Chinese government has increased R&D spending while decentralizing R&D institutions and encouraging partnerships with the private sector."
While 51% of Chinese investment for renewable energy was given to solar firms, the remaining 49% went to a diverse cross-section - materials science, agriculture, water and wastewater, energy storage and energy efficiency have also emerged as areas of interest. The indications are that China is innovating beyond the solar sector - 70% of new energy venture capital deals between 2006 and 2009 were outside of solar. The government in China - concerned with issues of security, economic prosperity and keeping a growing population content - is seen as making spending on green initiatives a top priority.
... the coal legacy hangs over new energy like a grey shroud.
"Parallel policies are essential," said Wang Yi, deputy head of Institute of Policy and management, China Academy of Science, in a Reuters report. "The government must gradually lift fossil fuel prices while granting incentives to non-fossil fuels to establish a long-term price signal." For international firms involved in the sectors expected to receive the spending, the plan is a potential gold mine. They are closely watching decision-makers in Beijing. Companies such as nuclear reactor manufacturers Areva of France, wind power equipment makers Gamesa of Spain, India-listed Suzlon and solar power companies such as US-based First Solar and China's Yingli are waiting to see if Beijing is ready to use their technologies on a massive scale. One estimate has China on track to build at least 20 nuclear power plants of 2 GigaWatts (GW) each for the next five years.
Yet the coal legacy hangs over new energy like a grey shroud. China's ability to build cheap cleaner coal plants makes it hard for the world's No. 1 coal producer and user to switch to other sources. The generators, known as supercritical plants, produce about 15 percent less CO2, at a third to a half (US$500-US$600 per kilowatt) of the costs in most OECD countries.
China has largely freed prices of coal, which fires almost 80% of its total electricity output. But it has carefully controlled power rates, worried about wider implications for the economy, effectively encouraging generators to cling to low-cost coal to maximize profit.
In recent months Beijing has drummed up support for hydropower, calling for quicker building of dams after recent years had seen plans scaled back due to tighter environmental rules and the costs or relocating the population. Hydropower is seen as playing a big role in making the 15% primary consumption target for renewables, and Reuters quoted an official from China's National Energy Administration: "Hydropower is the key to reaching that target. It will make up 9%-10% out of the 15%."
Even so, Beijing has scaled back adding new wind and solar farms in places like Inner Mongolia, due to the cost per unit of power and access to the distribution system. Some projects get subsidies to contribute to the grid, but there has been reluctance to embrace new sources as handling new flows requires an upgrade of the power grids.
Cross-sector coordination has gained urgency as major Chinese cities choke under a haze of pollution caused by rapid economic growth. "Chinese leaders are dead serious about environment, more serious than the outside world thinks," said Yan Kefeng of Cambridge Energy Research Associates. "But the challenges are huge."
The Chinese economy has depended upon exports and investment, Prof Minqi Li, of the University of Utah, has reminded us (see The Real News Network via Energy Bulletin). "With the American economy basically in stagnation, China could no longer rely upon the American market," he said.
"And on the other hand investment has surged to 50% of China's GDP. Recently China has very much relied upon the real estate investment, and that potentially could lead to property bubbles - if that collapses it could have quite terrible consequences. And so China needs to have this transition into a more consumption-led economy. The downside is that as China makes this transition, it is going to take place through higher wages, higher purchasing power by the working people. But the problem is that in a capitalist economy you have higher wages, and then you have less capitalist profits. So to really complete this transition, you need two additional conditions. One is that China needs to move to the technology front here in the global market. Secondly, China needs to overcome its energy and environmental crisis. And neither of the two is very easy."
Already, the numbingly large manufacturing sprawl of the Pearl River Delta is removed by a magnitude from conditions in the late 1980s, when in China's cities, a 'market economy' was introduced, allowing small businesses to develop, while the door was opened to foreign investment, especially in new Special Economic Zones in the southern and eastern coastal regions. "Once these forces were sufficiently developed," wrote Bob Weil in China Study Group,
"an assault was made on the main stronghold of the working class in the urban areas, State Owned Enterprises. Most of these were privatised outright or semi-privatised by putting them in the hands of managers, and party and state authorities, who treated them as their personal property. All corporations were required to operate on a profit basis, and tens of millions of workers were dismissed, losing their right to social securities, and in many cases even their housing."
This was the start of the policy that enabled China to become "factory to the world". In place of a participatory, organised and long-term labour force, peasant migrants were drawn into the cities, to find temporary, often dangerous and dirty work in harsh conditions. The same investors, venture capitalists and planners who would guide China into a renewable energy-powered phase of growth will say that for workers and peasants there have been certain general gains - a wider variety of food and clothing, greater access to consumer goods if they can afford them.
... China has been transformed from one of the most egalitarian countries in the world into among the most polarised
In the 1970s, large-scale collective organisation allowed the state and provinces to undertake extensive infrastructure and environmental projects, such as irrigation works, fish ponds, opening of new land, and forestry. Such organisation also laid the basis for what used to be called 'sideline industries', and these provided agricultural and consumer goods, and work in slow seasons. Most important, from a social equity point of view, the communes eliminated the old landlord system and allowed all peasants a high degree of equality in deciding the distribution of their collective production, while providing an opportunity to share in village level governance.
The historical truth is that China has been transformed from one of the most egalitarian countries in the world into among the most polarised. "Today, a growing number of billionaires live in extreme luxury," wrote Weil, "while a 'new middle class' resemble their peers in rich nations." The cost has undoubtedly been exceedingly high and we shall never fully know the burdens - cultural, environmental and economic - on the village household.
Made vulnerable compared to their parents by the loss of jobs and basic social securities, tens of millions of Chinese form an impoverished reserve army of labor which is forced into a state of semi-permanent mobility. Whether fuelled by coal or solar power, China's "dangerous model of development" is widening the urban-rural, and class polarisation is growing to resemble - in a deeply worrying historical irony - the alliance of urban capitalists, landowners and compradors which existed before Mao's revolution.
[Endnote: Among the welter of books on China both contemporary and modern, I recommend a reading of the work of William Hinton, who died in 2004. He wrote the memorable 'Fanshen: A Documentary of Revolution in a Chinese Village (1967)' and 'Shenfan: The Continuing Revolution in a Chinese Village (1980)', both outstanding depictions of rural China. Hinton was a farmer in Vermont and a legendary figure in the American left.]
Thanks for running the China article. It's the sixth straight day of rain here, I've been stuck in Bombay for a week now. Rain is 20% above normal for the season. That's a lot when normal is about 240 cm. In Goa further south it's already over 300 cm. But from halfway across India and to the east the rainfall averages are 20-30% less.-BA
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