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Copenhagen: “China Won”?

Stance at Climate Conference Brings Costs for China
21 December 2009

by Daniel Michaeli

British Prime Minister Gordon Brown is expected to say in a podcast that a deal at Copenhagen was “held to ransom by a handful of countries.” His climate secretary wrote, more specifically, that it was China that had “vetoed” crucial proposals the entire developed world and most of the developing world stood behind.

The Financial Times reports seeing “a more assertive China” at the summit. And at least one paper’s conclusion from Copenhagen is: “China won, the world lost.”

But did China really win? It kept the Kyoto agreement intact and avoided binding cuts, both of which helped to secure China’s policy maneuverability and economic growth prospects. Nevertheless, Chinese obstructionism–which included peculiar tactics like failing to show up to a meeting with President Obama–still carries significant costs.

In November, China’s premier, Wen Jiabao, decided t0 participate in the summit after a similar decision by President Obama. The same month, China announced a carbon-intensity target. The climate and energy campaign manager for Greenpeace China then said “China is in a more comfortable negotiating position.”

It seems Wen did not want to be seen as spoiling chances for a deal by failing to show up and negotiate in good faith. “They really care what the world thinks of them,” claimed the World Wildlife Fund’s climate change program director. More cynically, however, China feared that without appearing deeply engaged in international talks, it might face carbon tariffs on its exports to the United States and Europe–an approach featured prominently in the climate change bill passed by the U.S. House of Representatives this fall.

But Wen also sought to protect China’s near-term economic and political interests, which meant, in particular, refusing binding emissions cuts or international monitoring of its emissions.  It legitimized its stance by taking charge of the G77 group of developing nations, arguing that developing countries could not be forced to sacrifice economic opportunities for their impoverished populations to fight climate change that was largely caused by the developed world.

China’s strategy failed in two major ways. First, the developed world blames China–and not Brazil or India, countries that held similar positions–for the failure to produce a binding treaty. Second, even as China purported to speak for them, many of the smaller G77 developing countries broke ranks because they felt China needed to offer more. (At the end of the day, the conference was even unable to pass the final non-binding U.S.- and China-backed agreement, merely “noting” it, because a group of developing countries failed to fall into line with China’s approach.)

The first issue should be of the greatest concern to China. The European Union, disappointed by the summit’s outcome and reeling from being left out of negotiations on the final text, is furious at China. Both the United States and Europe are now more likely to consider import tariffs against China and other nations that refuse to sign on to a binding treaty, to account for otherwise unfair competition. The Financial Times, in the same article referenced above, reports that “being talked about in Europe on Monday…is the idea of putting carbon-related import taxes on goods from countries left out of a legally binding treaty.” The New York Times reported last week that French President Nicolas Sarkozy continues to argue for such tariffs. China appears deeply concerned, but it is not clear how far it would go to express displeasure with such policies, if enacted.

Could China’s stance at Copenhagen lead to a trade war? Is a U.S.-EU-led treaty that excludes China possible? How would India, South Africa, Brazil, and other large developing countries respond? What does this mean for China? Readers, I would love to hear your thoughts.

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  • Olivier said:

    Thanks for your insightful piece, Dan.

    I agree that there is a possibility of a trade war with China, but I think it’s too early to tell.

    The House bill you spoke of definitely sent a strong signal to China: no commitment to emissions reductions will likely mean import tariffs on Chinese goods. There is a high chance that carbon-based import tariffs will figure in the final climate bill (China says this goes against WTO regulations, but I doubt that matters). Similar language is included in the senate bill, and its this measure has quite a bit of support. Although Obama criticized the measure just after the bill passed, saying this was no time to send out protectionist signals, if his uncritical support of the healthcare bill offers any indication of his eagerness to pass bills that are too big to fail, I wouldn’t be surprised if he signed off on it. And to make matters worse, it still looks like the U.S. and China are far from agreeing on how to verify emissions reductions.

    But if I had to make a prediction, I’d say the U.S. and China will come to a compromise before they reach the brink of a trade war. Compromise. That’s something neither China nor the U.S. was willing to do in Copenhagen. Things look no better for either state than they looked last week. That’s why I’d give them both a notch in the Loss column.

  • David said:

    The U.S. and EU primarily caused the climate change problem by having emitted about 80% CO2 since industralization. Until they clean up the mess they created, they have no moral ground to sanction other countries now for CO2 emission. This point is further accentuated by the fact that on average, a resident from U.S. and EU currently emits about three to four times CO2 that a resident from the developing countries [including China] emits.

    This perception of who has the moral high ground in this climate change dispute is widely accepted in the developing world, including China.

    China may not be able to prevent a trade war, but if such a war does come, we can be sure that China will mobilize its side with a sense of climate justice based on morality and equality. The so-called carbon tariff is seen as another ploy in a never-ending struggle between countries to maximize their interest. Today the trick is anti-dumping. Tomorrow it will be carbon tariff. The day after tomorrow it will be something else.

    Last but not least, whoever starts a war using whatever excuse, including carbon tariff, needs to understand that retaliation will be certain. The opponent also holds substantial leverage: trillions of dollars worth of government bonds, withdrawing from intellectual property regimes, etc.

    It is not wise to go down that path, and it is not wise to encourage anyone to go down that path.

  • Stuart said:

    I think the whole conflict has come about because the US actually brought nothing substantive to Copenhagen and tried to bluff it out.

    The Chinese saw that Climate Change was the platform for them to assert themselves on the ‘world leadership’ stage.
    From their perspective – having been constantly pilloried for a decade ofer:
    1. Industrialization that sucked global manufacturing from the West to its coastal production zones – of course Walmart, Nike etc also benefit
    2. Making so much money from the export of goods that the US constantly demands revalue its currency so that it will owe Beijing less
    3. Human Rights: Treating Workers/Uighurs/Tibetans/Dissidents/Falongong (& just about anyone the media & Congressmen thought was being oppressed) {NB: I’m simply stating a perspective)
    4. Being the world’s largest polluter in absolute terms (never mind that per capita the US is a much higher polluter)
    – Side note: Has anyone noticed that whenever CNN talkes about China’s energy industry it always refers to “China’s reliance on ‘dirty coal’ for power generation” – like the US doesn’t get 90% of its electricity from ‘dirty coal’

    So with those odds stacked against it, China needed a platform, other than the Olympic games, to announce its arrival as a world power.

    It found it, not in Copenhagen, but in Bali in Dec 2007 when it rallied the developing world & the EU boxing the US into a corner for failing to commit to any CO2 reductions & (like N Korea) refusing to ratify Kyoto.

    It is a position China has heald steadfastly to ever since.

    Both Clinton & Obama made trips to Beijing to discuss the possibility of a Sino-US side deal before Copenhagen, they left with no such deal. However, it seems inconceivable that while in Beijing they had no insight into the position China would take in Copenhagen! Hell, the Chinese leadership publicly stated it at just about every opportunity!

    At the UN Conference in NY, Wen announced China’s ‘voluntary emissions cuts’ & told the world’s leaders what their stance would be….
    The head of the UK charity Oxfam summarized it qute wekk “Everybody played nice at the UN Climate Change party – but only China and Japan brought cake!”

    So on to Copenhagen:-
    – Clinton’s announcement of a $100 billion fund for the developing world was seen by the developing world as a scam to buy them off – it wasn’t even the US’s money: the EU would contribute some $9 billion, Japan $11 billion… the US would throw in some $3.5 billion, of course very little of those pledges would ever be ponied up & what was wouldn’t be dispersed (see: http://news.bbc.co.uk/2/hi/business/8376874.stm)

    – The US offer to cut emissions (it was hardly a pledge) by 17% was little more than a two-card-trick based on 2005 emissions when set against the EUs pledges to cut from 1990 levels it works out that the US was really offering 4% (see: http://www.newscientist.com/article/dn18198-obama-offers-fixed-targets-for-us-emissions-cuts.html)

    So were I a Chinese negotiator, I’d have blocked any binding agreement that would let the US get away with committing to a paltry 4% cut & sure as hell I’d have demanded that it sign up to Kyoto first (it STILL has 2 years to run).

    On reflection, I think China played its cards well by blocking a binding agreement & forcing the US to go back & come up with a more substantive ‘real’ commitment – after Congress has approved it.

    Possibly China’s only mistake at Copenhagen was that it didn’t have a slick impeccable English speaking spokesperson to front their argument, they didn’t seem to have anyone – I don’t recall any Chinese delegates being interviewed by the international media (there was the lady from The Climate Group, but that’s an international NGO & it seemed that the media trotted her out for lack of anyone more official).

    A trade war? Possible, but consider this: in a War the winner tends to be the one who has the largest war-chest, and currently who is that?

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