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As nations turn their attention to fighting the economic crisis resulting from the Covid-19 pandemic, green recovery seems to be a good—and perhaps for the first time, possible—option. As climate change remains the most pressing challenge despite the severity of the global Covid-19 pandemic, a green recovery plan to slow down global warming and meet climate goals becomes imperative. Leaders in the EU are taking the lead in greening the recovery, while China seems to be following suit. A ‘green consciousness’ seems to be emerging. Could these efforts improve EU-China relations and help these two global powerhouses work together to fight climate change? asks Hao Zhang.
As the IMF’s latest report on fiscal policies shows, the Covid-19 crisis won’t change the global climate that is also in crisis, but responses to it might. Even though science hasn’t produced an answer on whether the current economic crisis induced by the pandemic will indeed affect the stock of greenhouse gases in the atmosphere, efforts to address it certainly will. It is undeniable that the current health and economic crisis together create a threat to our current development trajectory and that the scope and severity of the issue to some extent make lasting efforts and immediate actions crucial. These decisions on how we will recover from the pandemic and the resulting crisis will shape our society for the next few decades and, even more importantly perhaps, how we deal with our climate and environmental challenges. As the IPCC’s report warned that our current ambition and willingness are far from pushing us to reach our goal of containing global warming, a green recovery plan becomes imperative in a post-Covid-19 world.
The question then arises: How do we green our recovery? As the IMF suggests, fiscal policymakers should take the lead in making policies that support climate goals without undermining the purpose of boosting the economy. Then, finance ministries should be able to set up concrete and practical projects to implement these policies. In addition, public support for the green policies with the rationale that curbing emissions would likely reduce the risk of respiratory diseases is indispensable. In a post-Covid-19 world, this might sway the public in support of green measures in a way it never has before.
The EU seems to be taking the lead in employing green measures to recover its lockdown-hit economies. As policymakers tend to believe that a green plan can better help revive the economy, concrete actions can be witnessed. In May this year, the European Commission proposed a €750 billion recovery fund with green conditions, 25% of which is to be set aside for climate action, meaning that one-quarter of expenditure with a ‘do-no-harm’ clause can potentially rule out environmentally damaging investments.[1] In addition, the Commission also issued a €1.85 trillion, seven-year budget and pandemic recovery package. This EU green recovery package could be introduced elsewhere to stimulate the economy while fighting climate change.
In addition, the EU launched the world’s largest programs for innovative low-carbon technologies under the fund from the EU’s emissions trading system. This innovation fund is created to finance breakthrough technologies for renewable energy, energy-intensive industries, carbon capture, use and storage, etc. These could help create local job opportunities, lead the economy to a climate-neutral place, and also help the EU maintain its technological leadership in climate change. It is obvious that the EU pays great attention to the future of clean technologies, yet it allows member states and the market space to decide how the money is spent. The member states will be allowed to use their allocations from the EU’s Recovery and Resilience Facility for a wide range of green projects detailed in their national energy climate plans, and their proposals will be reviewed by the Commission; at the same time, private capital will be encouraged to invest in clean energy technologies.
On the other side of the world, in China, residents also survived the first wave of the pandemic, and the government is now also making recovery plans. This May, in the report on the work of the government, the development of renewable energy and efforts toward the clean and efficient use of coal were emphasized.[2] At the same time, this year for the first time Beijing has decided not to set an economic growth target, which is interpreted as a way to help China shift away from energy-intensive infrastructure projects.[3] This indeed has sent out a very positive signal; however, given that China still hasn’t submitted its Nationally Determined Contributions (NDCs) for the next reporting round, it also raises concerns about a lack of practical assurance.
Nevertheless, the cooperation between the EU and China in regard to green recovery seems promising. At the recent 22nd China-EU Summit on September 14 this year, President Xi Jinping stated that
China is interested in forging a green partnership with the EU and constructively participating in the global process of tackling climate change and preserving biodiversity. We are researching on reaching our long-term vision in the mid-century,[4] which includes carbon-peaking and carbon-neutrality.[5]
It is thus obvious that economic recovery after the Covid-19 pandemic is considered a top priority for leaders of both the EU and China, and it becomes increasingly clear that both parties are interested in a recovery package that aligns with their green transition goals.
Looking ahead, the EU and China can cooperate with each other in a few fields. First, the EU’s experiences could help China transition more rigorously to the use of green energy, especially in cutting the number of carbon-powered plants and subsidizing new energy vehicles. Second, the EU and China could agree to channel public and private funds to low-carbon investments both at home and abroad. Both parties are big investors of overseas development projects; they can thus work together to invest in projects subject to green terms. Going a step further, the EU and China could also work on developing international standards for sustainable finance[6], and China could learn from the EU’s experience in committing to more ambitious climate targets, specifically making ‘decarbonization’ a top priority in its next five-year plan.[7] Hopes are high for future cooperation between the EU and China in leading the world toward a green recovery, yet key decisions need to be made by both parties.
[1] Refer to Climate Home News, “EU €750 billion Covid recovery fund comes with green conditions”, May 27, 2020.
[2] Refer to ccchina.org.cn, 一图读懂2020政府工作报告, May 29, 2020.
[3] Refer to Climate Home News, “China prioritises employment over GDP growth in coronavirus recovery”, May 22, 2020.
[4] President Xi confirmed that China will try to reach carbon-neutrality before 2060 in his speech at a high-level meeting to mark the UN’s 75th anniversary on September 22nd, 2020.
[5] Refer to Global Times, “推动疫后全球经济复苏 中欧领导人视频会晤定目标”, September 15, 2020.
[6] Refer to China Dialogue, “Hopes for EU-China climate deal centre on a green recovery”, June 17, 2020.
[7] Refer to China Dialogue, “中欧气候协议前景如何？”, September 14, 2020.
About the author:
Hao Zhang is a PhD candidate at the International Institute of Social Studies (ISS), Erasmus University Rotterdam (EUR). Before joining ISS, she was a master’s student majoring international affairs at School of Global Policy and Strategy at University of California, San Diego. Her current research focus on policy advocacy of Chinese NGOs in global climate governance. Her research interests lie in Chinese politics, global climate politics and diplomacy.
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After benefiting from international trade and investment for the past 30 years, China’s global position is starting to change. This is perhaps most evident when regarding its position at the centre of an ongoing ‘trade war’ with the United States. Given its role as leader in international trade, will China be able to ‘restart’ globalisation and offer an alternative to globalisation and deglobalisation as defined by the West?
As developed countries appear to step back from globalisation, China senses an opportunity to step forward and set new rules for globalisation. A major component of the Chinese strategy to lead changes in how globalisation is thought of and practiced is the One Belt and One Road Initiative (OBOR) of the Chinese government. Aimed at improving infrastructure and connectivity between China and the world, this initiative comprises more than physical connections. The Chinese government argues that this initiative includes not just economic, but also socio-cultural linkages, ultimately leading to mutual benefits for all countries involved. The OBOR defines China’s idea of globalisation in a new era in which emerging economies backed by rising economic power and strong alliances are seeking greater influence on global issues.
China’s push for globalisation has evoked mixed reactions across the world, and Beijing has had to deal with multiple obstructions to its vision. Moreover, logistical and bureaucratic issues are plaguing countries participating in the OBOR. For instance, although China has signed bilateral cooperation agreements with Pakistan, Hungary, Mongolia, Russia, Tajikistan, and Turkey, with a number of projects planned under those agreements, the proposed projects have not been implemented. Most such projects are infrastructure-related, for example a proposed train connection between eastern China and Iran, which eventually may be expanded to Europe. Powerful Western economies and neighbouring Asian giants have remained cautious in their assessments and acceptance of the initiative.
Sustaining the benefits of globalisation
An important motivation behind the OBOR is the endeavour to continue to benefit from globalisation. Since 1979, China has implemented an Opening and Reforming Strategy. However, its export in percentage of GDP (trade openness) in 1980 was only 5.9% and outward Foreign Direct Investment (FDI) was 1.7 billion US dollars. Only after the 1990s China’s globalisation process really began. Joining the WTO in 2001 pushed its trade openness to the highest point—higher than the world average and the levels of the UK and US (Figure 2).
China is said to have been the largest beneficiary of globalisation until the economic crisis hit in 2008. After the economic crisis, the international market became weak and the Chinese economy could no longer count on export as its most powerful economic ‘carrier’ (besides investment and consumption). Immediately following the crisis, the Chinese government injected 4 trillion renminbi (RMB) into the economy and boosted short-term investment and consumption. Its long-term plan, which was not clear until 2012, is to further stimulate trade openness and integration into the world economy. China thus seeks to leverage the global market and resources to boost its economic growth.
At the helm of rebuilding globalisation efforts?
China does not only want to continue to benefit from globalisation, but also wants to lead the rebuilding of a global system where it could assume a leading role. The current deglobalisation phenomenon does not mean that the general globalisation trend will cease, because the core driver of globalisation is technology, which is advancing faster than ever. However, it does suggest a splintering (if not collapse) of the current globalisation system created after World War II and shaped to its current state largely by developed economies.
Trumpism and Brexitism are both symbols of the deglobalisation phenomenon but are not evidence that the traditional leaders of globalisation are deglobalising their economies. Instead, such symbols show the recognition of the need for a new globalisation system by both ‘traditional’ world leaders like the US and UK as well as emerging powers who were largely excluded from the last global rulemaking process and now hold a share of the world GDP so significant that they cannot be ruled out again.
However, globalisation in China has always been selective, well-managed, and restricted mainly to economic and trade-related activities. Besides its achievement regarding global trade, China shows little achievement or/and willingness to be globalised in terms of, for example, finance, human resources, and culture. The exchange rate is under careful control. English education in China is mandatory since middle school, but the real usage of English is still quite limited. China is known to be the most difficult country for foreigners to attain residence permits, and to date it blocks direct access to the global internet. These are all signs that Beijing is not too eager to participate in all forms of globalisation.
China needs to tread carefully
And thus its attitude may jeopardise China’s idea of globalisation through the OBOR initiative. The explanation often used by Chinese government for the selectivity related to the initiative is its desire to minimise the negative effect of Western-Defined Globalisation and to respect China’s special country situation. However, China’s attitude towards the OBOR must be open-minded and holistic, both tolerable of and acceptable to a wide range of ideologies.
The Chinese government seems to realise that and is promoting the OBOR as ‘the most inclusive globalisation system’. Formally, the OBOR emphasises five key areas of cooperation, including economic, financial and social exchanges, and the private sector is encouraged and expected to be the main driver of the initiative. Unfortunately, the current situation suggests that OBOR has been largely driven by state-owned enterprises and government-level trade agreements, and is limited to global trade. The areas that are not engaged by the plan, such as culture, education, data sharing and immigration, are likely to hinder China’s efforts towards globalisation, especially in a digital world where technology is developed at such a high speed.
In conclusion, China will continue to seek leadership in restoring the globalisation system, with the OBOR initiative as its core measure. However, both traditional leaders and other emerging powers still have a say in how and whether the globalisation system is re-established. Consensus may not have been reached between countries, but the globalisation trend is likely to continue—and at a faster pace due to new technologies. If China truly wants to become a major global leader in the quest to ‘restart’ globalisation, private sector involvement in areas other than trade need to be encouraged through a more open-minded attitude.
Also see: Deglobalisation 2.0: Trump and Brexit are but symptoms by Peter. A.G. van Bergeijk and Challenges to the liberal peace by Syed Mansoob Murshed
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