CRG Weekly: Climate pledges, Evergrande and Meng and the Michaels
The week in review
Speaking at the United Nations General Assembly (UNGA) on Tuesday, Chinese President Xi Jinping pledged to “step up support for developing countries developing green tech and low-carbon energy” and “stop building new coal-fired power plants abroad”.
Xi’s assurances to the UNGA came less than 24 hours after US counterpart Joe Biden verbally committed to funding for green infrastructure and electric vehicles and pledged $11bn in climate aid annually by 2024. The two economies account for around 40% of global emissions and, prior to the Trump era, were lynchpins of cooperation when releasing joint statements on multilateral climate diplomacy.
This week’s commitments came at a pivotal moment in a crucial year for efforts to slow global warming. With the UK hosting landmark climate change talks in November at Glasgow’s COP26 summit, Xi’s statement left climate negotiators hopeful that China - the largest emitter of CO2 emissions worldwide - is serious about phasing coal out, particularly with infrastructure projects that fall under the banner of Xi’s flagship Belt and Road Initiative.
Xi’s address was light on detail. Questions remain over how the phase out will be implemented and whether planned or existing coal power projects will be curtailed. Domestic coal production in China remains a big concern. It’s also not yet clear whether Xi, or indeed any Chinese delegation, will attend the crucial Glasgow summit. The recently announced AUKUS defence pact irked Beijing, which described it as an “extremely irresponsible ... geopolitical gaming tool”, and could dissuade Chinese leaders from coming to the table with firm details on how China will restrict the use of coal over the next five years. COP26 president Alok Sharma acknowledged China will have to be a “key” part of any agreement and said the “ball is in their court” to make the talks a success.
Some foreign policy observers have been inclined to view China’s approach to climate change through the lens of creating points of leverage to extract concessions in other areas (for example, to discourage world leaders from speaking out on human rights in Xinjiang or the erosion of democracy in Hong Kong). However, Tuesday’s pledge suggests that the Chinese Communist Party is determined to move forward with decarbonisation unilaterally. Since the unveiling of its 12th Five Year Plan in 2011, there has been a recognition that the costs to the Chinese population of environmental degradation and land and water pollution have become increasingly tangible as economic growth has decelerated.
Sam Geall, CEO of China-focused environmental think tank China Dialogue, wrote in The Guardian that China’s leaders have also deduced that the “economics of energy point towards renewables”. China is the leading global supplier of clean technologies and dominates the supply and processing of most of the raw materials needed for batteries and other zero-carbon technologies. Three-quarters of global lithium-ion battery production, half of the world’s electric vehicles, and almost 70% of all solar panels are made in China. This is no accident - Beijing is banking on the economic benefits of decarbonisation flowing back into China.
Whilst the CCP may, ultimately, be taking action on climate out of self-interest (there is also a big soft power win for China by positioning itself as a global climate leader and providing climate finance for developing nations), the UNGA speeches were a welcome signal ahead of COP26.
UK Prime Minister Boris Johnson, also speaking at the UNGA, said that “history will judge” the world’s richest nations should they fail to deliver on a commitment to provide $100bn in annual climate aid. This week offered hope that the most powerful two could put aside geopolitical differences in order to tackle one of the greatest challenges of our times.
In brief
Chinese property developer Evergrande continued to slide towards crisis point as investors sized up the potential impact of a default. Michael Pettis penned a fascinating explainer for Carnegie Endowment on the decisions faced by Chinese policymakers as they weighed up rescuing rescue Evergrande’s creditors without undermining their broader fight against bad debt.
Meng Wanzhou, CFO of Huawei, left Canada on Friday night after reaching a deal with the US Department of Justice to drop an extradition request for her. Meng had been detained on fraud charges since December 2018. As part of the deal, known as a deferred prosecution agreement, she accepted responsibility for misrepresenting the company's business dealings in Iran.
Only hours later, Canadian Prime Minister Justin Trudeau announced that two Canadians detained in China on spying charges were to be released from prison and flown out of the country. Michael Kovrig and Michael Spavor had been held for over 1000 days having not been granted bail, nor given frequent legal counsel or consular visits. Whilst the international community welcomed the decision to release the ‘two Michaels’, Friday’s events were seen as laying bare Beijing’s ‘hostage' diplomacy’ tactics.
Taiwan has applied to join a major transpacific trade pact just after a week after China filed its own membership bid. The FT explained how the formal request to join the CPTPP, sent to New Zealand’s Ministry of Foreign Affairs and Trade, will force other members of the pact into a delicate political balancing act.
The UK Foreign Office has warned UK-based Hong Kong critics about extradition risk abroad. According to a report by Bloomberg, individuals who have been named in national security cases have been advised to avoid travelling to countries that have extradition treaties with the Chinese territory.
The UK government published a 10-year plan to become ‘AI superpower’, in an attempt to rival U.S. and China. CNBC reported that the so-called “National Artificial Intelligence Strategy” is designed to boost the use of AI among the nation’s businesses, attract international investment into British AI companies and develop the next generation of homegrown tech talent.
A parliamentary subcommittee held an information session on the issue of foreign aid flows to China. As detailed by the Evening Standard, the committee heard that the “short-term” focus of British aid officials had prevented them from preparing for China’s transition to high income country status.
The Times reported that polls from 12 European countries showed that 85% of citizens do not see US-China great power competition as having an immediate influence on their lives.
Lithuania’s Defence Ministry instructed citizens to throw out Chinese phones over censorship concerns. Flagship phones sold in Europe by China's smartphone giant Xiaomi reportedly have a built-in ability to detect and censor terms such as "Free Tibet", "Long live Taiwan independence" or "democracy movement".
China’s Foreign Minister, Wang Yi, called for economic sanctions on Afghanistan to be lifted and the Taliban to be given access to billions of dollars in frozen foreign exchange reserves.
The People’s Bank of China announced that all cryptocurrency-related financial activities are to be made illegal.
Weekend reads
Is it time to avoid investing in China? George Magnus lays out the puzzle facing foreign investors and China experts alike as the Chinese government continues to crack down on privately owned companies and place emphasis on achieving ‘common prosperity’.
Evergrande and the end of China’s ‘build, build, build’ model - James Kynge and Sun Yu discuss how Evergrande’s meltdown is symptomatic of a much bigger problem of overcapacity in China’s real estate market.
Changing China: Xi Jinping's effort to return to socialism. The BBC’s Stephen McDonnell kicked off a three-part series looking at China’s changing role in the world by exploring the CCP’s seminal shift towards common prosperity
Wendy Leutert and Sarah Eaton investigate the governance of China’s state-owned economy under Xi Jinping in The China Quarterly journal.
Amidst China’s zero-tolerance approach to coronavirus prevention and control, international students have been desperate to return to the country to finish their studies, as reported by Elyse Weingarten.
Podcasts
What Evergrande Means for China. Logan Wright of Rhodium Group discusses Evergrande’s implosion and the ramifications for China’s economy on ChinaTalk.
Is China Exporting Authoritarianism Around the World? The China in Africa Project discusses competing worldviews at the UN General Assembly and what is at stake for Africa as the US and China seek to align others to their worldview.