China-United States cooperation on climate change is widely regarded as one of the few areas where the two countries have common interests, against the background of increasingly fierce competition, lingering chill in diplomatic relations and growing hostility. So there are greater expectations for this sector than for any other sector. Some even argue that climate cooperation could become the modern equivalent of “ping-pong diplomacy” between China and the United States, serving as an entry point to break the deadlock. However, this view may be too optimistic.
This article analyzes the prospect of Sino-US cooperation on climate change from the perspective of both governments and business.
The political perspective
From a government or political perspective, it is difficult for China and the United States to work together to tackle climate change smoothly and achieve substantial results. The idea that climate cooperation will stimulate cooperation in other areas seems too simple.
First, for the United States, implementing the new green policies and combating climate change is only a means, not an end, for the Biden administration. In an environment where the United States economy remains sluggish, the unemployment rate fluctuates, society tends to polarize and international leadership has been severely damaged by Trump, Biden resorted to green development and a clean energy transition to achieve its goals of creating jobs, stimulating the economy, reshaping the economic and social competitiveness of the United States, achieving equality among ethnic groups domestically, maintaining the democratic system of the United States and the new reinvigorating US international leadership. Green development is the largest consensus Biden can find in a divided American society, although that consensus exists only as a small majority. Green development is a means to an end and will never be given a higher priority for that end.
If Biden is willing to cooperate sincerely and deeply with China on climate change, he cannot reject the large-scale import of relevant equipment and components from China by US new energy companies. For the fastest green transition, the United States needs equipment and services produced by China that rely on their own advanced battery technology, key mineral production technology, mature edge computing service, competitive 5G communication technology and other advantages, as well as the relevant industrial supply chains in China. Once accepted, the stimulus from Biden’s Green New Deal would become a disguised incentive for imports from China and ultimately boost the development of related industries in China. That runs counter to Biden’s intention to revive the United States’ domestic economic advantage and create more jobs domestically, and is not conducive to restoring US international leadership. Therefore, Biden is aware of the “American character” of the Green New Deal and promotes the idea of manufacturing in the United States and “Buy American.”
While the Biden administration continues to send signals that China and the United States can, should, and indeed should work together to tackle climate change, it is lip service. Biden has not relaxed US restrictions on exports to China on key new energy technologies, energy efficiency technologies and advanced equipment. Instead, the Biden administration is using human rights and other issues to repress and punish green companies in China, especially photovoltaic equipment companies with global industrial competitiveness, and is coordinating with Europe and Japan to localize – and divest – out of China. – from relevant industries in the name of strengthening supply chain security.
Meanwhile, for China, tackling climate change is expressed as a goal of green development of the economic and social system, and green development is only one of the five main development concepts – namely “innovation, coordination, green, opening and sharing” in the new era established by the central government in 2015. It is clear that tackling climate change is at least a secondary goal of China’s policy objectives. This means there are other, bigger priorities that will weigh on the issue of climate change.
If we look at the past decade, we can see what these priorities are: maintaining and strengthening political security, fighting corruption, building a national governance system with Chinese characteristics, ensuring that the economy is under control and develops a higher quality, and so on. The most succinct statement of recent economic priorities is the “six safeguards” proposed in April 2020: ensuring security in employment rates, basic needs, activities of market entities, food and energy security, industrial and supply chains, and the functioning of primary governments at level . These goals aren’t even directly related to green development, let alone climate change.
While China has announced targets for achieving maximum carbon emissions and carbon neutrality for the world and has already made successive plans, China’s carbon peak and neutrality is essentially a top-down move, motivated by the determination and strong pressure of leaders. Strictly speaking, the movement lacks real and effective support from the general public. There is little understanding. This may also, to some extent, explain why the “campaign-style carbon reduction” phenomenon appears in China. At the same time, China has never even analyzed the urgency to tackle climate change carefully and systematically, as the Biden administration did in the United States.
These issues could lead China’s carbon campaign, which now seems to be raging, in several possible directions. It may look like a short storm that no one will mention any time soon; or the dance of a dragonfly floating on the surface with no appreciable progress; or a new stimulus and a good reason to strengthen the planned economy. In short, without a comprehensive and systematic reform of China’s national governance system, it is less likely that there will be healthy and sustainable development.
International cooperation is a two-way interaction. A deep and lasting cooperation should and should be based on the premise that the gains of both parties are greater than their respective losses. According to the brief analysis of the goals and measures of China and the United States in tackling climate change, we can see that the two countries have big differences in their perception of this problem. These differences have nothing to do with global temperature control goals and the international community’s policy coordination to address global climate change, but are closely linked to their respective domestic policy priorities and domestic politics.
Global climate change is a public affair, requiring concerted action by all of humanity and collective action to increase international public goods. Unfortunately, there is no possibility that this international public interest will overwhelm the domestic political needs of China and the United States. In other words, as long as the two countries fail to reach consensus on bigger issues such as competition between major powers, economic development, social stability, world order and others, even if there are clear opportunities for cooperation in tackling climate change, both will countries parties are likely to ignore them.
At present, tackling climate change is becoming an international coliseum, in which China and the United States compete for the discourse and leadership influence of green development. Both sides propose different goals and approaches and strive for consensus with other countries, but there are few concrete actions, let alone major projects in which both countries participate. This could also become the new norm in the near future.
The economic perspective
However, from a business, economic and trade perspective, Sino-US cooperation in tackling climate change is a matter of practical urgency and long-term necessity. It is also consistent with the basic logic of an open economy. At this level, the collaboration has a promising future.
Biden’s government plans to expand photovoltaic installations on a large scale, promote electric vehicles in an all-round manner, and add 500,000 charging stations to create massive industrial demand. Meanwhile, China has industrial advantages in photovoltaic module production, rare earth mining and smelting, large-scale production of wind power equipment, intelligent car network systems, advanced battery modules of electric vehicles and more. Decoupling from China will not only seriously affect the achievement of Biden’s green goals, but will also waste limited global resources and cause a significant increase in costs. Setting up new industries elsewhere will not contribute to green development, but will increase resource consumption and CO2 emissions. Therefore, it is urgent for both parties to cooperate in relevant industries.
More microscopically, the green development demand in the United States can be met by importing Chinese equipment and services, without compromising US national interests. In fact, the country is in the green industry value chain, although it has comparative advantages in terms of production costs and labor force, still at the lower end of the ‘smile curve’, with a value of less than 30 percent; major components, patents, design, and other high value-added parts are still primarily made in the United States.
Thus, in the absence of deliberate impediments by the administrative authorities, the enterprises of both parties have sufficient reasons to communicate with each other in order to jointly promote the realization of the green development goals. In this sense, China and the United States have infinite space for cooperation in tackling global climate change and accelerating the world’s green transition.
In short, the prospect of China-US cooperation on climate change is complex. At the political level, the outlook is not very optimistic; but economically it is absolutely necessary. If we view politics, rather than economic needs, as a fundamental determinant of Sino-US relations, we cannot expect too much. However, if we believe that enterprises and entrepreneurship have great power to direct and even determine history, then we can prepare ourselves in advance for a deep cooperation between the two countries. Once the time is right, such cooperation can be implemented on a large scale.