China, Pollution and the 11th Five Year Plan: The PlanetShifter.com Networks Interview with Investment and Sustainability Advisor Terry Cooke
China, Pollution and the 11th Five Year Plan: The PlanetShifter.com Networks Interview with Investment and Sustainability Advisor Terry Cooke

Introduction

"In China, the level of foreign exchange reserves resulting from its successful expansion of the export-led growth model rapidly eclipsed the level of surplus generated by Japan and Taiwan in earlier decades. Simultaneously, an upstart group of new sovereign wealth funds (SWFs) popped up to recycle the bonanza of petrodollars in the Middle East as well as foreign exchange surpluses in Asia resulting from booming exports to the West. China's sovereign wealth vehicles, China Investment Corporation (CIC) and State Administration of Foreign Exchange (SAFE), began acting as new drivers of Beijing's effort to draw in raw materials from around the world.

In parallel to Beijing's resource-attuned policies in Africa and other parts of the undeveloped world, China's SWFs vetted acquisition of global resource companies in Australia and elsewhere in the developed and developing world. In the wake of the collapse of CNOOC's bid for Unocal in 2005, Chinese SWFs were scrutinized with regard to the motivation for, and transparency of, their activities. In Washington, Congress increasingly preempted the executive branch's public lead on these issues, fanning exaggerated fears in China of a supposed U.S. determination to block China's rise." TC

* * * * * * *

Why go to China way back when? Why stay there now?

China has 19.8% of the world's population. Its people are well-equipped with basic health and education, are historically and culturally entrepreneurial, and are eager for greater connection with the world community. Economically, China is the only major world market growing at a 10% rate. Over the past twenty years, its economy has grown from a level representing 1.8% of world trade in 1990 through a 3.9% level in 2000 to a level expected to exceed 8% in 2010. (Prior to the Great Depression of 1929, China accounted for roughly one-quarter of world trade and, after sixty years of relative disconnection from western markets, China seems committed to regaining a comparable economic position in tomorrow's global market). In addition to the demographic and economic argument, China has the longest continuous cultural tradition in the world today. As 'global conversations' go, this is simply one not to miss.

How do the Chinese interpret the green movement in the States?

Chinese tend to see a fundamental disparity between the U.S.' situation in the world and their own. America is 'the beautiful country' (mei guo), blessed by prosperity (natural resources, technological advancement, capital accumulation) and abundance (ample living space, big cars and houses and lifestyles, etc). By contrast, Chinese see their situation as historically disadvantaged (centuries of political weakness and even humiliation) and existentially precarious (overpopulated, under-resourced, threatened by political disorder and 'chaos,' etc.).

Coming from this worldview, few except for the most educated and internationally-minded Chinese see the green movement in the States as directly relevant to their situation in China.

Awareness of the green movement as a 'social movement' in the U.S. tends to be tightly scripted by the government and plays into cultural perceptions about 'social movements' as leading to disorder. Instead, the focus is on the 'green economy.' The 'green economy' can help China gain technology, capital and expertise - all viewed as essentials for China's continued 'peaceful rise' in the world. It is also an 'industrial leap-frogging' opportunity for a nation that did not participate fully in early stages of 20 c. industrial revolution. By contrast, the 'green movement' tends to be perceived as a 'luxury' beyond the reach of China's stage of economic development.

If there is a growing realization in the U.S. of the connection between 'green' and jobs, that focus is like a laser in China.

What characterizes an entrepreneur in China (vs. UK and US)?

A Chinese entrepreneur expects not just competition but hyper-competition. The norms of 'hyper-competition' in China reflect a playing-field where a vastly greater number of people are competing for far fewer rewards (in both absolute/objective terms and also in cultural/subjective perception).

Equally, a Chinese entrepreneur does not expect a clear boundary between 'right' and 'wrong' business behavior as defined clearly and consistently by courts or other external sources of authority. Rather than black-and-white, the cultural expectation in China -- patterned over many centuries -- is more of a field of constantly shifting gradations of grey. The imperative is not to be on 'the right side,' but instead to simply survive in this subtle environment. The quite arbitrary intrusion of government and political influence into this field of action is simply an expected feature of a landscape viewed as inherently treacherous.

How do you see censorship and the power of online communities in China today?

A broad (and slightly tongue-in-cheek) generalization holds that the U.S. has a government of lawyers and China a government of engineers. As far as the issues of privacy and social media are concerned, this contrast is instructive. The approach to internet technology by the authorities in Beijing is largely to master for the government's purposes a new technology -- one which is viewed as intrinsically neither good or bad but which is seen by the authorities as having vast potential to promote either 'social harmony' or 'social disorder.' By way of contrast and as set forth by Secretary of State Clinton on January 20, 2010, the U.S. has an entirely different view of the role and power of online communities, one rooted in the rights of individual citizens of the global community.

Is sustainability a spiritual force in China?

'Sustainability' as a rallying cry for an indigenous green social movement is not currently a pervasive force in China, either spiritually or socially (see question 2 above). 'Sustainability' as a positive value does, however, has extremely deep roots in Chinese religious thought (e.g., Taoism) and cultural values (e.g., concepts of sustainable balance in eating (yin/yang), breathing/physical movement (tai-chi), etc).

What are some of the key symbols and stories in the green business hive there?

A key story to watch is the development of Tianjin municipality, a port city located just east of Beijing (and only 30 minutes via the new high-speed rail connection). A leader among China's "second tier" cities, Tianjin has been growing at a 17% annual rate as compared to the roughly 10% national growth rate. Much of this growth rate is spurred by nationally-directed spending as set out in the current 11th Five Year Plan (Shenzhen, across the border from Hong Kong, and Pudong, within Shanghai Municipality, were previous beneficiaries of nationally-directed spending in earlier Five Year Plans).

As further illuminated in the question below, Tianjin's mandate is to become (a) the national showcase for the deployment/enactment of green technology and green urban development in China and to be (b) the seedbed for experimentation/innovation in carbon-finance and other alternative investment vehicles to support further development of cleantech innovation in China.

My new consultant friend in Tianjin relays that his country has money but lacks technology. Your view?

Since the Lehman collapse in September 2008, the prevailing view in China is that China has sufficient money, but insufficient investment capital. (In this view, capital is money properly organized to stimulate and promote the advance of technology).
In broader view, the Chinese were focused on acquiring technology, capital (i.e., foreign direct investment) and expertise from the West prior to September 15, 2008. Increasingly since then, their focus has shifted to an emphasis on technology, capital markets know-how (so local money can be organized and channeled into productive investment and local technology innovation) and a narrower spectrum of expertise that no longer includes financial engineering of derivatives and other exotic/innovative financial products.

Is pollution factored into the cost of business there?

Among the rank-and-file of Chinese businesses, pollution is not yet factored directly into the cost of doing business. However, pollution impacts are increasingly, though inconsistently, factored into the career advancement of the party and local officials who oversee business development. Since political oversight is a factor in virtually all business decision-making in China, this matters. In this sense, the cost of doing non-green business is neither easily quantifiable nor governed by market forces; it is, however, an increasingly important part of the overall context of doing business there. (Not insignificantly, the authorities in Beijing are mindful that growing social awareness of pollution impacts across the Strait of Taiwan was the major factor during the 1970s and early 1980s in forcing the authoritarian KMT party of that period to loosen its political control in Taiwan).

* * * * * * *

Terry Cooke Bio -

Terry Cooke is currently a 2010 Public Policy Scholar with the Woodrow Wilson International Center in Washington D.C., researching policy implications of U.S.-China clean energy cooperation/competition. He is the founder of GC3 Strategy, which works with U.S. companies seeking sustainable partnerships in Greater China, and the Green Channel Editor of The China Business Network.

Terry was a Director of the World Economic Forum from 2006-08, responsible for Asian Corporate Partnerships, and a career-member of the U.S. Senior Foreign Commercial Service from 1988-2002 with postings in Shanghai, China and Taipei, Taiwan. He has a PhD (1985) in Cultural Anthropology from the University of California at Berkeley.

Connections -

Terry Cooke
www.terrycooke.com
mterrycooke at gmail.com
P - 610.526.2720
F - 610.527.2721

* * * * * * *

Join Us for Discussion: LinkedIn China - Global Group