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China's G-Finance & G-Economy Key to US$ 40 Trillion Market

12:46, September 03, 2010

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By John Milligan-Whyte and Dai Min

US companies and policymakers recognize that the green technology market is a US $ 40 Trillion global business opportunity. However, the US is rapidly falling behind China in creating an environmentally sustainable national and global economy. China’s "G-Financing" investments of US $ 1 Trillion in 2010 to 2013 in pollution remediation and energy efficiency reflect that it is the key market in the global “Green Economy” or "G-Economy."

China’s policymakers understand that serious pollution remediation and energy effeciency policies will create jobs, new businesses and increase business profits and GDP growth. American policy making is currently vexed by the assumptions that pollution remediation and energy effeciency policies that change the status quo will reduce American jobs, business profits, the number of businesses, and GDP growth.

As a result, it is China that must lead in creating the vital new global business and economic advantages required for a successful rapid global warming remediation. China must combine foreign pollution remediation and energy efficiency high technology with China’s huge market, urbanization and infrastructure investments. To do so China must make massive G-Finance investments in and contract with new globally operating joint ventures by foreign companies and Chinese companies that use the most advanced technologies and global economies of scale. That is the only way to quickly and effectively finance the new technologies China requires. It is also the only way to bring down the price of using such technology globally and thus increase the participation of all nations in the pollution remediation and energy efficiency benefits. That is urgent as the damaging results of changing weather patterns due to global warming are developing very rapidly. Foreign companies seeking profits in the Chinese market that do not offer Chinese companies global opportunities to jointly develop, market and profit while reducing the price of the leading edge technology will lose out to companies that do.

Jonathan Woetzel, head of McKinsey & Co in China, commented in the McKinsey Quarterly in August 2009, “Only a collaboration between the two countries will create an environment where clean-energy technologies can thrive. Most critical to making or breaking the two countries’ efforts to curb the dangers of global warming could well be the market that they jointly create in pursuit of their aims. Unless the two work together to provide the scale, standards, and technology transfer necessary to make a handful of promising but expensive new clean-energy technologies successful, momentum to curb global warming could stall and neither country will maximize its gains in terms of green jobs, new companies, and energy security….Electrified vehicles, carbon capture and storage (CCS), and concentrated solar power, among other emerging “green tech” sectors, will need massive investment, infrastructure, and research to get off the ground. While the Chinese and US governments, along with private investors, are pursuing all of these technologies, they cannot achieve separately what they could jointly.” The Global Joint Venture Model is pioneered in China Business Strategies: Chinese and American Companies as Global Partners published in 2009 in English and Mandarin.

To ensure the US’s maintains a key role in the rapidly developing global G-Economy President Obama will have to make two sets of major changes in US policy. President Obama will have to initiate fundamental changes of American economic and military policies towards China that are based on the Principles of Conflict. President Obama will also have to accept the approach championed by the US’s chief climate negotiator. To facilitate such urgently needed breakthroughs this article reviews the US and Chinese different approaches to the G-Economy policymaking, pioneers the application of the Global Joint Venture Model, and analyses of several of the counterproductive positions in the Obama administration’s current policies and proposals regarding pollution remediation. The Principles of Conflict are key parts of what has been recognized in 2009 as the “New School of US China Relations providing a complete answer for China and America’s success in the 21st century” by the Chinese Academy of Social Sciences and China Daily.

China and America produce 40 percent of pollutants linked to climate change, which increasingly threaten human beings with extinction. Competing views within the Obama administration reflect a gridlock in American politics resulting from the disputing views on trade and military policies towards China and on climate change remediation in the Republican and Democratic parties and US business and media. Political deadlock between the Democratic and Republican parties is a fundamental problem that must be solved to enable the US to achieve coordinated and successful policies for pollution remediation in the US itself and with China. Also, America and China’s collaboration is the key to achieving collaboration among the other 192 nations.

On May 24, 2009, President Obama announced he had asked Jon Huntsman Jr’, a leading Republican, who had agreed to serve as US ambassador to China. President Obama also announced he was launching a new era of partnership between the US and China. But, a new era requires new policies and President Obama’s administration is reiterating the conventional conflicting containment and engagement US policies towards China. It is adding new economic, diplomatic, and military actions and policies that are resulting in a dangerous deterioration of US China collaboration on many issues. This includes an urgently needed coordinated response by the two largest economies and polluters to the urgent economic and national security impacts of climate change.

It was hoped that successful dialogues on climate change would be a highlight of President Obama’s appointment of Jon Huntsman Jr. because he made a name for himself as a leader in this field as governor of Utah. The issue is very much part of the Obama administration's core missions. President Obama’s nomination and Jon Huntsman Jr.’s acceptance of the ambassadorship present a unique opportunity, if managed successfully to achieve Democratic and Republican parties’ consensus on both US China policy and pollution policy in the 21st century.

Ambassador Huntsman could be a future US President. Currently, American politics and political opinions are divided between “red” Republican Party dominated states and “blue” Democratic Party dominated states. The Republican Party is expected to regain majorities and control in both the Senate and House of Representatives in the November 2010 elections. It is strongly resisting President Obama’s policy initiatives. The gridlock in American politics may get worse. President Obama must rely on the powers of his office to create the new direction needed for American progress.

President Obama chose Todd Stern, a senior fellow at the Center for American Progress, a progressive think tank, as the US’s chief climate negotiator. The Washington Post commented on January 26, 2009, "Today marks a new chapter in U.S. climate diplomacy....Todd Stern is first-rate — brilliant, with long experience and deep expertise on climate change…If Stern can't bring China along we're never going to reduce worldwide emissions enough to stave off that 5 to 7 degrees Celsius warming we're facing." Todd Stern recognizes the urgent need for mindset change among US policymakers. After his appointment, he commented, “We need to set our minds to joining with China in an active, real partnership, on the principle of mutual benefit. And we need to recognize that if we aren’t careful, we may spend the next few years pushing China to do more, but will then spend all the years after that chasing them, as they hurtle profitably down the road to the low-carbon transformation….We need to press forward with our own efforts to enact a broad-based, mandatory program to drive the clean-energy transition and limit our emissions. And that includes promptly enacting strong legislation to cap carbon pollution. We need to listen and not just lecture. We need to make clear that we support China’s growth and development and have no desire to constrain it through climate change commitments or in any other way. We need to acknowledge the impressive steps the Chinese have already taken to promote low-carbon development and the new ones that will be coming off drawing boards soon.”

The Obama administration’s proposed cap and trade approach will not be accepted as it has been formulated to date and perhaps not in any form. Todd Stern recognizes part but not all of what is required in US policy-making for achieving a consensus with China necessary for an implementable and effective pollution remediation strategy. But Todd Stern has sought apparently without success to date to change US policymakers’ approach. Before reviewing key issues in US policymaking and the conflict of views within the Obama administration that currently are making a breakthrough with China impossible, we must recognize the tremendous benefits to American business of a breakthrough.

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The articles in this column represent the author's views only. They do not represent opinions of People's Daily or People's Daily Online.

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John Milligan-Whyte and Dai Min are the executive producers and co-hosts of the Collaboration of Civilizations television series adapted by the eight books they wrote in the America-China Partnership Book Series published in English and Mandarin in 2009-2010. They founded the America-China Partnership Foundation and Forum in 2008 and the Center for America-China Partnership in 2005. E-mail: [email protected]