China’s emerging new development model

As China grows rapidly alongside India and Brazil, can rising living standards coexist with a sustainable green development model?

john-mathews100x100China – and to some extent Brazil and India (which may be christened the BICs) – are staging a ‘Great Convergence’ in terms of industrial strength and incomes. This reverses the past two centuries of the Great Divergence which had separated them from the West.  In the process, the BICs are lifting billions of people out of poverty.

Commentators like Martin Wolf of the Financial Times have described this convergence as the single most important feature of today’s global political economy. Now he has been joined by Singapore-based scholar Kishore Mahbubani, who borrows the name The Great Convergence for his new book, just published by PublicAffairs.

Mahbubani, Dean of the Lee Kwan Yew School of Public Policy in Singapore, is a polymath author who likes to tackle the big picture – and there is surely no bigger picture than the astonishing transformation that is under way, drawing many more countries into the orbit of industrialisation and wealth generation.

Industrial capitalism has revealed itself to be the most effective transformative agent found in the world today. Its appearance in Britain in the second half of the 17th century, powered by access to the new fossil fuels, unleashed astonishing gains in productivity associated with rises in income.

This innovative political economy proved so attractive that it was widely emulated elsewhere. Karl Polanyi aptly called its appearance the ‘Great Transformation’, meaning that nothing would be the same again. Capitalism was indeed an amazing invention of humankind.  Its appearance in cities led to demands for independence and liberties that today we take for granted in the West, and which are now spreading worldwide.

In his recent book The Next Convergence, the Economics Nobel laureate Michael Spence argues that there is a distinct possibility that by 2050 no less than 75% of the world’s population could be living moderately comfortable lives – up from only 15% enjoying such a status in the year 1950. That implies that a world population growing to 8 billion from now until 2050 would have 6 billion people emancipating themselves from poverty by 2050.

But, amidst this ‘Great Convergence’, there is a significant problem to contend with.  It’s this: can the model of industrial capitalism that served the West so well, based on the cornucopia of fossil fuels and resource exploitation, ‘scale’ to meet the aspirations of so many? Can it in a nutshell be a model for the BICs as well?

More specifically, can the number of cars burning petrol be raised from one billion to five or six billion? Can China go on burning coal to produce its electric power, without making the air in its cities unbreathable?

Posed this way, the answer to these questions is clear.  China – and the BICs – will have to find another model of development, or abandon their dreams of industrialising and completing their process of convergence.

What is needed, in short, is a further ‘Great Transformation’ of the industrial model that is powering the ascent of the BICs. Brazil, India and China cannot have confidence in a model that binds them to fossil fuel dependence indefinitely, even as supplies of oil and coal peak and then decline, and carbon emissions cumulate.  Spence did the world a service in pointing out that in this current period a new pattern of growth is indeed emerging, initially in Asia.

Everybody knows that China is building the world’s largest coal- and oil-burning industrial engine. But what is less recognised is that, alongside this ‘black’ development pathway, China is also forging a complementary ‘green’ development strategy.  It is doing this for entirely pragmatic reasons, mainly to do with energy security but also to clean its environment, which is reaching breaking-point.

These new strategies and institutions – based on renewable energies and low-carbon technologies, on resource efficiency and circular economy initiatives, and on eco-finance – are creating, in effect, a green model of industrial capitalism. It is being developed at the same time as China is also ramping up its black energy and resource supplies. The two models are contending for supremacy.

The issues at stake could hardly be more significant.  Only if China’s leaders succeed in building their green alternative can they deliver the stability, resilience and security that their nation requires to continue on its self-ascribed arc of peaceful development.

If this approach can be extended and consolidated and seen to serve China well, it will be an attractive model for other countries, enhancing China’s soft power and offering an enticing replacement of the discredited ‘Washington Consensus’.

Meanwhile, the United States remains fixated on fossil fuels. It has even found new vigour and strategic purpose in what Michael Klare calls ‘extreme energy.’ In using that term, he is referring to energy derived from the ‘fracking’ of coal-seam gas and shale oil, which is dirty, but supposedly independence-enhancing. And he refers to extraction of fuels from dangerous locations like deepwater wells and Arctic drilling, which is deemed a ‘manly’ technological frontier – never mind the risks involved. But that simply reinforces US ‘carbon lock-in’.

European energy policies seem likewise framed by carbon lock-in with some exceptions such as Germany’s bid to build a new, non-fossil and non-nuclear system that they are calling their ‘Energy transition’ (Energiewende).

Whether the three BIC countries succumb to the lock-in that has traditionally framed Western energy and industrial policies is the great unanswered question, both for themselves and for the world.  Can the BICs create a new industrial model that breaks free of carbon lock-in and drives their continued convergence – without costing the earth?