Bad times for Europe: First, the Russian government snubs Brussels while Foreign Affairs Commissioner Borrell is in Moscow. Now Beijing takes advantage of the EU Commission’s bad image when it comes to procuring vaccines for its member countries. Far away from any diplomatic custom, head of state Xi Jinping chaired Tuesday’s meeting with Eastern and Central European states in the 17+1 format himself – and put cooperation on Covid vaccine procurement at the center. The message to Brussels couldn’t be more painful: We will mercilessly exploit your weakness. Amelie Richter has the details.
Traveling to China on business in these Covid times is bordering on a hurdle race. Foreign entrepreneurs, but not only them, can tell a thing or two about it. Christiane Kuehl gets to the bottom of the problems.
I assume that you are also already preparing for the upcoming New Year and, as a China connoisseur, naturally know how much goes into the red envelopes and what delicacy you are preparing for your guests. You would like to have a late tip? Tomorrow, the China.Table team will bring you exciting, interesting and delicious information about the New Year.
China’s borders are virtually closed. There are hardly any international flights, and getting a visa has never been so difficult. Anyone arriving in China must spend at least two weeks in quarantine – in Beijing and the southern province of Guangdong currently even three to four weeks. Several Covid tests before and after arrival are mandatory. The travel restrictions curb travel.
Hardly any country has restricted entry as much as China in the wake of the Covid crisis. This enabled the country to largely ward off the second wave of the pandemic. Within the country, new infections are low and people enjoy much greater freedom of movement than we do in Europe. For German companies, the entry restrictions are a major problem.
For 74 percent of companies, travel restrictions are the biggest challenge posed by the virus, according to a survey by the German Chamber of Commerce in China (AHK). “Only” 49 percent, on the other hand, see falling demand for their products and services as a problem. The largely closed border is particularly problematic for small and medium-sized enterprises, according to Andreas Glunz, Managing Partner at KMPG, which organized and evaluated the survey with the AHK.
The problem affects many areas, says Glunz. For one thing, of course, it’s about the fact that new employees and their families can’t enter the country so easily. And once in China, it’s virtually impossible to get out without going through the whole process again. Fifty-eight percent said their business relationships were suffering, according to Glunz. 37 percent cited missing trade shows as a difficulty. 27 percent said installing and commissioning machinery and equipment is hindered. These processes are often taken over by engineering teams from Germany that have been brought in specifically for this purpose – whether in the company’s own factory or at the customer’s site.
Since China first imposed a two-week quarantine requirement on inbound travelers in the spring of 2020, the rules have become increasingly strict. At the time, many people thought they could avoid the two weeks at home by postponing their return to China. But nothing came of it. A little later, two weeks at home became two weeks in an assigned quarantine hotel – at their own expense. Then came a temporary ban on entry for everyone – even those with valid visas. In the meantime, visas can be applied for again. But getting one is extremely difficult.
Applicants must present a so-called PU letter from the respective local and provincial government – a kind of official invitation. “Companies have to prove that the person in question is urgently needed,” said German Ambassador Clemens von Goetze at the presentation of the AHK survey. This applies to companies of all sizes, he said.
The quarantine rules for arrival in China vary from region to region. In Shanghai, for example, it has remained at the two weeks in a state-assigned hotel. In Beijing and Guangdong, however, a so-called 14+7+7 rule currently applies. This means that the two weeks of state quarantine are followed by a week spent either in a hotel or at home, depending on the individual case. The last week means seven days of health surveillance – where is decided in Beijing by the respective neighborhood committee, as a European diplomat explains. These committees are the lowest level of local government.
However, if you can’t enter Beijing directly from abroad, you have to plan for three more weeks. Because you have to have been in China for at least three weeks to be allowed to travel to Beijing at all. This means, for example, an additional two weeks of quarantine in Shanghai, plus one week “off” – and then 14+7+7 in Beijing. By the way, this rule applies to everyone who leaves Beijing and travels around China – so practically all Beijingers stay at home over the upcoming New Year.
During the quarantine, multiple tests are carried out. Beijing requires triple tests: a throat, nose and stool test. According to diplomats, this procedure is primarily intended as a deterrent. Actually, the capital does not want anyone to enter at all, no matter from where. For one thing, this has to do with the fact that the capital has been specially protected since the experience with SARS in 2003 – that was already the case in the spring of 2020. But now there is also the fact that the National People’s Congress and the Political Consultative Conference are meeting in Beijing in early to mid-March – with thousands of delegates. Before that, those responsible want to rule out any risk at all costs. There are currently no signals from the official side for an early relaxation of the restrictions, says Ambassador von Goetze.
For individual companies and their employees, the regulations are very tough. However, since China operates a no-Covid policy, they are quite logical from the Chinese point of view in view of the high number of cases in the West. Even on the few flights, there were always infected people despite all the tests before departure. At coronavirus clusters in China itself, the affected areas are always sealed off immediately, which has so far prevented the virus from spreading again.
The internet is playing an increasingly important role in companies’ day-to-day operations, not least because of the Covid travel restrictions. 36 percent said in the AHK survey that they are driving digitalization of their entire supply chains. One in three companies has also changed its working models and work distribution. Home offices also play a bigger role in China than before the pandemic. “Here, the restrictions of the internet and slow speeds are a problem,” says Glunz. After all, digitalization and new work processes will stay with companies even after Covid.
One hope is the vaccination campaigns that are starting up around the world. However, as the EU and China have approved different vaccines, the situation is still unclear. The EU Chamber of Commerce in China (EUCCC) therefore recommends facilitating mutual recognition of the best vaccines – regardless of where they were developed.
Little was known in advance about the content of the virtual summit between Beijing and representatives of 17 Central and Eastern European countries (CEEC). Speaking in person for the first time at a meeting of the format yesterday, President Xi Jinping proclaimed: “We believe that 17+1 can be much more than 18.” Xi promoted more vaccine cooperation and praised existing Belt and Road Initiative (BRI) projects. He made no pledges for new project funding. Observers of the summit spoke of “old wine in new bottles” that Xi served to the CEEC.
Alexandra Martin, head of the Brussels office of the think tank GLOBSEC, observed mixed feelings among the participants: Six EU countries had shown rather less interest and sent ministers. But the presence of some high-level government representatives should “send an important signal to Brussels, but also to Washington DC,” Martin said. “CEECs need to find their place between their geopolitical interests, which rest on the EU and the transatlantic side, and geo-economic interests, which rest on the relationship with China.”
The EU should pay closer attention to how the region benefits from the investment agreement with China and how interests are taken into account, Martin said. In her view, the 17+1 format is still interesting for both sides: China uses it to highlight its role in the region, she said. “I think there is reassurance on the CEEC side as well.” However, the fact that the format could “adjust or change the foreign policy inclinations of the region” would be downplayed, Martin criticized.“The concern in Washington is probably being led by Brussels and a comprehensive EU China policy rather than this format.”
On the EU side, an observer was present at the summit. The latter may then have heard Xi cite CEEC-China cooperation as proof that China treats large and small countries equally “without political preconditions and in terms of mutual concerns”. To interested CEECs, he offered cooperation on matters of Covid vaccines and referred to Serbia and the EU country Hungary. A “community of shared health” is the goal, he said – this could include cooperation in the field of Traditional Chinese Medicine (TCM). In addition, he said, cooperation in the digital sector, e-commerce and climate change should be improved and cultural exchanges intensified. “Cooperation between the two sides has not stopped,” headlines in state media stressed after the meeting. Observers also saw this as a message to the still relatively young US administration.
Xi Jinping promised that China would import products worth $170 billion from the states in the next five years and improve access for their agricultural products on the Chinese market. But whether the economic pledges will translate into reality is not certain, Radu Albu-Comănescu, a lecturer at Babeș-Bolyai University and partner at Foreign Policy Magazine in Romania, tells China.Table. It would not be the first time that promises were made on paper and then “remain only on paper”. Albu-Comănescu sees Xi’s appearance more as a “sign of self-confidence” than as a provocation for the EU. But Beijing is also well aware that there is disappointment in the region after the conclusion of the EU-China Comprehensive Agreement on Investment (CAI) and because of unimplemented BRI projects. Depending on who the states sent to the meeting, one could see how “trustworthy” China was seen in the respective capitals, said Albu-Comănescu.
Meetings of the 17 Central and Eastern European countries, including 12 EU and five non-EU states, with China, are usually scheduled annually – the last summit was held in Dubrovnik, Croatia, in 2019. Beijing was supposed to host it in April 2020, but the meeting was canceled due to the spread of the coronavirus. The run-up to the online summit turned out to be bumpy: Until shortly before the meeting, the Chinese Foreign Ministry did not publish any official word on participants or agenda. On the European side, several countries announced that they would not be attending the meeting at a high level – Beijing then put pressure on the countries’ diplomats on the ground.
Apparently, with little success: Six of the 17 states – the EU countries Estonia, Latvia, Lithuania, Slovenia, Romania and Bulgaria – were only represented at ministerial level yesterday, as the network China Observers in Central and Eastern Europe (CHOICE) compiled on a list of participants. The summit thus recorded the highest “abstention rate” since the format’s inception, CHOICE said. Officials in Beijing cited scheduling problems for the three Baltic countries. Montenegro, Poland, the Czech Republic, Serbia and Bosnia and Herzegovina sent Xi’s counterparts, while the remaining states were represented by their respective heads of government.
Poland was highly represented by President Andrzej Duda. “This could mean a new opening of relations between Warsaw and Beijing,” Łukasz Kobierski, president of the Polish Institute of New Europe and a China expert at the Warsaw Institute, told China.Table. Duda stressed at the summit that Poland and most countries in the region saw the need for a wider opening of the Chinese market for its goods and awaited possible action by the Chinese authorities on this issue, Kobierski said.
Just hours after the 17+1 summit ended, there were more friendship offers for some of the countries in the region – this time from the US: New US Secretary of State Antony Blinken congratulated the Visegrád Group in a tweet on its 30th founding anniversary: “The US and #V4 members are unwavering Allies and I look forward to working with the Czech Republic, Hungary, Poland, and Slovakia.”
Optimism is in the air in Asia, where the new Regional Comprehensive Economic Partnership has brightened prospects for a post-pandemic recovery and a revival of multilateralism. Even more promising, there is growing regional agreement on the need to address climate change.
China’s recent announcement that it will aim for carbon neutrality by 2060 – which was followed by commitments from Japan, South Korea, and Hong Kong to achieve net-zero emissions by 2050 – shows that East Asia is serious about the issue. But truly making a difference will require reconsidering the traditional Asian development model, which has long tolerated environmental degradation in the interest of maximizing growth.
While China’s commitment to carbon neutrality by 2060 is a good start, electricity demand is already forecast to double by 2050 (from 2017 levels). It therefore must urgently step up its efforts to improve energy efficiency, adopt green and low-carbon energy, expand energy storage, deploy carbon capture and sequestration technologies, and develop a framework for low-carbon urbanization. Many of the needed technologies are already available, and East Asia has the scale to bring down their cost to a level that would enable widespread adoption.
Moreover, at a time of high liquidity (from central banks) and excess capacity, there is no shortage of funding for an Asian low-carbon transition. The real question is how best to channel existing resources to the right projects. The role of sustainable finance must be expanded substantially. East Asian corporations are already issuing more green bonds than in the past, in order to align with new policy frameworks (such as in Hong Kong). But there are at least three ways to scale up these efforts even more.
First, policymakers and others with influence over industry standards need to make it easier for companies large and small to present their green credentials to investors. The global shift toward unified carbon reporting is a good start, but it applies mainly to large multinationals with the necessary capacity. Disclosure guidelines that work for big and small enterprises alike are still needed. Here, the Hong Kong Exchanges’ Sustainable and Green Exchange (STAGE) is a step in the right direction.
Second, ordinary investors must be able to understand and access financial vehicles geared toward the low-carbon economy. Creating a region-wide market for green funds, initiatives, and companies would help, bringing many more financial-market participants into the mix.
Third, Asia needs to diversify the financing for its low-carbon future, tapping both debt and equity markets, and providing a platform to connect potential funders with companies and projects that meet environmental, social, and governance criteria.
But it is important to remember that technology alone will not overcome the challenge of climate change. We also need to recognize the far-reaching potential value of nature-based solutions. Standing forests, healthy soils, mangroves, salt marshes, oceans, coral reefs, and other ecological systems all play a role in sequestering atmospheric carbon dioxide. In fact, one-third of the global CO2-mitigation challenge could be met simply by protecting healthy ecosystems and supporting reforestation.
Moreover, protecting ecosystems and pursuing reforestation are an ideal way to create jobs locally, providing opportunities for those displaced by the transition away from fossil fuels. The pandemic has shown us that we must rethink our relationship with nature and the environment, allowing for more bottom-up solutions that will empower communities.
At the global level, while US President-elect Joe Biden‘s administration will revive America’s climate commitments, international climate action could suffer if Sino-American relations do not improve. In the meantime, it will help to double down on private-sector and civil-society efforts like the China-United States Exchange Foundation and the US-China Green Fund, as these will facilitate more coordinated action.
More broadly, it is time to take a hard look at the current state of climate collaboration. Green innovation is flourishing in many places, yet without a broader exchange of data and ideas, too many grassroots projects will never take off. A good analogy is to open-source programming. With open digital platforms to facilitate collaboration among non-governmental organizations, businesses, and governments, innovations to address climate change can be treated as global public goods, and made available for rapid adoption to match supply with demand.
Achieving carbon neutrality in 30-40 years implies that Asian societies will undergo a far-reaching scientific, economic, financial, technological, and environmental transformation. No citizen will be spared from the effects, so all must be involved. Public commitments by governments are not enough.
The challenge now is to envision what a net-zero trajectory actually means for the next 3-5 years, so that we can start tracking our progress. Which policy measures are most urgent? How should we sequence our investments to yield the largest multiplier effect? What do we need to stop doing within the next three years to salvage the capital that will be left in stranded assets, and how can we ensure that vested interests do not block change?
Some of these issues will be easier to resolve than others. We must continue to build infrastructure and transportation systems to support low-carbon outcomes, retrofit buildings for energy efficiency and improved indoor health, and set rules for green construction and urbanization. And we must start now. with Pamela Mar, Peter Seligmann and Lin Xu
Christine Loh, former undersecretary for the environment of Hong Kong, is Chief Development Strategist at the Hong Kong University of Science and Technology. Pamela Mar is Executive Vice President for Knowledge and Applications at the Fung Academy. Peter Seligmann, Founder and Chairman of Conservation International, is CEO of Nia Tero. Lin Xu is Chairman of the US-China Green Fund.
Copyright: Project Syndicate
www.project-syndicate.org
Bad times for Europe: First, the Russian government snubs Brussels while Foreign Affairs Commissioner Borrell is in Moscow. Now Beijing takes advantage of the EU Commission’s bad image when it comes to procuring vaccines for its member countries. Far away from any diplomatic custom, head of state Xi Jinping chaired Tuesday’s meeting with Eastern and Central European states in the 17+1 format himself – and put cooperation on Covid vaccine procurement at the center. The message to Brussels couldn’t be more painful: We will mercilessly exploit your weakness. Amelie Richter has the details.
Traveling to China on business in these Covid times is bordering on a hurdle race. Foreign entrepreneurs, but not only them, can tell a thing or two about it. Christiane Kuehl gets to the bottom of the problems.
I assume that you are also already preparing for the upcoming New Year and, as a China connoisseur, naturally know how much goes into the red envelopes and what delicacy you are preparing for your guests. You would like to have a late tip? Tomorrow, the China.Table team will bring you exciting, interesting and delicious information about the New Year.
China’s borders are virtually closed. There are hardly any international flights, and getting a visa has never been so difficult. Anyone arriving in China must spend at least two weeks in quarantine – in Beijing and the southern province of Guangdong currently even three to four weeks. Several Covid tests before and after arrival are mandatory. The travel restrictions curb travel.
Hardly any country has restricted entry as much as China in the wake of the Covid crisis. This enabled the country to largely ward off the second wave of the pandemic. Within the country, new infections are low and people enjoy much greater freedom of movement than we do in Europe. For German companies, the entry restrictions are a major problem.
For 74 percent of companies, travel restrictions are the biggest challenge posed by the virus, according to a survey by the German Chamber of Commerce in China (AHK). “Only” 49 percent, on the other hand, see falling demand for their products and services as a problem. The largely closed border is particularly problematic for small and medium-sized enterprises, according to Andreas Glunz, Managing Partner at KMPG, which organized and evaluated the survey with the AHK.
The problem affects many areas, says Glunz. For one thing, of course, it’s about the fact that new employees and their families can’t enter the country so easily. And once in China, it’s virtually impossible to get out without going through the whole process again. Fifty-eight percent said their business relationships were suffering, according to Glunz. 37 percent cited missing trade shows as a difficulty. 27 percent said installing and commissioning machinery and equipment is hindered. These processes are often taken over by engineering teams from Germany that have been brought in specifically for this purpose – whether in the company’s own factory or at the customer’s site.
Since China first imposed a two-week quarantine requirement on inbound travelers in the spring of 2020, the rules have become increasingly strict. At the time, many people thought they could avoid the two weeks at home by postponing their return to China. But nothing came of it. A little later, two weeks at home became two weeks in an assigned quarantine hotel – at their own expense. Then came a temporary ban on entry for everyone – even those with valid visas. In the meantime, visas can be applied for again. But getting one is extremely difficult.
Applicants must present a so-called PU letter from the respective local and provincial government – a kind of official invitation. “Companies have to prove that the person in question is urgently needed,” said German Ambassador Clemens von Goetze at the presentation of the AHK survey. This applies to companies of all sizes, he said.
The quarantine rules for arrival in China vary from region to region. In Shanghai, for example, it has remained at the two weeks in a state-assigned hotel. In Beijing and Guangdong, however, a so-called 14+7+7 rule currently applies. This means that the two weeks of state quarantine are followed by a week spent either in a hotel or at home, depending on the individual case. The last week means seven days of health surveillance – where is decided in Beijing by the respective neighborhood committee, as a European diplomat explains. These committees are the lowest level of local government.
However, if you can’t enter Beijing directly from abroad, you have to plan for three more weeks. Because you have to have been in China for at least three weeks to be allowed to travel to Beijing at all. This means, for example, an additional two weeks of quarantine in Shanghai, plus one week “off” – and then 14+7+7 in Beijing. By the way, this rule applies to everyone who leaves Beijing and travels around China – so practically all Beijingers stay at home over the upcoming New Year.
During the quarantine, multiple tests are carried out. Beijing requires triple tests: a throat, nose and stool test. According to diplomats, this procedure is primarily intended as a deterrent. Actually, the capital does not want anyone to enter at all, no matter from where. For one thing, this has to do with the fact that the capital has been specially protected since the experience with SARS in 2003 – that was already the case in the spring of 2020. But now there is also the fact that the National People’s Congress and the Political Consultative Conference are meeting in Beijing in early to mid-March – with thousands of delegates. Before that, those responsible want to rule out any risk at all costs. There are currently no signals from the official side for an early relaxation of the restrictions, says Ambassador von Goetze.
For individual companies and their employees, the regulations are very tough. However, since China operates a no-Covid policy, they are quite logical from the Chinese point of view in view of the high number of cases in the West. Even on the few flights, there were always infected people despite all the tests before departure. At coronavirus clusters in China itself, the affected areas are always sealed off immediately, which has so far prevented the virus from spreading again.
The internet is playing an increasingly important role in companies’ day-to-day operations, not least because of the Covid travel restrictions. 36 percent said in the AHK survey that they are driving digitalization of their entire supply chains. One in three companies has also changed its working models and work distribution. Home offices also play a bigger role in China than before the pandemic. “Here, the restrictions of the internet and slow speeds are a problem,” says Glunz. After all, digitalization and new work processes will stay with companies even after Covid.
One hope is the vaccination campaigns that are starting up around the world. However, as the EU and China have approved different vaccines, the situation is still unclear. The EU Chamber of Commerce in China (EUCCC) therefore recommends facilitating mutual recognition of the best vaccines – regardless of where they were developed.
Little was known in advance about the content of the virtual summit between Beijing and representatives of 17 Central and Eastern European countries (CEEC). Speaking in person for the first time at a meeting of the format yesterday, President Xi Jinping proclaimed: “We believe that 17+1 can be much more than 18.” Xi promoted more vaccine cooperation and praised existing Belt and Road Initiative (BRI) projects. He made no pledges for new project funding. Observers of the summit spoke of “old wine in new bottles” that Xi served to the CEEC.
Alexandra Martin, head of the Brussels office of the think tank GLOBSEC, observed mixed feelings among the participants: Six EU countries had shown rather less interest and sent ministers. But the presence of some high-level government representatives should “send an important signal to Brussels, but also to Washington DC,” Martin said. “CEECs need to find their place between their geopolitical interests, which rest on the EU and the transatlantic side, and geo-economic interests, which rest on the relationship with China.”
The EU should pay closer attention to how the region benefits from the investment agreement with China and how interests are taken into account, Martin said. In her view, the 17+1 format is still interesting for both sides: China uses it to highlight its role in the region, she said. “I think there is reassurance on the CEEC side as well.” However, the fact that the format could “adjust or change the foreign policy inclinations of the region” would be downplayed, Martin criticized.“The concern in Washington is probably being led by Brussels and a comprehensive EU China policy rather than this format.”
On the EU side, an observer was present at the summit. The latter may then have heard Xi cite CEEC-China cooperation as proof that China treats large and small countries equally “without political preconditions and in terms of mutual concerns”. To interested CEECs, he offered cooperation on matters of Covid vaccines and referred to Serbia and the EU country Hungary. A “community of shared health” is the goal, he said – this could include cooperation in the field of Traditional Chinese Medicine (TCM). In addition, he said, cooperation in the digital sector, e-commerce and climate change should be improved and cultural exchanges intensified. “Cooperation between the two sides has not stopped,” headlines in state media stressed after the meeting. Observers also saw this as a message to the still relatively young US administration.
Xi Jinping promised that China would import products worth $170 billion from the states in the next five years and improve access for their agricultural products on the Chinese market. But whether the economic pledges will translate into reality is not certain, Radu Albu-Comănescu, a lecturer at Babeș-Bolyai University and partner at Foreign Policy Magazine in Romania, tells China.Table. It would not be the first time that promises were made on paper and then “remain only on paper”. Albu-Comănescu sees Xi’s appearance more as a “sign of self-confidence” than as a provocation for the EU. But Beijing is also well aware that there is disappointment in the region after the conclusion of the EU-China Comprehensive Agreement on Investment (CAI) and because of unimplemented BRI projects. Depending on who the states sent to the meeting, one could see how “trustworthy” China was seen in the respective capitals, said Albu-Comănescu.
Meetings of the 17 Central and Eastern European countries, including 12 EU and five non-EU states, with China, are usually scheduled annually – the last summit was held in Dubrovnik, Croatia, in 2019. Beijing was supposed to host it in April 2020, but the meeting was canceled due to the spread of the coronavirus. The run-up to the online summit turned out to be bumpy: Until shortly before the meeting, the Chinese Foreign Ministry did not publish any official word on participants or agenda. On the European side, several countries announced that they would not be attending the meeting at a high level – Beijing then put pressure on the countries’ diplomats on the ground.
Apparently, with little success: Six of the 17 states – the EU countries Estonia, Latvia, Lithuania, Slovenia, Romania and Bulgaria – were only represented at ministerial level yesterday, as the network China Observers in Central and Eastern Europe (CHOICE) compiled on a list of participants. The summit thus recorded the highest “abstention rate” since the format’s inception, CHOICE said. Officials in Beijing cited scheduling problems for the three Baltic countries. Montenegro, Poland, the Czech Republic, Serbia and Bosnia and Herzegovina sent Xi’s counterparts, while the remaining states were represented by their respective heads of government.
Poland was highly represented by President Andrzej Duda. “This could mean a new opening of relations between Warsaw and Beijing,” Łukasz Kobierski, president of the Polish Institute of New Europe and a China expert at the Warsaw Institute, told China.Table. Duda stressed at the summit that Poland and most countries in the region saw the need for a wider opening of the Chinese market for its goods and awaited possible action by the Chinese authorities on this issue, Kobierski said.
Just hours after the 17+1 summit ended, there were more friendship offers for some of the countries in the region – this time from the US: New US Secretary of State Antony Blinken congratulated the Visegrád Group in a tweet on its 30th founding anniversary: “The US and #V4 members are unwavering Allies and I look forward to working with the Czech Republic, Hungary, Poland, and Slovakia.”
Optimism is in the air in Asia, where the new Regional Comprehensive Economic Partnership has brightened prospects for a post-pandemic recovery and a revival of multilateralism. Even more promising, there is growing regional agreement on the need to address climate change.
China’s recent announcement that it will aim for carbon neutrality by 2060 – which was followed by commitments from Japan, South Korea, and Hong Kong to achieve net-zero emissions by 2050 – shows that East Asia is serious about the issue. But truly making a difference will require reconsidering the traditional Asian development model, which has long tolerated environmental degradation in the interest of maximizing growth.
While China’s commitment to carbon neutrality by 2060 is a good start, electricity demand is already forecast to double by 2050 (from 2017 levels). It therefore must urgently step up its efforts to improve energy efficiency, adopt green and low-carbon energy, expand energy storage, deploy carbon capture and sequestration technologies, and develop a framework for low-carbon urbanization. Many of the needed technologies are already available, and East Asia has the scale to bring down their cost to a level that would enable widespread adoption.
Moreover, at a time of high liquidity (from central banks) and excess capacity, there is no shortage of funding for an Asian low-carbon transition. The real question is how best to channel existing resources to the right projects. The role of sustainable finance must be expanded substantially. East Asian corporations are already issuing more green bonds than in the past, in order to align with new policy frameworks (such as in Hong Kong). But there are at least three ways to scale up these efforts even more.
First, policymakers and others with influence over industry standards need to make it easier for companies large and small to present their green credentials to investors. The global shift toward unified carbon reporting is a good start, but it applies mainly to large multinationals with the necessary capacity. Disclosure guidelines that work for big and small enterprises alike are still needed. Here, the Hong Kong Exchanges’ Sustainable and Green Exchange (STAGE) is a step in the right direction.
Second, ordinary investors must be able to understand and access financial vehicles geared toward the low-carbon economy. Creating a region-wide market for green funds, initiatives, and companies would help, bringing many more financial-market participants into the mix.
Third, Asia needs to diversify the financing for its low-carbon future, tapping both debt and equity markets, and providing a platform to connect potential funders with companies and projects that meet environmental, social, and governance criteria.
But it is important to remember that technology alone will not overcome the challenge of climate change. We also need to recognize the far-reaching potential value of nature-based solutions. Standing forests, healthy soils, mangroves, salt marshes, oceans, coral reefs, and other ecological systems all play a role in sequestering atmospheric carbon dioxide. In fact, one-third of the global CO2-mitigation challenge could be met simply by protecting healthy ecosystems and supporting reforestation.
Moreover, protecting ecosystems and pursuing reforestation are an ideal way to create jobs locally, providing opportunities for those displaced by the transition away from fossil fuels. The pandemic has shown us that we must rethink our relationship with nature and the environment, allowing for more bottom-up solutions that will empower communities.
At the global level, while US President-elect Joe Biden‘s administration will revive America’s climate commitments, international climate action could suffer if Sino-American relations do not improve. In the meantime, it will help to double down on private-sector and civil-society efforts like the China-United States Exchange Foundation and the US-China Green Fund, as these will facilitate more coordinated action.
More broadly, it is time to take a hard look at the current state of climate collaboration. Green innovation is flourishing in many places, yet without a broader exchange of data and ideas, too many grassroots projects will never take off. A good analogy is to open-source programming. With open digital platforms to facilitate collaboration among non-governmental organizations, businesses, and governments, innovations to address climate change can be treated as global public goods, and made available for rapid adoption to match supply with demand.
Achieving carbon neutrality in 30-40 years implies that Asian societies will undergo a far-reaching scientific, economic, financial, technological, and environmental transformation. No citizen will be spared from the effects, so all must be involved. Public commitments by governments are not enough.
The challenge now is to envision what a net-zero trajectory actually means for the next 3-5 years, so that we can start tracking our progress. Which policy measures are most urgent? How should we sequence our investments to yield the largest multiplier effect? What do we need to stop doing within the next three years to salvage the capital that will be left in stranded assets, and how can we ensure that vested interests do not block change?
Some of these issues will be easier to resolve than others. We must continue to build infrastructure and transportation systems to support low-carbon outcomes, retrofit buildings for energy efficiency and improved indoor health, and set rules for green construction and urbanization. And we must start now. with Pamela Mar, Peter Seligmann and Lin Xu
Christine Loh, former undersecretary for the environment of Hong Kong, is Chief Development Strategist at the Hong Kong University of Science and Technology. Pamela Mar is Executive Vice President for Knowledge and Applications at the Fung Academy. Peter Seligmann, Founder and Chairman of Conservation International, is CEO of Nia Tero. Lin Xu is Chairman of the US-China Green Fund.
Copyright: Project Syndicate
www.project-syndicate.org
