Emissions trading is considered an important instrument for achieving climate goals in China just as it is in the EU. But while prices for carbon emissions have skyrocketed in Europe, they have made little difference in China so far. Some crucial elements are still missing, analyzes Christiane Kuehl in a first assessment of the still young Chinese emissions trading system. The system will probably not take effect until 2025, when, according to the plan, emissions of harmful gasses are supposed to decline.
Japan and Australia, meanwhile, are forming a military pact. The two large Pacific islands have not given any specific reason for their new security alliance. But it is clearly directed against China. The People’s Republic’s naval buildup is driving its neighbors together. Every action causes a counter-reaction, after all. Naturally, this also applies to the forging of new, exclusive alliances, analyzes Michael Radunski.
Xi Jinping is acting more and more like a new Emperor of China. This is rather irritating since feudalism is in fact the natural enemy of communism. But how else to interpret a chair with dragon ornaments, the ancient symbol of imperial strength? Or the precious teacups in imperial yellow? Johnny Erling is interpreting these symbols of a meeting with the Hong Kong head of administration that took place in a palace building – and is drawing a link to Mao and the last (real) emperor.
The first trading cycle of the Chinese national carbon trading scheme has been completed: Time to take stock. And the results are mixed. On the positive side, the system started successfully: Trading of CO2 emission allowances has been underway on the Shanghai Environment and Energy Exchange (SEEE) since mid-July. But even though there have been actual transactions on the market, 2021 should more be considered a test run for a future, more comprehensive ETS. This is because the instrument so far had little impact on emissions due to low coverage:
As of the December 31 deadline, virtually all approximately 2,200 participating companies met the requirements, at 99.5 percent, the Ministry of Ecology and Environment announced on New Year’s Eve. That means they were able to present and submit a sufficient amount of emissions allowances for their verified CO2 emissions from 2019 and 2020. They either received these allowances from the allocation or bought additional ones through the ETS. As a rule, older power plants with high CO2 emissions acquire surplus allowances from newer, more efficient plants in the process.
According to calculations by the financial services provider Refinitiv, 99.5 percent of properly registered companies emitted in both years a massive 8.693 gigatons of CO2 equivalent, or around 4.35 gigatons per year. That’s a good 40 percent of China’s emissions and, according to the British trade website Carbon Brief, about 12 percent of global emissions. By comparison, the 1,817 German plants covered by the EU’s ETS emitted only 320 million metric tons (0.32 gigatons) of greenhouse gases in 2020.
Germany’s total CO2 emissions in 2020 were just under 0.59 gigatons, according to the International Energy Agency (IEA). These figures show how just important China’s ETS will be for the global climate if it eventually works properly.
According to Refinitiv data, allowances for a good 178 million metric tons of CO2 were traded in 2021. In addition, just under 33 million metric tons of Chinese Certified Emissions Reductions (CCERs) were traded. CCERs verify climate protection projects by ETS companies to offset their emissions, for example by investing in renewable energies, carbon sinks, or methane use. In China’s ETS, companies are allowed to offset up to five percent of their compliance obligations with such CCERs. Refinitiv estimates that there are currently CCERs for an additional 30 million tons of CO2 remaining in the market, which companies can now acquire this year.
In general, critics note that there is a surplus of emission allowances in China’s ETS because the distribution criteria are too loose or too inaccurate. (China.Table reported). The ETS also provides little incentive for companies to reduce their emissions. The reason, according to Carbon Brief, is that power plants are only required to buy additional allowances for the first 20 percent of emissions above their allocated allowances. Those that emit above this limit do not have to fear any consequences.
The few gas-fired power plants in the ETS do not even have to buy any additional certificates if they emit more than the allocated amount of CO2. The only incentive to save CO2: selling allowances brings money. But according to many experts, this has hardly been on the minds of most power plants so far.
Because of these problems, the market price on the ETS is decidedly low. At the end of New Year’s Day, the allowance for one ton of CO2 emissions cost ¥54.22 (€7.52), 13 percent more than at the beginning of trading on July 16, 2021, according to Refinitiv. On average, the price was ¥43.85 over the 104 trading days last year. In the EU Emissions Trading Scheme, prices rose rapidly recently and are now above €60 per ton of CO2. The EU’s ETS was also initially criticized for low prices.
Meanwhile, one of the most criticized shortcomings in China are the low penalties for violating rules or falsifying emissions data: The maximum fines are only ¥30,000 (€4,175).
However, it is quite normal that these teething troubles occur in a new system, Yan Qin and Yuan Lin concluded in the latest Refinitive study on the ETS in December. It’s a learning process for all involved. Parts of the regulatory framework were not finished until trading was already underway: For example, the Ministry of Ecology did not issue guidelines until late October, such as the December compliance deadline. The distribution of emissions allowances, scheduled for the end of September, was delayed until November. In between, the Ministry of Ecology also required a review of all verified emissions data after data fraud in Inner Mongolia was uncovered.
The current ETS system is a compromise aimed at ensuring participation by corporations and avoiding conflicts, says Chen Zhibin, senior consultant at Beijing-based consulting firm Sino-Carbon Innovation & Investment. “It’s a result of years of negotiation between regulators, industry associations, and big enterprises.”
As a result, there is no fixed upper limit of distributed CO2 allowances in the ETS so far. The maximum can vary each year depending on the actual output of power plants. There are still no concrete plans to withdraw CO2 allowances from the market. Bloomberg reported on Thursday, however, of initial proposals to reduce allowances by a maximum of one percent. China has not yet achieved the emissions peaks set in its climate protection targets. Increases are allowed at least until 2025 in most energy-intensive sectors. This is likely to be reflected in the ETS format.
Power companies now have until the end of March to submit their emissions for 2021 for verification. Experts expect these to remain above four gigatons.
After all, the system is soon to include other sectors. SEEE head Lai Xiaoming wants to include financial companies first and then groups from energy-intensive sectors such as non-ferrous metals or construction materials. That could start as early as 2022. By 2025, according to Lai, all eight of China’s major emissions-heavy industries should be included. These include chemicals, concrete, refineries, steel and pulp, and paper production. Respective influential industry associations already have to prepare their participation. The companies in these sectors also had to report their emissions for 2020 by New Year’s Eve and have them verified.
SEEE also plans to launch CO2-related derivative products, Lai told the Shanghai Stock Exchange newspaper in late December. These include swaps, forwards, and options. The goal, he said, is to make China a global center for CO2 trading and pricing. At some point, the allowances should also cost something and be auctioned, according to the Ministry of Ecology’s ETS rules. But there are no timetables for all these reforms yet.
It is clear that CO2 emissions in China will have to become much more expensive and allowances scarcer. Otherwise, the ETS would have no steering effect at all. Many experts assume that only a so-called cap-and-trade system with a steadily decreasing “cap,” i.e., an upper limit for all CO2 allowances in the market, will have any real effect on reducing emissions. This is how it works in the EU.
The biggest effect of the ETS in its current form is that it represents the beginning of nationwide carbon pricing – with the potential for later expansion and tightening.
Australia and Japan signed an agreement on Thursday to build up military cooperation. Article II of the so-called Reciprocal Access Agreement (RAA) states that the main goal is to “facilitate
mutually beneficial defense cooperation” between the two countries.
On Thursday, Australia’s Prime Minister Scott Morrison called the agreement a historic milestone. “This treaty will be a statement of our two nations’ commitment to work together in meeting the shared strategic security challenges we face and to contribute to a secure and stable Indo-Pacific,” Morrison said. In the face of “shared strategic security challenges.” In light of these challenges, cooperation between the two countries’ armed forces would be necessary.
The Japanese side stressed the defensive nature of the treaty on Thursday. Japanese Chief Cabinet Secretary Hirokazu Matsuno said that the main aim was to guarantee a free and open Indo-Pacific. And indeed, the agreement reads like a harmless list of technical details: how long in advance troop visits are to be announced, or which regulations and customs provisions then apply in each case.
But the ramifications of this treaty are quite far-reaching: for example, a significant number of Japanese soldiers could hold maneuvers with Australian or US forces in the area around the Australian port of Darwin in the future. The port holds a strategic position, serving as a gateway to Asian markets and a potential hub for commodity and agricultural exports. At the same time, Australia’s submarines could regularly call at and use Japanese bases.
Experts believe the agreement to be more important than its currently low-profile suggests. “This is a powerful expression of how two like-minded democracies can co-operate to shape regional security outcomes,” says Peter Jennings, Executive Director of the Australian Strategic Policy Institute (ASPI). “The message to the region is that we have better options than simply trembling and obeying Beijing’s wishes.”
As defensive and technical as the Reciprocal Access Agreement (RAA) may appear at first glance, it is undoubtedly a reaction to China’s increasingly dominant presence in the region. For years, China has been expanding its military and economic sphere of influence in the Indo-Pacific, be it by building airstrips, establishing military bases, or even simply filling in islands.
In essence, China’s boastful behavior made the RAA possible in the first place, says Alessio Patalano in an interview with China.Table. “The negotiations between Australia and Japan for RAA started already in 2014, but were progressing slowly,” explains the Professor of War & Strategy at King’s College in London. That changed, he says, when China began flexing its muscles and acting without regard for the sensitivities of neighboring states. Patalano assumes that the government in Beijing will brand the agreement between Australia and Japan as yet another attempt by democratic industrialized nations to prevent the rise of the People’s Republic.
However, the reaction in Beijing to the agreement was initially quite reserved. A spokesman for the Chinese Foreign Ministry had said on Wednesday, even before the signing of the agreement, that the Pacific Ocean is “vast enough for the common development of countries in the region”. But he added a little warning: cooperation and collaboration are good and well, but they should not be “targeting or undermining the interests of any third party”.
According to Peter Jennings, however, China itself is doing just the opposite. “China is engaged in a full-on but thus far unsuccessful effort to break Association of Southeast Asian Nations members away from the world’s democracies and to weaken their regional co-operation.” The only way to prevent Beijing from splintering the region into a multitude of individual players would be to increase cooperation among like-minded states. Left to their own devices, individual states have little to counter China.
But Canberra and Tokyo have not only China in mind with this agreement, but probably also their mutual great ally: the USA. In America, an isolationist mood is increasingly spreading. The Americans are tired of playing the role of the global police. Not least, the chaotic withdrawal from Afghanistan illustrates how unpopular their global missions have become, which cost a lot of money and, above all, the lives of dozen of US soldiers.
Although Joe Biden assured the public that the US was back on the geostrategic stage when he took office, confidence in America’s loyalty to the alliance has suffered massively of late. If the Americans were to withdraw further from world politics, agreements such as the RAA would become the security policy centerpiece of democratic states against Beijing’s authoritarian threat, believes Peter Jennings.
Last but not least, the RAA pact between Australia and Japan has a third component that may not be obvious at first glance: Power security. Australia’s largest export to Japan in 2019/2020 was natural gas worth more than AUS$19 billion (about €12 billion). In addition, there were coal shipments worth around AUS$14 billion. In 2019, 88 percent of Japan’s power was generated from imported fossil fuels, with more than two-thirds from natural gas and coal; natural gas currently accounts for about 37 percent of Japan’s power supply, and coal 32 percent.
Against this background – and together with the Fukushima nuclear disaster – power security forms an important component of Japan’s foreign policy and an element in the partnership with Australia that should not be underestimated.
A closer look at Australia’s and Japan’s Reciprocal Access Agreement reveals that it is far more than a technical and defensive pact. It expresses the will for more military cooperation – and is thus fully in line with the trend. After years of slumber, the “Quadrilateral Security Dialogue,” or Quad for short, first came to life in mid-2021 (China.Table reported). This is the informal discussion forum of the USA, Japan, Australia, and India.
In September, another alliance, AUKUS, was initiated, this time between Australia, the United Kingdom, and the USA. The subject of the agreement is, among other things, that Australia will be supported by the US and the UK in particular in the development and deployment of nuclear submarines until March 2023.
Now, with the Reciprocal Access Agreement, the next step has been taken. As different as the individual agreements are in their technical content, they all have one thing in common: official declarations avoid explicitly mentioning China. And yet it is clear to everyone what Quad, AUKUS, and now RAA are all about: creating counterweights to China.
How does a new autocrat entertain his dethroned predecessor? Sixty years ago, Chairman Mao Zedong held a grotesque lunch for the last emperor of China, Pu Yi, (溥仪). He had imprisoned him as his most prominent prisoner for a decade before finally pardoning him. Then he suddenly invited Pu Yi as his surprise guest to a private lunch at Yingtai Palace (瀛台), one of the magnificent buildings of the once imperial gardens of Zhongnanhai. Mao had commandeered the buildings as his party headquarters and residence after the founding of the People’s Republic in 1949.
Now, President Xi Jinping followed in Mao’s footsteps. On December 22, he brought his Hong Kong governor Carrie Lam to the same Yingtai Pavilion for a report. There, tea was served in imperial yellow porcelain cups. Xi presided over the meeting in a pompous wooden chair carved with dragon ornaments.
It was January 31, 1962, four days before the start of the Spring Festival celebrations for the Year of the Tiger. Mao Zedong invited his four oldest friends, who hailed from his home province of Hunan, to a private lunch. He chose the Yingtai Pavilion on the northern lake of Zhongnanhai as a special location for the occasion. Emperor Qianlong had once praised it as a “fairyland by the water”.
Mao rejoiced like a child when he announced a surprise guest to his countrymen. They would never guess “who it is, although you all know him as your supreme leader” (顶头上司). With a smirk, he allowed a lanky man waiting in the anteroom to enter and introduced him by his former dynasty name: “This one is our Emperor Xuantong. We were all his subjects.” (“他就是宣统皇帝嘛！ 我们都曾经是他的臣民.”)
It was China’s last emperor Pu Yi (1906 – 1967), who took the Dragon Throne at the age of two and was forced to abdicate when his feudal empire collapsed under the bourgeois revolution of 1911. In his later odyssey, he was crowned puppet emperor of occupied Manchuria by the invading Japanese. After Tokyo’s surrender, he fell into the hands of Soviet troops in August 1945. Wang Qingxiang (王庆祥) historian and biographer of Pu Yi found, fearing extradition to China and execution, he once asked Stalin to let him stay in the Soviet Union. He was said to be ready to join the CPSU.
But when Mao’s Communists came to power in 1949, Stalin, at Mao’s request, extradited Pu Yi in the fall of 1950. In China, he was sentenced to life imprisonment. Mao had him pardoned on December 4, 1959. He had specially placed Pu Yi’s name as number 001 on a list of 1,000 war criminals whom Beijing had amnestied on the occasion of the tenth National Day of the People’s Republic.
Pu Yi had already been living back in Beijing for two years when Mao summoned him on a whim. Biographer Wang first described the meeting between China’s new ruler and the last emperor, which had been kept secret for decades, in a two-part essay for the magazine “Zong Heng” (纵横) in 2003. Even the timing was delicate. Just the day before, on January 30, 1962, Mao had addressed 7,000 officials at a mammoth Beijing labor conference, seemingly self-critical about the starvation catastrophe of his Great Leap Forward and the People’s Communes. He acknowledged responsibility for mistakes made in Beijing’s ultra-leftist policies. But while the party continued to brood over ways out of the crisis, Mao absented himself to dine with the ex-emperor.
When he introduced the Emperor to his four compatriots who had once participated in the Wuhan Uprising to overthrow the empire in 1911, Pu Yi submissively jumped up and bowed to each. Mao stopped him, “Stay seated. These are all my friends. You are the one who is a guest here.” Pu Yi should also stop apologizing all the time. Zhang Baochang, (张宝昌), who was serving at the Yingtai Palace at the time, recounted how the five-hour meeting began in the 2013 official series “New Communist Party of China authentic oral history” (中国共产党口述史料丛书): He barely had poured the Tea when Pu Yi confessed: “I am a person who has committed crimes worthy of death against the state and the people. Today I have the good fortune to be received by Chairman Mao. This is the greatest honor of my life.” Mao waved it off and lectured on China’s past dynasties, saying Pu Yi was not only the last emperor of the Qing Dynasty but also embodied “the last emperor ever in the more than 2,000 years of feudal rule over China,” for which his new era was now beginning.
At lunch, Mao amused himself by serving up the peppery favorite dish of his native Hunan. He stuffed chili-fried bitter melon (青椒炒苦瓜) into Pu Yi’s bowl. The ex-emperor, unaccustomed to such spicy fare, moaned, “tastes very good.” The meeting culminated in a group photo. Mao insisted on posing at eye level with Pu Yi. The table celebrated the photo as “the State Founder and the Last Emperor” .(这叫开国元首与末代皇帝). Pu Yi’s later wife Li Shuxian (李淑贤) revealed long after his death how Red Guards during the Cultural Revolution demanded Pu Yi hand over all photos showing the “arch-criminal” together with China’s leader. Out of fear, Pu Yi had handed over the photo to a state archive, where it vanished. Today, only one unflattering photograph of the meeting with Mao is left.
Mao was even more interested in Pu Yi’s biographical life story than in the person. After Pu Yi’s release from prison, Beijing provided Li Wenda (李文达), the publishing director, as a ghostwriter. From January 1960 to spring 1964, he helped Pu Yi write the world-famous memoirs about his re-education from emperor to citizen. Li later said that he had to rewrite and revise the manuscript nine times before it became a bestseller. Pu Yi became the cue for one of Beijing’s greatest propaganda coups. Historians and writers, from Jian Bocan and Wu Han to Guo Moruo, Lao She, or Cao Yu, also collaborated on the edition published in March 1964.
By the time Mao met Pu Yi, he had already read the first manuscript, which was based on Pu Yi’s written confession – and wasn’t happy. “After halfway, I stopped reading,” he said. He wanted a vivid and lively account of the making of an emperor to his re-education as a citizen loyal to Mao. Time and again, Mao boasted to his foreign visitors about how successful Pu Yi’s transformation was.
The true feelings and thoughts of the last emperor were taken to his grave when he died at the end of 1967. It is quite interesting that he does not mention the 1962 meeting with Mao in his 800 pages long diary of his years from 1914 to 1967, published in 1993. Chronologically, he skips over the entire year 1962.
Will we ever know what Hong Kong’s Chief Administrative Officer Carrie Lam was thinking? President Xi Jinping summoned her two days before Christmas on December 22. She was to brief him on the situation in Hong Kong. Xi Jinping served her and her entourage tea in imperial yellow porcelain cups. It all took place in the same Yingtai Palace where Mao Zedong and Pu Yi once met. Xi Jinping sat in a particularly large chair adorned with a dragon statue and presided over the meeting.
All of this is deliberate and calculated. Back in November 2014, Xi had shown then US President Barack Obama the Yingtai Pavilion as a special place where as early as 1681 the Qing Emperor Kangxi pondered the development of a national strategy. Xinhua quoted that he told Obama that “knowledge of China’s modern history is of great importance in understanding the ideals of the Chinese people and their path.” Surrounding themselves with imperial flair and embracing the imperial legacy is part of the self-image of Beijing’s new rulers.
Can you spot the CM-34 tank in this picture? As every year, the Taiwanese army is holding a military exercise before the Chinese New Year in case of an invasion. In view of increasing tensions with the People’s Republic, the professional soldiers and conscripts are taking their maneuvers particularly seriously this time.
Emissions trading is considered an important instrument for achieving climate goals in China just as it is in the EU. But while prices for carbon emissions have skyrocketed in Europe, they have made little difference in China so far. Some crucial elements are still missing, analyzes Christiane Kuehl in a first assessment of the still young Chinese emissions trading system. The system will probably not take effect until 2025, when, according to the plan, emissions of harmful gasses are supposed to decline.
Japan and Australia, meanwhile, are forming a military pact. The two large Pacific islands have not given any specific reason for their new security alliance. But it is clearly directed against China. The People’s Republic’s naval buildup is driving its neighbors together. Every action causes a counter-reaction, after all. Naturally, this also applies to the forging of new, exclusive alliances, analyzes Michael Radunski.
Xi Jinping is acting more and more like a new Emperor of China. This is rather irritating since feudalism is in fact the natural enemy of communism. But how else to interpret a chair with dragon ornaments, the ancient symbol of imperial strength? Or the precious teacups in imperial yellow? Johnny Erling is interpreting these symbols of a meeting with the Hong Kong head of administration that took place in a palace building – and is drawing a link to Mao and the last (real) emperor.
The first trading cycle of the Chinese national carbon trading scheme has been completed: Time to take stock. And the results are mixed. On the positive side, the system started successfully: Trading of CO2 emission allowances has been underway on the Shanghai Environment and Energy Exchange (SEEE) since mid-July. But even though there have been actual transactions on the market, 2021 should more be considered a test run for a future, more comprehensive ETS. This is because the instrument so far had little impact on emissions due to low coverage:
As of the December 31 deadline, virtually all approximately 2,200 participating companies met the requirements, at 99.5 percent, the Ministry of Ecology and Environment announced on New Year’s Eve. That means they were able to present and submit a sufficient amount of emissions allowances for their verified CO2 emissions from 2019 and 2020. They either received these allowances from the allocation or bought additional ones through the ETS. As a rule, older power plants with high CO2 emissions acquire surplus allowances from newer, more efficient plants in the process.
According to calculations by the financial services provider Refinitiv, 99.5 percent of properly registered companies emitted in both years a massive 8.693 gigatons of CO2 equivalent, or around 4.35 gigatons per year. That’s a good 40 percent of China’s emissions and, according to the British trade website Carbon Brief, about 12 percent of global emissions. By comparison, the 1,817 German plants covered by the EU’s ETS emitted only 320 million metric tons (0.32 gigatons) of greenhouse gases in 2020.
Germany’s total CO2 emissions in 2020 were just under 0.59 gigatons, according to the International Energy Agency (IEA). These figures show how just important China’s ETS will be for the global climate if it eventually works properly.
According to Refinitiv data, allowances for a good 178 million metric tons of CO2 were traded in 2021. In addition, just under 33 million metric tons of Chinese Certified Emissions Reductions (CCERs) were traded. CCERs verify climate protection projects by ETS companies to offset their emissions, for example by investing in renewable energies, carbon sinks, or methane use. In China’s ETS, companies are allowed to offset up to five percent of their compliance obligations with such CCERs. Refinitiv estimates that there are currently CCERs for an additional 30 million tons of CO2 remaining in the market, which companies can now acquire this year.
In general, critics note that there is a surplus of emission allowances in China’s ETS because the distribution criteria are too loose or too inaccurate. (China.Table reported). The ETS also provides little incentive for companies to reduce their emissions. The reason, according to Carbon Brief, is that power plants are only required to buy additional allowances for the first 20 percent of emissions above their allocated allowances. Those that emit above this limit do not have to fear any consequences.
The few gas-fired power plants in the ETS do not even have to buy any additional certificates if they emit more than the allocated amount of CO2. The only incentive to save CO2: selling allowances brings money. But according to many experts, this has hardly been on the minds of most power plants so far.
Because of these problems, the market price on the ETS is decidedly low. At the end of New Year’s Day, the allowance for one ton of CO2 emissions cost ¥54.22 (€7.52), 13 percent more than at the beginning of trading on July 16, 2021, according to Refinitiv. On average, the price was ¥43.85 over the 104 trading days last year. In the EU Emissions Trading Scheme, prices rose rapidly recently and are now above €60 per ton of CO2. The EU’s ETS was also initially criticized for low prices.
Meanwhile, one of the most criticized shortcomings in China are the low penalties for violating rules or falsifying emissions data: The maximum fines are only ¥30,000 (€4,175).
However, it is quite normal that these teething troubles occur in a new system, Yan Qin and Yuan Lin concluded in the latest Refinitive study on the ETS in December. It’s a learning process for all involved. Parts of the regulatory framework were not finished until trading was already underway: For example, the Ministry of Ecology did not issue guidelines until late October, such as the December compliance deadline. The distribution of emissions allowances, scheduled for the end of September, was delayed until November. In between, the Ministry of Ecology also required a review of all verified emissions data after data fraud in Inner Mongolia was uncovered.
The current ETS system is a compromise aimed at ensuring participation by corporations and avoiding conflicts, says Chen Zhibin, senior consultant at Beijing-based consulting firm Sino-Carbon Innovation & Investment. “It’s a result of years of negotiation between regulators, industry associations, and big enterprises.”
As a result, there is no fixed upper limit of distributed CO2 allowances in the ETS so far. The maximum can vary each year depending on the actual output of power plants. There are still no concrete plans to withdraw CO2 allowances from the market. Bloomberg reported on Thursday, however, of initial proposals to reduce allowances by a maximum of one percent. China has not yet achieved the emissions peaks set in its climate protection targets. Increases are allowed at least until 2025 in most energy-intensive sectors. This is likely to be reflected in the ETS format.
Power companies now have until the end of March to submit their emissions for 2021 for verification. Experts expect these to remain above four gigatons.
After all, the system is soon to include other sectors. SEEE head Lai Xiaoming wants to include financial companies first and then groups from energy-intensive sectors such as non-ferrous metals or construction materials. That could start as early as 2022. By 2025, according to Lai, all eight of China’s major emissions-heavy industries should be included. These include chemicals, concrete, refineries, steel and pulp, and paper production. Respective influential industry associations already have to prepare their participation. The companies in these sectors also had to report their emissions for 2020 by New Year’s Eve and have them verified.
SEEE also plans to launch CO2-related derivative products, Lai told the Shanghai Stock Exchange newspaper in late December. These include swaps, forwards, and options. The goal, he said, is to make China a global center for CO2 trading and pricing. At some point, the allowances should also cost something and be auctioned, according to the Ministry of Ecology’s ETS rules. But there are no timetables for all these reforms yet.
It is clear that CO2 emissions in China will have to become much more expensive and allowances scarcer. Otherwise, the ETS would have no steering effect at all. Many experts assume that only a so-called cap-and-trade system with a steadily decreasing “cap,” i.e., an upper limit for all CO2 allowances in the market, will have any real effect on reducing emissions. This is how it works in the EU.
The biggest effect of the ETS in its current form is that it represents the beginning of nationwide carbon pricing – with the potential for later expansion and tightening.
Australia and Japan signed an agreement on Thursday to build up military cooperation. Article II of the so-called Reciprocal Access Agreement (RAA) states that the main goal is to “facilitate
mutually beneficial defense cooperation” between the two countries.
On Thursday, Australia’s Prime Minister Scott Morrison called the agreement a historic milestone. “This treaty will be a statement of our two nations’ commitment to work together in meeting the shared strategic security challenges we face and to contribute to a secure and stable Indo-Pacific,” Morrison said. In the face of “shared strategic security challenges.” In light of these challenges, cooperation between the two countries’ armed forces would be necessary.
The Japanese side stressed the defensive nature of the treaty on Thursday. Japanese Chief Cabinet Secretary Hirokazu Matsuno said that the main aim was to guarantee a free and open Indo-Pacific. And indeed, the agreement reads like a harmless list of technical details: how long in advance troop visits are to be announced, or which regulations and customs provisions then apply in each case.
But the ramifications of this treaty are quite far-reaching: for example, a significant number of Japanese soldiers could hold maneuvers with Australian or US forces in the area around the Australian port of Darwin in the future. The port holds a strategic position, serving as a gateway to Asian markets and a potential hub for commodity and agricultural exports. At the same time, Australia’s submarines could regularly call at and use Japanese bases.
Experts believe the agreement to be more important than its currently low-profile suggests. “This is a powerful expression of how two like-minded democracies can co-operate to shape regional security outcomes,” says Peter Jennings, Executive Director of the Australian Strategic Policy Institute (ASPI). “The message to the region is that we have better options than simply trembling and obeying Beijing’s wishes.”
As defensive and technical as the Reciprocal Access Agreement (RAA) may appear at first glance, it is undoubtedly a reaction to China’s increasingly dominant presence in the region. For years, China has been expanding its military and economic sphere of influence in the Indo-Pacific, be it by building airstrips, establishing military bases, or even simply filling in islands.
In essence, China’s boastful behavior made the RAA possible in the first place, says Alessio Patalano in an interview with China.Table. “The negotiations between Australia and Japan for RAA started already in 2014, but were progressing slowly,” explains the Professor of War & Strategy at King’s College in London. That changed, he says, when China began flexing its muscles and acting without regard for the sensitivities of neighboring states. Patalano assumes that the government in Beijing will brand the agreement between Australia and Japan as yet another attempt by democratic industrialized nations to prevent the rise of the People’s Republic.
However, the reaction in Beijing to the agreement was initially quite reserved. A spokesman for the Chinese Foreign Ministry had said on Wednesday, even before the signing of the agreement, that the Pacific Ocean is “vast enough for the common development of countries in the region”. But he added a little warning: cooperation and collaboration are good and well, but they should not be “targeting or undermining the interests of any third party”.
According to Peter Jennings, however, China itself is doing just the opposite. “China is engaged in a full-on but thus far unsuccessful effort to break Association of Southeast Asian Nations members away from the world’s democracies and to weaken their regional co-operation.” The only way to prevent Beijing from splintering the region into a multitude of individual players would be to increase cooperation among like-minded states. Left to their own devices, individual states have little to counter China.
But Canberra and Tokyo have not only China in mind with this agreement, but probably also their mutual great ally: the USA. In America, an isolationist mood is increasingly spreading. The Americans are tired of playing the role of the global police. Not least, the chaotic withdrawal from Afghanistan illustrates how unpopular their global missions have become, which cost a lot of money and, above all, the lives of dozen of US soldiers.
Although Joe Biden assured the public that the US was back on the geostrategic stage when he took office, confidence in America’s loyalty to the alliance has suffered massively of late. If the Americans were to withdraw further from world politics, agreements such as the RAA would become the security policy centerpiece of democratic states against Beijing’s authoritarian threat, believes Peter Jennings.
Last but not least, the RAA pact between Australia and Japan has a third component that may not be obvious at first glance: Power security. Australia’s largest export to Japan in 2019/2020 was natural gas worth more than AUS$19 billion (about €12 billion). In addition, there were coal shipments worth around AUS$14 billion. In 2019, 88 percent of Japan’s power was generated from imported fossil fuels, with more than two-thirds from natural gas and coal; natural gas currently accounts for about 37 percent of Japan’s power supply, and coal 32 percent.
Against this background – and together with the Fukushima nuclear disaster – power security forms an important component of Japan’s foreign policy and an element in the partnership with Australia that should not be underestimated.
A closer look at Australia’s and Japan’s Reciprocal Access Agreement reveals that it is far more than a technical and defensive pact. It expresses the will for more military cooperation – and is thus fully in line with the trend. After years of slumber, the “Quadrilateral Security Dialogue,” or Quad for short, first came to life in mid-2021 (China.Table reported). This is the informal discussion forum of the USA, Japan, Australia, and India.
In September, another alliance, AUKUS, was initiated, this time between Australia, the United Kingdom, and the USA. The subject of the agreement is, among other things, that Australia will be supported by the US and the UK in particular in the development and deployment of nuclear submarines until March 2023.
Now, with the Reciprocal Access Agreement, the next step has been taken. As different as the individual agreements are in their technical content, they all have one thing in common: official declarations avoid explicitly mentioning China. And yet it is clear to everyone what Quad, AUKUS, and now RAA are all about: creating counterweights to China.
How does a new autocrat entertain his dethroned predecessor? Sixty years ago, Chairman Mao Zedong held a grotesque lunch for the last emperor of China, Pu Yi, (溥仪). He had imprisoned him as his most prominent prisoner for a decade before finally pardoning him. Then he suddenly invited Pu Yi as his surprise guest to a private lunch at Yingtai Palace (瀛台), one of the magnificent buildings of the once imperial gardens of Zhongnanhai. Mao had commandeered the buildings as his party headquarters and residence after the founding of the People’s Republic in 1949.
Now, President Xi Jinping followed in Mao’s footsteps. On December 22, he brought his Hong Kong governor Carrie Lam to the same Yingtai Pavilion for a report. There, tea was served in imperial yellow porcelain cups. Xi presided over the meeting in a pompous wooden chair carved with dragon ornaments.
It was January 31, 1962, four days before the start of the Spring Festival celebrations for the Year of the Tiger. Mao Zedong invited his four oldest friends, who hailed from his home province of Hunan, to a private lunch. He chose the Yingtai Pavilion on the northern lake of Zhongnanhai as a special location for the occasion. Emperor Qianlong had once praised it as a “fairyland by the water”.
Mao rejoiced like a child when he announced a surprise guest to his countrymen. They would never guess “who it is, although you all know him as your supreme leader” (顶头上司). With a smirk, he allowed a lanky man waiting in the anteroom to enter and introduced him by his former dynasty name: “This one is our Emperor Xuantong. We were all his subjects.” (“他就是宣统皇帝嘛！ 我们都曾经是他的臣民.”)
It was China’s last emperor Pu Yi (1906 – 1967), who took the Dragon Throne at the age of two and was forced to abdicate when his feudal empire collapsed under the bourgeois revolution of 1911. In his later odyssey, he was crowned puppet emperor of occupied Manchuria by the invading Japanese. After Tokyo’s surrender, he fell into the hands of Soviet troops in August 1945. Wang Qingxiang (王庆祥) historian and biographer of Pu Yi found, fearing extradition to China and execution, he once asked Stalin to let him stay in the Soviet Union. He was said to be ready to join the CPSU.
But when Mao’s Communists came to power in 1949, Stalin, at Mao’s request, extradited Pu Yi in the fall of 1950. In China, he was sentenced to life imprisonment. Mao had him pardoned on December 4, 1959. He had specially placed Pu Yi’s name as number 001 on a list of 1,000 war criminals whom Beijing had amnestied on the occasion of the tenth National Day of the People’s Republic.
Pu Yi had already been living back in Beijing for two years when Mao summoned him on a whim. Biographer Wang first described the meeting between China’s new ruler and the last emperor, which had been kept secret for decades, in a two-part essay for the magazine “Zong Heng” (纵横) in 2003. Even the timing was delicate. Just the day before, on January 30, 1962, Mao had addressed 7,000 officials at a mammoth Beijing labor conference, seemingly self-critical about the starvation catastrophe of his Great Leap Forward and the People’s Communes. He acknowledged responsibility for mistakes made in Beijing’s ultra-leftist policies. But while the party continued to brood over ways out of the crisis, Mao absented himself to dine with the ex-emperor.
When he introduced the Emperor to his four compatriots who had once participated in the Wuhan Uprising to overthrow the empire in 1911, Pu Yi submissively jumped up and bowed to each. Mao stopped him, “Stay seated. These are all my friends. You are the one who is a guest here.” Pu Yi should also stop apologizing all the time. Zhang Baochang, (张宝昌), who was serving at the Yingtai Palace at the time, recounted how the five-hour meeting began in the 2013 official series “New Communist Party of China authentic oral history” (中国共产党口述史料丛书): He barely had poured the Tea when Pu Yi confessed: “I am a person who has committed crimes worthy of death against the state and the people. Today I have the good fortune to be received by Chairman Mao. This is the greatest honor of my life.” Mao waved it off and lectured on China’s past dynasties, saying Pu Yi was not only the last emperor of the Qing Dynasty but also embodied “the last emperor ever in the more than 2,000 years of feudal rule over China,” for which his new era was now beginning.
At lunch, Mao amused himself by serving up the peppery favorite dish of his native Hunan. He stuffed chili-fried bitter melon (青椒炒苦瓜) into Pu Yi’s bowl. The ex-emperor, unaccustomed to such spicy fare, moaned, “tastes very good.” The meeting culminated in a group photo. Mao insisted on posing at eye level with Pu Yi. The table celebrated the photo as “the State Founder and the Last Emperor” .(这叫开国元首与末代皇帝). Pu Yi’s later wife Li Shuxian (李淑贤) revealed long after his death how Red Guards during the Cultural Revolution demanded Pu Yi hand over all photos showing the “arch-criminal” together with China’s leader. Out of fear, Pu Yi had handed over the photo to a state archive, where it vanished. Today, only one unflattering photograph of the meeting with Mao is left.
Mao was even more interested in Pu Yi’s biographical life story than in the person. After Pu Yi’s release from prison, Beijing provided Li Wenda (李文达), the publishing director, as a ghostwriter. From January 1960 to spring 1964, he helped Pu Yi write the world-famous memoirs about his re-education from emperor to citizen. Li later said that he had to rewrite and revise the manuscript nine times before it became a bestseller. Pu Yi became the cue for one of Beijing’s greatest propaganda coups. Historians and writers, from Jian Bocan and Wu Han to Guo Moruo, Lao She, or Cao Yu, also collaborated on the edition published in March 1964.
By the time Mao met Pu Yi, he had already read the first manuscript, which was based on Pu Yi’s written confession – and wasn’t happy. “After halfway, I stopped reading,” he said. He wanted a vivid and lively account of the making of an emperor to his re-education as a citizen loyal to Mao. Time and again, Mao boasted to his foreign visitors about how successful Pu Yi’s transformation was.
The true feelings and thoughts of the last emperor were taken to his grave when he died at the end of 1967. It is quite interesting that he does not mention the 1962 meeting with Mao in his 800 pages long diary of his years from 1914 to 1967, published in 1993. Chronologically, he skips over the entire year 1962.
Will we ever know what Hong Kong’s Chief Administrative Officer Carrie Lam was thinking? President Xi Jinping summoned her two days before Christmas on December 22. She was to brief him on the situation in Hong Kong. Xi Jinping served her and her entourage tea in imperial yellow porcelain cups. It all took place in the same Yingtai Palace where Mao Zedong and Pu Yi once met. Xi Jinping sat in a particularly large chair adorned with a dragon statue and presided over the meeting.
All of this is deliberate and calculated. Back in November 2014, Xi had shown then US President Barack Obama the Yingtai Pavilion as a special place where as early as 1681 the Qing Emperor Kangxi pondered the development of a national strategy. Xinhua quoted that he told Obama that “knowledge of China’s modern history is of great importance in understanding the ideals of the Chinese people and their path.” Surrounding themselves with imperial flair and embracing the imperial legacy is part of the self-image of Beijing’s new rulers.
Can you spot the CM-34 tank in this picture? As every year, the Taiwanese army is holding a military exercise before the Chinese New Year in case of an invasion. In view of increasing tensions with the People’s Republic, the professional soldiers and conscripts are taking their maneuvers particularly seriously this time.
