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Penalizing U.S. Manufacturing Will Only Increase Emissions and Slow Economic Recovery
Kevin L. Kearns and Alan Tonelson
Wednesday, April 22, 2009
There’s a dangerous contradiction at the heart of the climate change anxiety that’s become so pervasive in Washington, especially since the Obama administration came to town.  On one hand, the doomsayers warn that man-made global warming is such an indisputable, imminent, and overwhelming threat, that human civilization must be transformed immediately to avert catastrophe.  On the other hand, the climate change legions – including the European branch – keep ignoring the one initiative that could achieve the swiftest reversal: dramatically shrinking China’s greenhouse gas-belching, government-sponsored, industrial export machine.  

In fact, the doomsayers seem strangely fixated on overcoming any climate crisis mainly by imposing greater burdens on a U.S. manufacturing base that is already very efficient but still cutting emissions substantially – even in the face of recession and unfair foreign, especially Chinese, competition.  And they keep coddling Beijing -- despite the accelerating growth of China’s emissions, and signs of its growing unwillingness to reverse the trend.

It’s as though a perverse, anti-American manufacturing attitude infects the nation’s capital.  Few seem able to connect the dots between a sustainable, production-led economic recovery and a healthy manufacturing base. Washington has been so obsessed with the banks that it has paid scant attention to the extreme crisis in manufacturing; and it is manufacturing, not banking, that can actually create the plants, jobs, technology, products, and widespread wealth necessary for recovery – and do so in a climate-conscious way.

Without increased domestic manufacturing, the country will return (no matter how much stimulus money is printed) to its old habit of destructive over-consumption of foreign goods funded through excessive foreign borrowing that got us here in the first place.  And over-consumption of foreign (especially third-world) goods will produce more greenhouse gas emissions -- because those developing-country factories and the power plants that keep them running are much less climate friendly than ours.

Perhaps most disturbingly, U.S. and European climate change devotees continue to see salvation in the UN-sponsored Kyoto reform blueprint.  The U.S. Senate wisely refused to even consider the 1997 treaty precisely because it requires no emissions cuts from China and other major third-world countries.  But these “developing” nations have recently passed the developed countries as the biggest engines of global warming.

China’s emissions performance is in a league of its own.  The People’s Republic has just exceeded America as the world’s larger emitter in absolute terms, and according to some estimates, is currently producing 14 percent more greenhouse gases than the United States.  Moreover, the U.S. Department of Energy projects that, from 2005 to 2030, China will generate fully 47 percent of the projected global increase in greenhouse gas emissions, and the third world as a whole will produce more than 86 percent.  The projected U.S. contribution?  Just 6 percent.  Letting the third world off the emissions hook will ensure that man-made warming keeps worsening.

China’s greenhouse gas machine is anything but a natural development or free-market creation.  As documented in a 2007 study by the Peterson Institute, it stems mainly from the communist regime’s use of trade protection, subsidies, and other measures to overhaul its industrial structure.  

Beijing has long been reducing China’s reliance on labor-intensive – and energy- and carbon-light –industries, where its huge population and very low wages have given it big comparative advantages.  In their place, it has long been increasing the role played by advanced, capital- and energy-intensive, robustly-emitting industries.

Other major, non-market ingredients in China’s recipe for hyper-growth – and soaring emissions – are heavy subsidies for energy use in manufacturing and transportation, and deliberately threadbare enforcement of its own environmental regulations.  Also playing a large role are Beijing’s towering trade barriers -- including the predatory undervaluing of its currency.  These government-created policies and programs help Chinese-made goods displace other, more climate-friendly goods around the world, as well as help lure foreign-owned manufacturing to regulation-light, subsidized-energy China from countries where even capital- and energy-intensive manufacturing is clean and emissions regulations are widely enforced.

That’s why Chinese industry’s emissions of carbon dioxide, the most important greenhouse gas, now account for fully 31 percent of China’s total carbon dioxide emissions.  Higher Chinese living standards have played a relatively small role.  American industry, by contrast, generates only 11 percent of total U.S. carbon dioxide emissions.  And U.S. industry’s energy-related carbon dioxide emissions actually fell by an estimated 2.3 percent from 1990 to 2005.

From a global warming standpoint, China’s results have been spectacularly perverse.  According to the authoritative Organization for Economic Cooperation and Development, China’s carbon-dioxide emissions per unit of output are five times greater than America’s.

Washington’s response so far has been the usual diplomacy and suasion – to no avail.  If anything, China lately has signaled new resistance to reducing emissions.  For example, China has been relying more heavily on coal in its national energy mix – a surefire recipe for more emissions.  News reports describe how fear of slowing growth has led China to fast-track numerous new emissions-rich industrial projects.  And in March, a senior Chinese official blamed his country’s foreign customers for much Chinese emissions growth.  The normally aggressive climate change crowd, meanwhile, has proposed little more than new meetings for yet more Sino-American climate chit chat.

Clearly, it’s time to stop talking and start pressing Beijing to make big emissions cuts, and simultaneously to implement new American policies to revitalize the much cleaner U.S. manufacturing base.  Beijing has acknowledged that as much as 25 percent of its emissions come from export production and the United States is by far the largest market for Chinese exports.  Fewer Chinese exports and more American domestic production and consumption are the way to go.

Further dithering on China by the Obama Administration and Congress, is completely unacceptable -- unless the climate change crowd’s real target isn’t averting environmental disaster, but rather dismantling domestic U.S. manufacturing and with it, our chance for sustainable economic recovery and material progress for the average American working family.




Kevin L. Kearns, President of the USBIC Educational Foundation, is Editor-in-Chief of AmericanEconomicAlert.org. and a former Foreign Service Officer with extensive defense trade experience. Alan Tonelson, a columnist for AmericanEconomicAlert.org, is a Research Fellow at the Foundation. His recent book on globalization, The Race to the Bottom (Westview Press), is now in paperback.
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