Those secret US / China climate talks in full

by | May 19, 2009 | Climate and resource scarcity

Today’s Guardian has a big splash announcing that “China and US held secret climate talks“.  According to Suzanne Goldberg,

A high-powered group of senior Republicans and Democrats led two missions to China in the final months of the Bush administration for secret backchannel negotiations aimed at securing a deal on joint US-Chinese action on climate change, the Guardian has learned.

The report continues that the track 2 talks were orchestrated by the Carnegie Endowment’s Bill Chandler, who says that “My sense is that we are now working towards something in the fall… It will be serious. It will be substantive, and it will happen.”

Hmm. For all the breathless talk of “secret” dealings and “backchannel” negotiations about which “the Guardian has learned”, you have to figure that the talks probably weren’t that secret if Radio Free Asia was able to report fully two months ago that,

China has raised hopes for environmental cooperation with the United States despite differences that emerged during a Washington visit by leading officials this month. 

On March 18, Xie Zhenhua, vice chairman of the National Development Reform Commission (NDRC), stressed a positive outlook for cooperation on climate change at a Washington meeting co-hosted by the Carnegie Endowment for International Peace and the Global Environmental Institute of Beijing. After years of disagreement over which country bears greater responsibility for global warming, Xie, China’s top climate negotiator, voiced readiness to discuss joint action.

If you’re wondering where Bill Chandler is coming from on climate change, then this 2007 interview with CFR  is worth a look (n.b. his heavily sceptical view of Kyoto’s crappy Clean Development Mechanism); more up-to-date and in depth is this 2008 article entitled “Breaking the Suicide Pact: US-China Cooperation on Climate Change” (see also this summary on China Stocks Blog).

There’s a lot of good stuff in the article, with a particular focus on cooperation on best practice technologies and innovation in new ones.  But here’s what gives me pause: “Both countries could reach a deal – without a treaty – that could unlock the global stalemate”.

Without a treaty? Hmm. Chandler’s article is full of sensible proposals for confidence building measures between the US and China.  But none of these can substitute for a global system of binding, quantified targets, if the world wants to be sure of stabilising greenhouse gas concentrations at any given level.  Initiatives like this are useful – but if we learned anything from the Bush Administration, it’s that there’s always the risk of them becoming figleaves.

China’s backing for Sri Lanka

by | May 6, 2009 | East Asia and Pacific, South Asia

As Sri Lanka’s assault on the Tamil Tigers continues, Kotare has an interesting observation on an angle of the conflict that I’d missed:

While the US is entangled in an escalating war in Afghanistan, China is quietly strengthening its strategic position in the Indian Ocean. One sign of this is the way Beijing is helping the Sri Lankan government crush the Tamil Tigers while building a port at Hambantota, on Sri Lanka’s south coast.

China’s Achilles heel is its reliance on imported oil and minerals from the Middle East and Africa, and the need to ship those resources across the Indian Ocean and through the Straits of Melaka and the South China Sea. This poses a security problem for Beijing. If China and the US went to war, say over Taiwan, the US Navy could stop the flow of oil and minerals and do real damage to the Chinese economy and war machine. Similarly, India, which has a large navy, could interdict China’s ships in the Indian Ocean.

 To safeguard its shipping, China needs to be capable of projecting power into the Indian Ocean, the Middle East and Africa. From ports and airfields like Hambantota, sited along the Eurasian seaways like a ‘string of pearls’, Chinese forces could gather intelligence, protect its shipping and attack hostile navies.

What next for Chimerica?

by | Feb 11, 2009 | East Asia and Pacific, Economics and development, Global system, North America

What next for ‘Chimerica’, as Niall Ferguson calls the unholy alliance of Chinese capital and US debt that has grown up over the last decade.

China is concerned about the erosion of value in US Treasuries and the dollar:

China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.

The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.

But what can China do? John Higgins, senior economist at Capital Economics: ‘It’s self-defeating for China or others to offload Treasuries. if China dumped US Treasuries, it would push up yields, slow economic activity in the US, and slow demand for imports. Is that in China’s interests? No.’

On the other hand, this from Steve Barrow, currency strategist at Standard Bank:

‘The issue of declining appetite among foreign central banks for US Treasuries is not just about supply. It’s also a protectionist issue. For us to envisage a significant rise in the yield of US Treasuries and a fall in the dollar, it would have to be because of a rise in protectionist and isolationist tit-for-tat policies. But that’s the way the world is heading. You can see creeping protectionism all the time. And that could lead to emerging market central banks keeping more of their reserves locally, to defend their currency and support their economy.’