Cooperation between China and the United States on climate change issues is widely regarded as one of the few areas in which the two countries have common interests, against the backdrop of increasingly fierce competition, continued coldness in diplomatic relations and growing hostility. Thus, there are greater expectations for this sector than any other. Some even argue that climate cooperation can become the modern equivalent of “ping-pong diplomacy” between China and the United States, serving as an entry point for breaking the deadlock. However, this view may be too optimistic.
This article analyzes the prospect of Sino-U.S. cooperation on climate change from the perspective of the governments as well as businesses.
The Political Perspective
From the perspective of government or politics, it is difficult for China and the United States to cooperate on tackling climate change smoothly and achieve substantial results. The idea that climate cooperation will drive cooperation in other fields seems too simple.
First, for the United States, the implementation of the new green policy and combating climate change is only a means, not an end, for the Biden administration. In an environment in which the economy of the United States remains sluggish, the unemployment rate fluctuates, society tends to be polarized, and international leadership has been seriously damaged by Trump, Biden resorted to green development and a clean energy transition, so as to achieve the goals of creating jobs, stimulating the economy, reshaping the United States’ economic and social competitiveness, realizing the equality of ethnic groups at home, maintaining the democratic system of the United States, and reviving U.S. international leadership. Green development is the biggest consensus Biden can find in a divided American society, though that consensus exists only as a slim majority. Green development is a means to an end, and will never be placed as a higher priority to those ends.
If Biden is willing to cooperate sincerely and deeply with China on the issue of climate change, he cannot reject the large-scale import of relevant equipment and components from China by American new energy enterprises. For the quickest green transition, the United States will need equipment and services produced by China relying on its own advanced battery technology, key mineral production technology, mature edge computing service, competitive 5G communication technology, and other advantages, as well as the relevant industrial supply chains in China. Once accepted, the stimulus measures created by Biden’s Green New Deal would become a disguised stimulus for imports from China and eventually stimulate the development of related industries in China. That runs counter to Biden’s intention to revive the United States’ domestic economic advantage and create more jobs at home, and is not conducive to repairing U.S. international leadership. Therefore, Biden is mindful of the “American character” of the Green New Deal and promotes the idea of manufacturing in the United States and “Buy American.”
Although the Biden administration continues to send signals that China and the United States can, should, and even must cooperate in tackling climate change, it is lip service. Biden has not loosened U.S. restrictions on exports to China in key new energy technologies, energy efficiency technologies, and advanced equipment areas. Instead, the Biden administration uses human rights and other issues to suppress and punish green enterprises in China, especially photovoltaic equipment enterprises with global industrial competitiveness, and coordinates with Europe and Japan to support the localization – and divestment from China – of relevant industries in the name of strengthening supply chain security.
Meanwhile, for China, tackling climate change is expressed as a goal of green development of the economic and social system, and green development is only one of the five key development concepts – namely “innovation, coordination, green, opening and sharing” – in the new era established by the central government in 2015. It is clear that tackling climate change is, in any case, a secondary goal of China’s policy objectives. This means that there are other, bigger priorities that will weigh on the issue of climate change.
Reviewing the past decade, we can see what these priorities are maintaining and strengthening political security, fighting corruption, building a national governance system with Chinese characteristics, ensuring that the economy is under control and developing with higher quality, and so on. The most concise statement of economic priorities recently is the “six ensures” proposed in April 2020: ensure security in employment rates, basic living needs, operations of market entities, food and energy security, industrial and supply chains, and the functioning of primary-level governments. These goals are not directly related even to green development, let alone climate change.
Although China has announced goals for achieving peak carbon emission and carbon neutrality to the world and has already made successive plans, China’s carbon peak and neutrality is essentially a top-down move, motivated by leaders’ determination and strong push. Strictly speaking, the movement lacks genuine and effective support from the general public. There is little adequate understanding of it. This can also explain to some extent why the phenomenon of “campaign-style carbon reduction” appears in China. At the same time, China has never even analyzed the urgency of tackling climate change carefully and systematically, as the Biden administration did in the United States.
These issues could lead China’s carbon campaign, which now appears to be raging, in several possible directions. It could be akin to a short storm that no one will mention before long; or the dance of a dragonfly, floating on the surface without substantial progress; or a new stimulus and a good reason for strengthening the planned economy. In short, without a comprehensive and systematic reform of China’s national governance system, it is less likely that there will be healthy and sustainable development.
International cooperation is a two-way interaction. In-depth and sustainable cooperation should and must be based on the premise that both sides’ gain outweigh their respective losses. According to the brief analysis of the goals and measures of China and the United States in tackling climate change, we can see that the two countries have great differences in their perceptions of this issue. These differences have nothing to do with global temperature control targets and the policy coordination of the international community toward tackling global climate change, but are closely related to their respective domestic policy priorities and domestic politics.
Global climate change is a public matter, requiring concerted actions by all mankind and collective actions to increase international public goods. Regrettably, there is no possibility that this international public interest will overwhelm the domestic political necessities of China and the United States. In other words, as long as the two countries fail to achieve cooperative consensus on bigger issues such as great power competition, economic development, social stability, world order, and others, even if there are obvious opportunities for cooperation in tackling climate change, both sides are likely to ignore them.
At present, tackling climate change is becoming an international colosseum, in which China and the United States compete for the discourse power and the leading influence of green development. Both sides are proposing different goals and approaches, and seeking to reach consensus with other countries, but there are few concrete actions, let alone major projects in which both countries participate. This may also be the new norm for some time to come.
The Economic Perspective
From the perspective of enterprises, economy, and trade, however, Sino-U.S. cooperation in tackling climate change is a matter of practical urgency and long-term necessity. It also accords with the basic logic of an open economy. On this level, cooperation has a promising future.
The Biden administration intends to increase photovoltaic installations on a large scale, promote electric vehicles in an all-round way, and add 500,000 charging piles to create huge industrial demand. Meanwhile, China has industrial advantages in photovoltaic module manufacturing, rare earth mining and smelting, large-scale wind power equipment producing, intelligent car networking systems, advanced battery modules of electric vehicle, and more. Decoupling from China will not only seriously affect the realization of Biden’s green goals, but also waste limited global resources and cause a sharp increase of cost. Setting up new industries from scratch elsewhere will not contribute to green development, but will increase resource consumption and carbon emissions. Therefore, it is urgent for both sides to cooperate in relevant industries.
More microscopically speaking, the demand for green development in the United States can be met by importing Chinese equipment and services, without threatening U.S. national interests. In fact, in the value chain of green industry, although China has comparative advantages in manufacturing cost and labor force, the country is still at the bottom of “smile curve,” with less than 30 percent value retained; key components, patents, design, and other high value-added parts are still mainly made in the United States.
Therefore, if there are no deliberate obstructions by the administrative authorities, the enterprises of both sides have sufficient reasons to communicate with each other to jointly promote the realization of the green development goals. In that sense, China and the United States have infinite cooperation space in tackling global climate change and accelerating the world’s green transition.
In conclusion, the prospect of China-U.S. cooperation on climate change issues is complex. On the political level, the outlook is not very optimistic; but on the economic level, it is absolutely necessary. If we treat politics, rather than economic needs, as a fundamental determinant of Sino-U.S. relations, we cannot expect too much. If, however, we believe that enterprises and entrepreneurship have great power to drive and even determine the course of history, then we can prepare beforehand for in-depth cooperation between the two countries. As soon as the time is ripe, such cooperation can be carried out on a large scale.