Archive for the 'environment' Category

How the advent of special economic zones turned around the economy of China and why, inevitably, inexpensive goods will become more expensive.

Commentator and investment strategist Andy Rothman says economic development pushed by Beijing will be great for Chinese workers and the environment, but now all of us, that is the customers in the non-Chinese part of the world, will have to pay part of the cost.

In an excellent commentary the article shows that if China is to improve its standards for its people and, global warming and pollution the simple other end of the equation is that goods will cost more.

To illustrate the way in which this will happen he went back to the first wave of economic restructuring, in the 1980s which saw special economic zones established on the coast, where cheap labor fueled foreign-invested factories.

Soon inexpensive goods flooded into the US. This pushed down prices and restrained manufacturing wages.

He said that the second wave, in the 1990s, was the transfer of economic power from state-owned companies to entrepreneurs. ‘It was a process symbolized by China’s decision to join the World Trade Organization. Over a six year period, 46 million state sector workers, the equivalent to Germany’s entire work force, were laid-off in China. The private sector grew fast enough to pick up the slack, and now contributes a surprising 70% of China’s GDP.’

Now we come to the third wave which he confirms is just getting under way. It is an effort to push China’s manufacturing platform up the value-added chain.

He said, ‘Today, most of China’s exports are just assembled from imported components, and Beijing is hoping that in the future, more of the profit-creating parts will actually be made in China. The government is raising the minimum wage and enforcing environmental regulations. It’s also eliminating subsidies for the export of low-value, dirty products ranging from leather to toys, and steel and chemicals. This doesn’t mean China will quickly go high-tech, but Beijing is saying it no longer wants to be the world’s sweatshop for junk.’

All of this is great for Chinese workers and the environment, but it also means that the global deflationary impact of cheap Chinese goods is coming to an end.

Now all of us will have to pay part of the cost of higher Chinese wages and limits on overtime, and as Beijing enforces pollution controls, we will all have to start paying part of that expense, too.
Andy Rothman is with CLSA Asia-Pacific Markets which is an investment firm in Shanghai.
Source: Marketplace

TEDA — Tianjin Economic Technological Development Area — has passed the acceptance test of three ministries and commissions of the central government and become one of China’s first group of eco-industrial parks.

The acceptance team of the leading office of the development of the national eco-industrial model zones, which is composed of the State Environmental Protection Administration, the Ministry of Commerce, and the Ministry of Science and Technology of China, conducted in TEDA a two-day acceptance test.

Thus it is now an eco-industrial park ‘propelled by the government, centered on enterprises, and supported by all people.’

The basic conditions and indicators of TEDA meet the requirement as stipulated in China’s Standards for Comprehensive Eco-Industrial Parks.

Apart from TEDA, Suzhou Industrial Park and Suzhou National New & Hi-Tech Industrial Development Zone have also passed the acceptance test.
Source: All Roads Lead to China

China has been reforming its policies in an effort to discourage overseas investment in energy-intensive, polluting and resource-based ventures — the so-called smokestack industries.

Delivering a work report to the 1st session of the 11th National People’s Congress (NPC) on Wednesday, Premier Wen Jiabao made known China’s determination to end its position as a global center of such industries.

He said, ‘We will limit or ban foreign investment in projects that are energy-intensive or highly polluting, limit or ban foreign investment in some areas of resource exploitation, and correct illegal practices for attracting foreign investment.’

Zhang Yansheng, chief of the Institute of Foreign Economics affiliated with the National Development and Reform Commission, said: ‘Given the size of the Chinese economy, I believe the international community will benefit from the country’s policy adjustments toward overseas investment in terms of resources, environmental protection and the balance of global trade.’

Overseas investors are now being encouraged to enter fields such as recycling, clean production, renewable energy, environmental protection and efficient use of resources.

They are restricted or banned from entering energy-intensive, polluting sectors or certain certain fields of resource exploitation, and export tax rebates for 1,115 commodities in these sectors have been ended.

Zhang Yansheng said the blind pursuit of foreign funds led to many short-lived smokestack factories that turned out low-end goods.

A report released by the China Council for International Cooperation in Environment and Development in late February disclosed that the number of overseas investors investing in polluting industries accounted for about 30% of overseas-invested ventures in 1995 and 84.19% in 2005.
Source: China View