348: The China Pivot: What will Beijing’s climate leadership look like?

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Tom Rivett-Carnac: That's very interesting. And it's interesting to hear you describe it as a race and also that China is still sort of figuring out its role in this race, in this transition. But you can look at this race and say one thing you can be sure of is that China is winning. I mean, if you look at solar panel manufacturing, you look at battery manufacturing, you look at wind turbine manufacturing, China is 75, 80% of global capacity in all of those different sectors. And so if you look at that from one perspective, you can say the world is decarbonizing because of Chinese manufacturing, and that is what has driven down the costs and made it possible for this shift. But you can also look at it as some politicians are doing in particularly North America, but also parts of Europe, and saying now if we transition to renewable future, this is Chinese subservience and turning it into a political populist agenda, and they are projecting a very negative intention on China in terms of geopolitical intention as a result of that manufacturing strategy. So I would love to hear you talk a bit about how China sees its expanded role, because some other parts of the world seem to have drawn their own conclusions.

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Christiana Figueres: Can I come in on that? There are many different types of leadership, of course, and we have seen what the United States exerted, what kind of leadership it exerted over many decades. How would you compare and contrast the leadership that China could intend to have in the field of climate change and clean technologies? How would that be different to what we're used to seeing from the United States? On the coattails of Tom's question.

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Yixian Sun (guest, University of Bath): Thanks to both of you. I think these are excellent questions. And I'd like to comment on the leadership question raised by Christiana. Because recently I've been doing a lot of research of China's leadership in global environmental governance. I give a lot of talks every time I talk about leadership and people ask me about the definition. I always try to challenge the conventional definition. I think very much, in my view, embedded in the Western culture. I think people would say, in order to be a leader, you need followers, so you need people to follow you. But I think, in my view, as someone who grew up in China, think about Chinese philosophy. Being a leader, the first thing you have to do is more a kind of lead by example. That means you need to first do well, and then to show to the rest of the world that you have delivered something. I think this is China has been doing in the last 10 or 20 years, I would say, is trying to really figure out what kind of transition that can be happened in the country and how China can try to move from very much, still very much fossil fuel based economy, but to a more kind of clean energy based economy. So if we think about this different understanding or description of this transition, I think to some extent, I don't think China has planned everything. I think things just happened so fast in terms of this transition, and then the cost has been decreased so significantly due to the scale of the manufacturing power capacity here happened in China very much because of this new technology revolution. We are experiencing this revolution. It has happened so quickly. It's good thing it's a fortune for China because China has been winning. But at the same time, I think if we think about global climate action and how we can adjust or combat this crisis, I don't think it's a zero-sum game. So it's not someone is winning and then someone is losing. I think the problem is, of course, there is a distributional cost. So there are some distributional effects of this transition. So at the moment, we may see China is winning, but I think this is not a sustainable path. This is why what we have been seeing in the last year or so, I think there are a lot of discussion about how China can support other countries and help them to add values in the supply chains. We have seen a lot of investment, and we have seen also very explicit requests from a lot of host countries asking or requiring Chinese companies to provide more opportunities, more jobs locally, to transfer their technology. Of course, this is easy saying than doing, because there are a lot of barriers to those kind of technology transfer and also job creation. But I think this is the way we have to figure out, and I think especially for our Chinese companies, Chinese actors, Chinese government, is how they can work with other countries and trying to also use its technological advantages and to support the transition, and also not only a racket transition, but also adjust the transition in the rest of the world.

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Tom Rivett-Carnac: That's really interesting, and I'm going to invite Christiana to come in in a minute. I mean, do you think that the partnerships that China can develop with countries in the Global South to partner on manufacturing, is in part a strategy to mitigate some of the difficult political realities that have emerged as a result of China's rise? Of course, it's an economic strategy, but there are other political challenges that have occurred, particularly with this administration in the US. Do you think that strategy would help mitigate some of those challenges?

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Yixian Sun (guest, University of Bath): That's a good question. So let me rephrase this. I think from economic perspective, of course, I think there are some concerns from investors trying to circumvent the trade barriers to some developed country or global North market. But at the same time, if we look at the trade data, actually the majority of the market, the end market of Chinese clean technology is actually in the Global South. And this has already happened in the last few years. The bigger market is actually in the Global South. And this is what the Chinese companies are looking at. And so that means even if you try to also enter the global North market, but this is not the main target, we have to look at this home market, this domestic market in the Global South. So if you move manufacturing to these countries, I think in the mid and longer term, FC is trying to supply local markets. This is also what happened already in many places. For example, we have seen countries like Pakistan, like also a lot of African countries, they have imported a huge amount of Chinese solar panels in the last 18 months or two years, which has driven a very rapid transition in these countries, especially in the decentralized renewable energy system. This has not been planned by policy, and this is very much because of economics and because the price of solar panel has decreased significantly while the electricity price is still very high in these markets. So this has happened. Of course, this is not the end of the story. I think there are still a lot of challenges in these markets. But that means if we get the economics right and this Global South market and in the other future. So this is why I think we have to think both, I think, from a host country perspective, so how to actually gain from this transition. So if you don't be very proactive and have a long term planning, then you are actually just paying more to just buy products from China, but not really benefiting economically. Similarly, I think for Chinese companies, this is not a longer term solution, because you know there is a huge demand there, and then potentially the labor cost has increased significantly in China. So I think what would be beneficial is actually trying to move in production also in those countries that you can have shorter supply chance, which is also to manage the risks as well in the longer term. So I think it would be beneficial from both sides to think about how to work together, how to localize some of these supply chance into these Global South countries.

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Christiana Figueres: That is a very good description of the Chinese penetration into these markets as opening up economic opportunity. I wonder whether those economic opportunities also bring political opportunities for China.

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Yixian Sun (guest, University of Bath): Yeah, I think definitely it will also strengthen the relationship and partnership between China and the Global South. At the same time, it's not always easy. China has gone outward or gone out. So this China go out strategy is very recent. But I think it went so fast. China as a global power or as a global player is still a very new and young player. I think there has been a lot of reflections in China from the government, from the policy circles of what had been done, especially with the shift or the revised strategy for the second era or second decade of Belt and Road Initiative. That means also there has been a lot of reflections within China. For example, there has been a lot of projects which were not very successful, which have created some repercussions in host countries. I think China is reflecting on that. So I think potentially, of course, you try to strengthen the relationship and also think about how we can have more leadership from the Global South, both from China but also other Global South countries when they can work together economically but also politically to drive reforms of multilateral processes. But at the same time, I think China still needs time to digest what they have done in the last 10 or 15 years. And I think there are a lot of lessons to be learned. And this is also why we have this dialogue on international development cooperation between China and the UK. Because UK has a lot to offer to reflect on the past experiences, especially from the colonial period to the post colonial period. And I think this is also something hopefully some global North countries can also support China and then also try to help the global South countries for them to find out a new development pathway, I would say. I think so far, a lot of countries have been still struggling.

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Tom Rivett-Carnac: I mean, I feel like this is the beginning of a conversation. There's so many places we can go here about this. But I know that you are in part in Beijing with an eye to the future visit of the British Prime Minister in a little bit of time. And you've talked about that bilateral arrangement. We've talked a bit about the global South. But I'd love to just ask you in closing, what do you think the future cooperation between China, the UK, the EU in this sector would look like? We're entering an era of carbon border adjustment mechanisms. Those have a certain political resonance. What do you think the ideal landing ground is in that type of partnership to enable us to do what we need to do on climate in such a short space of time?

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Yixian Sun (guest, University of Bath): To answer that question, I think we have to think about what are the comparative advantage of different countries. And especially now, we look at China with this huge manufacturing capacity and I think a very strong clean energy industry. So there is no doubt that China can supply that kind of technology and also especially to push for manufacturing. At the same time, I think we shouldn't forget about if we think about global North countries, UK, Europe, or still I think a lot of basic research and development happened here. I think there is still a lot to be offered by UK, especially we talk about the UK research and development, higher education. I think even now, I think our Chinese colleagues still recognize the advantage of the UK research and higher education system. I think we still have lots of cooperation. We know that all the UK universities are trying to strengthen their cooperation, collaboration with China and try to have joint research. In the clean energy space, definitely we have seen also a lot of work, including at our university, we have worked on new transport system, new energy system, grid system, but also hydrogen, green hydrogen. And these are the fundamental research that happened of steel in Europe and also jointly with China. But I think with the capacity of China and push for manufacturing, commercialization, customization, we can actually accelerate transition in that sense. Another place I think these countries can work together, especially between UK and China, is in third country markets, in the Global South especially. But here I think the model would be China can offer more kind of hard-well for development, thinking about the infrastructure, technology, clean technology, whereas the UK has more soft-well, thinking about the rules, the ESG standards, and also monitoring and how to increase data transparency. I think if both sides can join their efforts, I think we can deliver better packages to our Global South country. Of course, we shouldn't forget about the agency of these countries, and we should give them ownership to drive the process. But I think even that China and UK and also other European countries have been very important development partners over the last few decades, I think there is a lot to be shared and also to join efforts. Now maybe just stop here. I hope that gives us a lot to think about.

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Tom Rivett-Carnac: That's fantastic.

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Christiana Figueres: Thank you so much.

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Tom Rivett-Carnac: Wonderful to talk to you. I hope you have a very successful trip and look forward to seeing you on your return. Thank you for taking the time to talk to us. So great to have a chance to talk to Yixian. What did you both take from that conversation? Paul, what did you think?

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Paul Dickinson: Well, he makes a very eloquent and effective case that China is simply sort of shuffling its activities to fit with a different global environment. I was struck by that most sales of Chinese renewable energy equipment is to the Global South, so to say, and I think that's really actually quite inspiring. We do have these incredible stats from China, about 300 gigawatts of solar and 100 gigawatt wind last year, something like five times the UK's entire electric teapot put in renewables in one country. I felt confident about the way he was talking. I also know that there are long-standing rivalries between different kinds of political systems, between one-party systems and democracies, and we can't pretend those aren't there. Back to something you said at the very start, you two were having a conversation about China, that there does not appear to be, so to say, some kind of Machiavellian agenda. I actually think that's sort of fossil fuel talking points.

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Christiana Figueres: The one word that kept on coming up for me as I listened to him was humility. I thought, how interesting. I can't imagine listening to any thought leader, let alone politician, in the United States speak about leadership without a sense of self-importance. And that was totally absent. Yes, it's leadership, it's economic. You know, there's not a sense of supremacy behind it, despite the fact that they are indisputable leaders in all of these technologies. But the sense of it is like, yes, this is what makes sense, this is what we're doing. But I don't know, I almost want to say arrogance that we have in the West about leadership was just not there. And the other piece that I also put under my humility sense is he kept on talking about it's too early to know. We are still trying to figure this out. We're still trying to understand. It's happened too fast, dot dot, over the past 10 to 15 years. I mean, that's four political cycles in the United States. Do you think anybody in the United States would say the past 10 to 15 years something happened that was too fast?

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Tom Rivett-Carnac: Yeah, it's interesting.

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Christiana Figueres: I mean, their sense of time is so much more elastic. It's so much more generous. It's so much more open. They don't have this, we have to get it done in the first 100 days of the political being elected. It's a very, very different sense of how transitions take place in the world.

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Tom Rivett-Carnac: Yeah, so I definitely got that. I would also just channel my US foreign policy analyst friends based on what you just said, because if you were to say that there is anything humble about Xi Jinping and the way that he's running China, then they would not see that at all. They would say there is huge expansionism.

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Christiana Figueres: There is huge autocracy.

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Tom Rivett-Carnac: Autocracy, you know, try to be...

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Christiana Figueres: There's no autocracy in the United States, by the way.

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Tom Rivett-Carnac: Try being Taiwanese or try owning an island in the South China Sea. And it's funny, isn't it, that everybody seems to project on to China their own intent in some way in the West. But if I speak to my friend, and I do have various friends who are foreign policy analysts in the US, they are 100% convinced of the hidden agenda. That we will come to understand that actually what China is doing is completely different from what they're placing onto the international stage. They have a totally different set of objectives that they're not being honest about. And we are falling into that trap by just thinking that they are trying to develop a little bit of wind and solar and spread it around the world. And one of the fascinating things is going to unfold in the coming years is we don't know the answer to that question.

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Paul Dickinson: But 30 minutes ago, you and I had a conversation, Tom. If we just ignore the difference between democracy and one-party systems, which are substantial, I don't want to ignore them. But if you just want to talk about powers rising and falling, there was an excellent article in the FT by Janet Ganesh, which was sort of suggesting that when the US had supreme political power in sort of 1946, it kind of created international institutions. It created Bretton Woods.

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Tom Rivett-Carnac: It could afford to be generous.

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Paul Dickinson: It could afford to be generous. And now it's behaving in a kind of a irascible and difficult way. China is really rising as a power. And perhaps it is capable of creating win-win environments for large groups of people. We just don't know.

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Tom Rivett-Carnac: Yeah. And I mean, I think one thing that's clear, very clear, just in the last few months, looking at how Donald Trump is now behaving on the world stage, the world economic forum and other things is he is massively accelerating that shift. He is pushing other leaders into closer alliance with China, pushing the Global South into much more willing partnerships to develop clean energy industries. I mean, when the history of these years comes to be written, I wonder if we will see one of the decisive roles he played as supporting finally this pivot from the US to China, inadvertently, of course.

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Christiana Figueres: The space on the lap of the Chinese is actually run out. Everybody wants to sit in their lap.

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Tom Rivett-Carnac: Yeah, totally. Exactly.

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Paul Dickinson: Yeah. I'm not entirely sure it's the safest place in the world, but better than being on Donald Trump's lap. Yes. I don't think either of them are all that appealing. I want to sit on little England's lap.

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Tom Rivett-Carnac: All right. I think that takes us to the end of this episode. So great to dive into this topic again. I'm sure we'll be back on it this year. Thanks for joining us, everyone. Bye.