Opinion

John Wasik

How to beat China at its own game

August 12, 2010

CLIMATE/BUSINESS

American politicians campaigning now would do well to stop polarizing the climate change debate and start talking about jobs, economic development and beating China at its own game.

That would mean employing social capitalism to create a powerful national energy plan that ignites the private sector through public incentives. Although the Chinese are faced with horrible environmental conditions, at least they are doing something about it and may win an economic war in the process.

Aided by a currency peg to the dollar — many say an unfair manipulation that has hurt U.S. exports — the Chinese are currently winning the trade battle. Imports from China surged to $33 billion in July, a figure not seen since the dark days of 2008, ballooning the U.S. trade deficit with the People’s Republic.

To date, U.S. policymakers are losing the Earth Race and the only environmental target they can hit are their own feet. The Chinese recently pulled ahead in the contest, announcing through its State Information Center that it would spend $738 billion in renewable energy projects over the next decade.

INVESTMENT-STRATEGIES/

By any measure, that’s a great leap ahead of U.S. clean-tech efforts. The stimulus plan set aside about $36 billion for a host of U.S. Department of Energy-led projects in the wake of the 2008 financial meltdown. In contrast, China’s stimulus investment for reducing greenhouse gas emissions was $221 billion, according to a report by British Bank HSBC.

What’s at stake isn’t whether climate change will be tackled this year by the world’s largest economy. It’s a matter of millions of new jobs that will likely flow to China, Germany and any other country with a comprehensive policy. Even poor, tiny Portugal has a better energy plan — it gets more than one-fifth of its energy from renewable sources, whereas the U.S. only gets 4%.

The International Energy Agency estimates that there’s a $27 trillion market for clean-tech over the next 50 years. If the U.S. just captures 14% of this business, that creates 850,000 new jobs, reports the World Wildlife Fund. Clean energy is not only a proven job creator, it’s relatively recession proof, according to a Pew Charitable Trust study. It declined only 6.6% last year despite one of the worst economic climates since the 1930s.

A tremendous opportunity for America is being lost as Washington has stumbled at every turn this year when it had a chance to launch a world-class energy policy.

DAVOS/GREEN

Despite the passage of a U.S. House plan to address climate change and promote energy projects, the Senate was unable to bring any energy bill to the floor and recessed this summer without doing a thing. Not even the largest oil spill in history was a call to arms.

Misguided deficit hawks have been deriding clean-tech as an expendable line-item. Some $3.5 billion in renewable energy loan guarantees have been rescinded this year, according to the Solar Energy Industries Association, a trade group. And an untold number of clean-tech ventures have been put on hold. If the U.S. doesn’t get in this game soon in a big way, it will be playing catch-up for years.

So, to help our country along, here is what we must do:

• Increase and extend loan guarantees and tax breaks for all clean-tech companies over decades, not year to year. A national energy program shouldn’t be subject to the political climate of the moment.
• Create incentives for all consumers to buy clean power. There’s a reason why Germany is one of the largest manufacturers and consumers of solar power appliances. Utilities buy back home-generated power over time. The U.S. needs a renewable energy portfolio standard to do the same.
• Create financing that favors energy-efficient buildings. That means widespread programs for “green” mortgages that offer lower rates for environmentally friendly buildings. That would stimulate the overall housing market and green building.
• Enact a permanent national trust fund to build/repair infrastructure in an environmentally friendly way. By my rough estimate, we need at least $5 trillion to fix crumbling roads, bridges, water systems and other public amenities. (The estimate is based on what the American Society of Civil Engineers projected should be spent to fix up essential infrastructure in 2009 minus what was allocated by the stimulus plan.)

Washington has battled many enemies over the years and rallied Americans to the cause. When it comes to forging a long-term, job-producing U.S. energy policy, though, their worst nemeses are stateside. So having an external foe may rouse more productive emotion than simply citing numbers and bungled opportunities.

Comments
11 comments so far | RSS Comments RSS

Wasik, your post should trigger a myriad of comments and responses…. and it would should you had been addressing the public in countries such as France , Denmark, Germany and Sweden, that is, would the issues presented refer directly to any of these countries.

So one has to query whether you are barking at the wrong tree at the wrong time! I believe you are as governments’ mind set in Washington and in illiquid states obviously do not trust in solid voter support when supporting any longer term energy issue where the solution and a measurable result cannot be presented within two or three quarters.

As some European countries commenced their investments in renewable energy more than 40 years ago, while the new Asian tigers have been in the game for approximately 10 years, time is not on the side of potential American initiatives. My perception is that until public budgets have been balanced over the next 10 to 15 years America will keep sliding down the 21st century ladder while quality of life and future financial prosperity for the majority of the population will be in tatters.

Neither party is being pushed by their voters to act decisively.

That is not to say that the issues discussed in your post are not included in a basket of key measures for the possible survival of America as a reasonable independent country without being dictated by a new world order quietly emerging, while America is diving into a sea of red ink under the stewardship of politicians fighting for re-election.

When Americans may wake up to the new role play in this century realizing that the real decision-makers are American creditors, it may be too late to avoid continuous unrest in the major cities.

Those of us that will be around by 2050 may be looking back at the decade from 2010 as the time when America’s supremacy was put to rest…. by Americans.

Posted by HuckleberryFinn | Report as abusive
 

I’m glad to see somebody in the media finally sharing a bit of common sense for a change. Every one of our international competitors that is outpacing us in clean energy, the one area of economic and high-paying job growth, is using social capitalism, to borrow your phrase, to gain an advantage over America. Meanwhile, we have nearly the entire Republican Party (not all of course) stopping at almost nothing to obstruct and derail the only promising industry out there.

The climate change debate is history. Science won, and America is trying to move on but the Right stubbornly is doing its best to keep us in a 20th century economy, while the rest of the world gets all the biggest pieces of the clean energy pie. An investment colleague of mine told me he is working with an Italian investment firm because the Italian government will match private investment funding in most green sectors. And the Republicans want to take all the money OUT of U.S. stimulus and put it into Bush tax cuts for the rich, who are already flush with trillions but waiting on the sidelines for somebody else to do the hard work of getting the economy rolling again.

Deficits = revenue – expense

Boosting the economy through stimulus (ala the pseudo keynesian Bush tax cuts) increases revenues. Yes, we need to cut more public employee AND contractor salaries.

But what kind of a person would save for a sunny day during one of the worst rainy days in a century?

Posted by signupbites | Report as abusive
 

What would you expect. Pears from pine tree. These politicians do not know how to plan, nor do they care beyond the next kickback or next vote they can buy. How do the voters push, they are so sick and tired of the same old failed programs they have no reason to believe that there will be any difference. Obama made promises, but he is cut from the same old tired bolt of cloth.

Posted by fred5407 | Report as abusive
 

The problem in the USA is that it is driven so strongly by politics which produces stupid decisions. Remember fuel cells? Billions wasted on an extremely complex and sophisticated technology that went nowhere. Biofuel? That was the farm lobby getting higher prices for food crops, with more energy going into production than the end product produced. Electric cars? This has to be the stupidest idea of all. In real world operating conditions they go 20-30 miles, cost much more than a conventional vehicle, and are powered by energy made 50% from filthy coal. Did we mention that a global shortage of Lithium will start by 2013? You looked at the DOE ARPA-E program for new technology? 3,500 applicants and 35 chosen, all of which were university researchers studying the same old stuff while every innovative technology from every other source was passed over. We are nuts. We will never have a smart energy policy. Its just a lot of “feel good” lip service, and business as usual in Washington.

Posted by cynicalme | Report as abusive
 

isnt china a larger polluter than the US? Did the author watch the olympics in Bejing? I seriously doubt that China is ahead of the US in ‘clean energy’ when compared to how much they polute.

Posted by BHOlied | Report as abusive
 

@BHOiled. Your comment reflects what the other posters have stated is wrong with the USA. Yes, China is a larger polluter, today; but is rapidly moving ahead in clean energy technology.
The typical US attitude is to think only about today and pay no concern for tomorrow.
China is a bigger polluter (your logic goes) so therefore we (the USA) don’t need to do anything. Let’s stick our heads in the sand and ignore the coming problem and noth think about tomorrow until it hits us over the head. Then we can blame our politicians for the problem. That is why the USA is and will continue to be in decline.

Posted by forzapista | Report as abusive
 

I agree with cynicalme. Same old tired Universities getting grants and spending 50% on administration costs. Same old tired researchers that have never worked in the real world. I agree with his analysis of stupid decisions. Now we have Biomass plants that pollute more than coal plants. How stupid can you be and still breathe and call yourself leaders

Posted by fred5407 | Report as abusive
 

“How do the voters push?” The voters push by biting their tongues and totally ignoring all of their pet issues, including this one. Then ask only one question of all politicians, “What are you doing to implement meaningful Campaign Finance Reform (CFR)? There will be no significant movement on any other issue of interest to voters until our dysfunctional electoral process undergoes a major revamp. CFR is a negative to all politicians, they will never raise this issue voluntarily. Please google Campaign Finance Reform and become informed.

Posted by Vertigo | Report as abusive
 

Apparently, the Chinese have learned from the economic failures of socialism, while the United States Congress has learned nothing.

Posted by misterliu | Report as abusive
 

You can’t “beat the Chinese” by subsidizing one US industry or another. This proposition reeks of good old DC lobbying, coupled with pre-election populist claptrap.

The way to go would have to be through creating a win-win situation for both Americans and Chinese.
In order to reach this situation the Chinese government would need to gradually switch from a totally export-oriented policy to a more balanced one, in which internal consumption replaces export as the main engine of economic growth.
Eventually, growing social and economic inequalities in China are bound to generate serious social unrest that would lead to such changes, so the Chinese government has every interest to begin raising wages and expanding consumer spending now, when things are still well under its control.
The Chinese government itself is influenced by local interest groups who keep promoting the so-far successful export-oriented policy. This influence can impede the implementation of the necessary changes.
The way Americans could help the Chinese government alter its economic and social course is by applying some gentle and polite yet firm and resolute economic and political pressure.
And by the way, a bigger Chinese consumer market may eventually help US companies too.

Posted by yr2009 | Report as abusive
 

How do you suppose we are going to do that when the American public is to busy screaming drill, baby drill? Add to that a giant skills gap. The Chinese produce far greater numbers of scientists and engineers than we do here in the US. In order to innovate and bring forth new technology you have to have a population that is: 1) recieving world class math and science education (costs money) 2) smart enough to admit there is a problem (from what I can tell, Americans don’t meet this requirement) 3) Go to college and graduate with degrees in engineering and the sciences. With all the focus on more tax cuts I fail to see how this will happen. Beating China will require BOTH public and private investment to the tune for more than 1 trillion dollars (yes, that’s trillion with a T) over the next decade. With a population that doesn’t want to pay for anything, but likes to whine about declining infrastructure, and private companies more interested in lining their CEO’s pockets than innovating, it is more likely we will continue to fall behind the rest of the world. All that doesn’t matter though, I mean we are the greatest country on Earth right?

Posted by BB1978 | Report as abusive
 

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