Soft Power, Bright Power

How can China build a soft-power image? Contributing to the Green Climate Fund would go a long way in burnishing its public diplomacy campaign.

Can China really become a leader in green technologies? Can it transform itself from a naysayer on climate change negotiations – blamed by the developed world for stalling progress on an international climate agreement – to a leader, exhibiting the sort of soft power that it craves? Certainly, China has come a long way in a short period.

Last year, China took the crown as king of wind power. China installed a staggering 16 gigawatts of wind power electricity capacity in 2010. By the end of 2010, China had built 41.8 gigawatts of wind power – in other words, more than one-third of what is now the world’s largest wind capacity was put up last year alone. Xinhua says that the wind power gives China the potential to cut more than 90 million tons of carbon dioxide.

Indeed, by 2015, China plans to more than double wind capacity to 90 gigawatts.  Just for reference, a typical large coal-fired plant would be about 600 megawatts, so 90 gigawatts of wind is the same capacity as 150 coal-power plants (though coal is more reliable than wind, so this is not a direct comparison).

It was only four years ago that China made a promise to reduce energy intensity. At that time, the plan was to improve energy efficiency by 20 percent during the 2006-10 11th Five-Year Plan. Then it promised renewable energy would make up 40 to 45 percent of the country’s total energy needs by 2020. Indeed, the just-ended plan saw China hit its 20 percent efficiency target, but just barely – thanks to draconian measures.

And all that wind power? Xinhua notes that more than 30 percent of the wind turbines aren’t connected to the grid. Even when they are connected, and even when the wind is blowing, the power that the turbines produce often isn’t used. “This shortfall in generation tells us that China still has a long way to go to reach its full potential in wind and other renewable energy,” said Yang Ailun of Greenpeace East Asia in a news release that was cited by UPI. “Despite a renewable energy policy requiring grid companies to purchase all available electricity generated by wind farms, wind power access to the grid is impeded by an unstable, outdated grid infrastructure,” he said.

Internationally, China is buffing its image. The climate change talks at Cancun (designed to produce a follow-on treaty to the Kyoto Protocol, which expires next year) buttressed China’s efforts to be a more serious international player – to be setting the agenda, not just reacting to it.  A year ago, in Copenhagen, China was seen as the spoiler, with many Americans and Europeans seeing Beijing acting out of spite to wreck a deal. Fair or not, that was the perception.

That negativity wasn’t on display in Cancun, where China was more open in explaining and articulating its position. The pre-Cancun meeting, held in Tianjin in September didn’t accomplish much except lower expectations. But it was nonetheless a chance for China to be more actively engaged with the international environmental negotiating process. Until recently, China has often reacted defensively, merely saying that it didn’t cause the problem.

The talking points to the Chinese delegation in Cancun, official and non-official alike, were that China was “positive,” China was “constructive,” and China was “not a barrier.” Just getting China engaged on this level does nothing to solve climate change, but it is still progress of a modest sort.

Chinese officials, for example, say that they played a more active role in brokering the modest Cancun deal (which mostly improved CO2 measurement, reporting and verification procedures but also promised to set up technology transfer funds), especially by working with developing and least-developed countries.

China, in short, now shows some early signs of moving away from being a free rider on the international system – reaping the benefits but not really sharing the costs. It is taking China time to shed its reflexive habit of saying that it is a poor, developing country and shouldn’t be asked to do much. Yes, China is a poor, developing country. It is also, simply by weight of the number of people and its economic growth, a significant international player.

China has both the manufacturing excellence and the government commitment to be a global leader. All in all, this augurs well.  Strong committed leadership, lots of money going into clean energy, and a corporate sector focused on green-tech opportunities.

Yet serious questions remain. What are the limits to this top-down administrative approach? To hit the 20 percent improvement in energy intensity, we saw surprising incidents where power was turned off in order to meet targets. Traffic lights went dark and citizens shivered in unheated offices and homes. That’s gaming the system, not changing behavior.

More important, will prices drive change? Or will it be more administrative measures, measures that often have only a temporary effect? Cheap power has fuelled economic growth and a three-decade-long industrial boom. Is there really the political will to push energy prices higher? If so, and it seems unlikely in the short term, how should this be signaled?

Business, in particular, needs to know what long-term pricing policies will be. What’s important is not prices this year – especially at a time when inflation is a concern, energy prices are not going to get pushed anywhere near average global levels – but what prices will look like for the balance of the 12th and perhaps even through the end of the 13th Five-Year Plan. In short, one of the virtues of an administrative, semi-planned economy is that price and policy can work in tandem. If the target for 40 to 45 percent of China’s energy mix in 2020 is to be low-carbon, businesses should expect to see pricing polices more clearly signaled.

If China wants to make a modest investment in soft power, it could consider contributing to the Green Climate Fund, which was agreed to in Cancun. The fund’s target is US$ 30 billion for 2011-12 and another $100 billion after that. China has said that it won’t contribute, and it’s under no obligation to do so. But a modest contribution could pay big dividends in terms of international goodwill.

Originally published in Caixin. Can be accessed at english.caixin.com/2011-01-21/100219608.html