University of Alberta political economist Wenran Jiang calculates China spends three times the world average on energy — and seven times what Japan spends — to produce $1 of gross domestic product. It also is far more inefficient than nations like Brazil and Indonesia…Chinese steelmakers on average use about twice as much energy as Japanese or Korean rivals per ton of output. Only 5% of the country’s office and residential towers meet China’s own minimal energy-conservation standards.
That is from the 11 April Business Week, pp.50-51.
The price of oil has more than quadrupled since 1999, but the world economy has been affected a lot less than it was by the oil price shocks of the 70s and 80s, for the simple reason that industry around the world, with some exceptions, has become much more energy effcient. Unfortunately the rapidly growing Chinese one is one of these exceptions. We can only hope that Western technology transfers will help to bring them up to speed, to prevent the huge waste, and so that oil prices won’t rise to such heights that they would damage the world economy after all.
Looking at the bright side, the Chinese dependency on Western technology, and their general lack of efficiency, make them a lot less dangerous than they otherwise would be.
9 thoughts on “China’s lack of energy effiency”
The price of oil has more than quadrupled since 1999…
Actually, that’s not totally true. Some of the rise in the price of oil has been a natural consequence of the fall of the value of the dollar over the last few years. So it hasn’t gone up by a factor of 4 for Europe, because the Euro has risen relative to the dollar during that interval.
However, it has gone up by a factor of four for the Chinese because they have pegged their currency to the dollar — at an artificially low exchange rate.
I have faith in the free market in this case. As the price of oil rises the hundreds of millions of Chinese capitalists will quickly find ways to become energy efficient.
I don’t think China will remain dependent on Western technology for long. Pick up any recent technical journal and give a cursory glance to see how many Chinese names appear among the authors. Some of them live in the West, sure, but increasingly they are migrating back to China for work. And there will soon come a time when these advanced researchers start publishing only in Chinese, if we’re not there already.
Agreed, the high value of the Euro (as undeserved as it is) has served as a hedge against increasing oil prices.
Yes, they are increasingly going to come up with their own technology. Even so they won’t want to reinvent the wheel, so they’ll still have to import already existing Western technology in many areas.
“We can only hope that Western technology transfers will help to bring them up to speed, to prevent the huge waste, and so that oil prices won’t rise to such heights that they would damage the world economy after all.
Looking at the bright side, the Chinese dependency on Western technology, and their general lack of efficiency, make them a lot less dangerous than they otherwise would be. ”
See the contradiction? Dependency on Western technology only holds them back so long as we DON’T transfer the technology. Ditto for energy efficiency.
Ralf, thanks for the post. You wrote, “…they are increasingly going to come up with their own technology.”
Or steal it! Wichitaboy’s comment got me wondering if now wouldn’t be a good time to direct the WTO to enforce the body’s intellectual-property rights and patent-protection provisions.
This would indirectly enforce the technology gradients in the energy and environmental sciences that currently favor western economies. If our global competitors and geopolitical antagonists need that technology, let them as least buy it from us – at top dollar.
The CCP’s been stamping around like a furious child lately: fomenting anti-Japanese sentiment in government-sponsored protests, recent comments from an a PLA general threatening to go nuclear over Taiwan. A WTO citing might get the party to “refocus” a bit.
A more mature, cooperative China could partner with Japan and Taiwan to solve its efficiency deficit. When you work with your neighbors, the sky’s the limit!
Technology transfer takes them only so far – they don’t have the scientific and engeneering base that we gained when we developed the technology ourselves, and they only get what we vouch-safe fro them. Just enough to help them bring down their energy use to reasonable levels. And if they don’t behave, the transfer will be handled even more restrictively.
Stategy Page has this relevant post from Thursday called, China’s Thousand Grains of Sand. In it, the author, James Dunnigan writes:
At this rate, China will soon close the gap in technological advancement and efficiency, adding incentive to the West’s policy of liberalizing China’s political system. Except for in times of war or national emergency, only an over-arching, illiberal government would coerce its private citizens to work for the state’s intelligence-gathering apparatus.
Begging the question: is China at war with us?
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