Monday, March 9, 2009

China's Green Stimulus, US/China Cooperation and Economic Recovery

The US and China are investing a large portion of their respective economic stimulus efforts in Green as are many of the worlds largest economies. Last Wednesday, markets rallied on speculation of a new Chinese stimulus. However rather than announce new government spending, Prime Minister Wen Jiabao, promised to combat corruption and provided details of China's blueprint for its US$585-billion ($908 billion) stimulus.

As reported by NRDC, "China disclosed a 4-trillion-yuan (US$585 billion) package that designates at least 350 billion yuan (US$51 billion) for biological conservation and environmental protection. Moreover, China’s Ministry of Environmental Protection (MEP) has announced that the stimulus will 'not be spent in the energy and resource-intensive industries or high-pollution industries' and will benefit the renewable energy and pollution-control industries."

This Chinese Green stimulus plan, originally announced last November, was joined earlier this year by similar government initiatives elsewhere in Asia. Japan and the Republic of Korea announced that they will invest billions of dollars in Green projects to create jobs and spur economic growth. Some have interpreted this as evidence that the United Nations 'Green New Deal' is gaining momentum.

As reported by China Green Space, a recent Natural Resources Defense Council (NRDC) report provides evidence of this greater cooperation between the US and China. The report is a recapitulation of similar reports issued by the Brookings Institute and the Asia Society. These reports indicate that both the US and China share the common objectives of creating Green jobs and expanding the use of Green technologies.

This crisis provides a powerful justification for Washington and Beijing to coordinate the Green components of their stimulus packages. The NRDC report suggests the US offer technical assistance to help China to accurately report its greenhouse gas emissions. Beyond more accurate environmental monitoring and reporting, US cooperation with China implies greater supervision, transparency and enforcement.

China View reports that Chinese stimulus efforts are already paying off, according to information released at two ongoing annual political conferences, there are "some signs of a return to stability and warmth" of the Chinese economy. The two Chinese conferences are the Second Session of the 11th National People's Congress (NPC) and the Second Session of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC).

"Reuters said China's economic leaders struck a note of quiet confidence at a press conference that the economy is already reviving in response to swift action to counter the shock of the global financial crisis." "The economic figures are stabilizing and recovering, which demonstrates that the policies have begun to show an impact," a Reuters report quoted Zhou as saying. Japan's Kyodo News also quoted Zhou as saying that China's efforts to combat the impact of the global financial crisis is taking effect. With regard to the detailed effects of the economic stimulus measures, the German Press Agency (dpa) quoted Zhang Ping as telling reporters that "there are already signs of recovery, including a rebound of consumption, investment and some product prices." Financial Times Deutschland said China's Purchasing Managers Index (PMI) in the manufacturing sector rose to 49 percent in February, the third monthly increase in a row since December 2008.This indicates China's economy is probably on the threshold of consecutive recovery and the government's big stimulus package is taking effect."

Francisco Encina, president of Chile's Deputies Chamber said "New decisions to be made during the ongoing sessions will not only guide the development of China's economy, but also have a profound impact on the world. Sustained growth in China will be of vital importance to the world economy and trade, and China's efficient and responsible economic stimulus measures will be a powerful backup for the world's ailing economy, he said. The annual meetings are crucial and may be a "catalyst" to speed up the recovery of the troubled world economy."

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