In the 1980s, Deng Xiaoping famously articulated the ‚Äú24-character strategy,‚Ä̬†in which he suggested that China ‚Äúkeep a low profile‚Ä̬†(tao¬†guang¬†yang hui, or¬†ťü¨ŚÖČŚÖĽśô¶) and¬†‚Äúnever claim leadership.‚Ä̬†This status quo strategy informed China‚Äôs foreign policy for decades and became the cornerstone of¬†its¬†political thought¬†throughout¬†the¬†20th¬†and¬†early¬†21st centuries.¬†That is¬†why¬†President Xi¬†Jinping‚Äôs impassioned defence of¬†globalization, free trade¬†and liberal economic institutions at the World Economic Forum in Davos in¬†January 2017¬†surprised both domestic and foreign audiences.¬†Xi‚Äôs speech¬†staked out¬†China‚Äôs position as a global political power and indicated a new, perhaps more assertive international role for¬†its leadership. Similarly,¬†Xi‚Äôs declaration¬†at Davos¬†that China would uphold the Paris climate accord,¬†in spite¬†of¬†the United States‚Äô¬†withdrawal¬†from it,¬†represented¬†an unusually¬†forceful¬†style of¬†international¬†diplomacy¬†for¬†Chinese¬†leaders.¬†¬†

This assertive approach to climate governance has not been confined to rhetoric: in the last few years, China has undertaken significant reforms, at both the international and domestic levels. At the Paris negotiations in 2015, China committed to reducing its reliance on coal-fired power plants and to hitting peak carbon emissions by 2030. Also in 2015, the central government announced a regional cap-and-trade emissions pilot program in two provinces and five cities, which led to the establishment of a formal emissions-trading scheme, involving six major industrial regions, implemented in 2017.  

While it is indisputable that China is actively engaged in climate reform, are these reforms evidence of international leadership?  

To be effective, cap-and-trade systems require two¬†things: transparent carbon accounting and credible enforcement. While the Chinese government has made great strides¬†in¬†generally improving¬†its¬†environmental transparency,¬†a¬†credible data collection¬†system¬†is¬†a long way¬†off: much¬†of Chinese industry is¬†not very effectively¬†regulated, particularly outside of urban centres¬†like Beijing.¬†And enforcement¬†of¬†environmental¬†regulations¬†has long been¬†problematic¬†for¬†the central¬†Chinese¬†government, particularly¬†as¬†it¬†involves¬†different levels of administration.¬†The ‚Äúwar on smog‚ÄĚ in Beijing¬†received much attention this year, but the¬†government appears to have¬†engaged¬†in a process¬†where¬†heavy industry¬†is¬†simply¬†moved¬†away from the city,¬†rather than being shut down.¬†¬†

Cap-and-trade systems have long been criticized as¬†being¬†ineffectual¬†as market¬†mechanisms for emissions¬†reduction. In 2016, the¬†International Monetary Fund¬†published a¬†working paper¬†¬†in¬†which¬†it¬†attempted to steer China away from cap-and-trade toward¬†a national price¬†on carbon.¬†If¬†a¬†carbon¬†tax were¬†directly¬†applied¬†at the point of extraction or refining, a national carbon price would more effectively¬†capture¬†the amount of¬†carbon emitted in both regulated and unregulated industries. However, China has instead chosen to adopt a hybrid¬†strategy¬†that¬†is a combination of¬†the¬†market approaches used¬†by the United States¬†in¬†the 1980s in its¬†acid rain reduction program¬†and the cap-and-trade scheme used by the European Union.¬†Since¬†the¬†failure of the¬†Kyoto Protocol¬†is widely¬†put down to a poorly enforced cap-and-trade scheme¬†‚ÄĒ¬†states ‚Äúgamed the system‚Ä̬†with¬†opaque carbon accounting and poor enforcement¬†‚ÄĒ¬†it is¬†difficult¬†to see¬†how¬†the adoption of that¬†strategy¬†in China‚Äôs case¬†could¬†be considered¬†international¬†leadership at all.¬†¬†

Earlier this year, China announced it would introduce a cap-and-trade system in its auto manufacturing sector: 10 percent of domestically manufactured vehicles would have to be low- or zero-emissions vehicles. However, in September, it changed course and announced that the cap-and-trade system would be put on hold to allow the industry to adequately prepare for the new regulations. Given that the Chinese power grid is still heavily reliant on coal-fired power generation, and that using more electric cars would not necessarily result in a net reduction in carbon emissions, this general acquiescence to industry on China’s part hardly demonstrates a new commitment to emissions reduction or to increasing its international leadership.  

However, China¬†should not¬†be held to a higher standard than¬†are¬†other¬†developed countries.¬†Canada‚Äôs fragmented climate strategy¬†and uneven carbon pricing, in which provinces submit their own approaches¬†to emissions¬†reduction, has been widely criticized as¬†being¬†inefficient and¬†ineffectual.¬†Considering that¬†Justin¬†Trudeau‚Äôs¬†government has¬†said¬†climate governance and emissions¬†reduction are strategic priorities for Canada,¬†our approach to climate governance is hardly innovative or¬†rigorous.¬†Likewise, the United Kingdom¬†committed to an 80 percent¬†emissions¬†reduction¬†by 2050 in its¬†Climate Change Act; however, projections suggest that a 100 percent¬†reduction in¬†emissions¬†by 2050¬†will be required¬†if Britain is to¬†meet its¬†obligations under the Paris Agreement. Given that¬†the¬†global¬†North¬†historically contributed¬†much¬†to the accumulation of carbon emissions¬†in the atmosphere today,¬†perhaps¬†these countries¬†should be doing more.¬†China is in good company with its ‚Äútoo¬†little,¬†too¬†late‚ÄĚ climate strategy.¬†¬†

Nevertheless, while the global North has contributed to global emissions for much longer, China has been the largest carbon and greenhouse gas emitter for over a decade. Xi’s newly articulated commitment to an ineffectual market-based mechanism that has been half-heartedly used by the other industrialized countries for decades is hardly evidence of leadership. It seems that China is not an innovator but rather a defender of the old guard.

Photo: Shutterstock, by kentoh. 

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Michaela Pedersen-Macnab
Michaela Pedersen-Macnab is a policy researcher in the China Institute at the University of Alberta. She completed a research fellowship in Zhengzhou and Beijing in July 2017.

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