Russia, China and Future Growth

Ten years ago conventional business wisdom was that if you had to make something you moved the production to China and invested (directly or indirectly) in production facilities in China. Today the position has almost reversed. Production in China has been so profitable that Chinese businesses are encouraged and urged to invest their profits in business in the United States, the European Community and other parts of the world. The Chinese economy has transformed from a branch of the western economy to an economic centre in its own right.

In order to fuel this economic growth China has built many coal power stations as well as investing in all kinds of renewable energy, from solar water heaters to wind farms. You cannot achieve the kind of economic growth that China has achieved without the collateral environmental damage. It is ironic that the environmental damage occurred when the Western Democracies were nominally obsessed with environmental protection, enacting numerous laws in efforts to protect the environment, and dominated their rhetoric with talk (and not much else) about climate change.

Recent politics have isolated Russia from the Western Democracies, who have attempted to impose some kinds of economic sanctions on Russia to punish Russia for its political actions of which the Western Democracies greatly disapprove. As a result Russia has sought to protect itself from sanctions; as Russia’s important resource is its natural gas, it has now agreed with China to supply 39 billion cubic metres of gas a year to China. Thus as a result of Western economic sanctions Russia has found a new and growing and (in economic and political terms) more reliable market for its natural gas and this will economically profit both Russia and China. It will also mean economic growth in both nations and environmental damage  at greater levels than if Russia continued to supply Europe as its main market because  China is relatively free from enforcement of environmental protection regulations.

It is clear that we can chose between environmental protection and rapid economic growth. For most the choice is a no brainer; economic growth and the prospect of wealth, luxuries, toys and the like wins over an undefined prospect of devastating the place where we live. It is not that humans are bad people, they simply prefer to live in the present, expecting that the future will take care of itself.

 

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