Towards Clean Development

Necessity is the mother of invention. In the Asian countries where development is fastest and the attendant pollution most worrisome, new industries devoted to cleaning air, land, and water are sprouting. They attract government funds as well as local and foreign private capital. The world is entering a new stage of “clean development.” It is high time for Latin Americans to both understand and imitate the new Asian initiatives. Otherwise, they will miss a golden opportunity to move beyond the present commodities-driven growth into a more productive and sustainable future. In the current development train that gathers speed in the global South, Latin America should move forward from the caboose towards the locomotive of economic growth.The impressive development that is taking place in the two most populous countries of the world –India and China—is putting us in front of a great paradox. On the one hand, such development has pulled out of poverty some 400 million people in China alone. Soon millions more will escape the dire fate of misery in what was once called the Third World. According to the World Bank, between 1981 and 2001 the number of very poor people has dropped dramatically in East Asia.i This was not the case in Africa and Latin America, where both poverty and inequality have increased. Fortunately, their poor performance has not seriously upset the impact of the Asian progress. It is precisely the dizzying capitalist development of the two Asian giants that has allowed the world to attain the main target of the United Nations Millennium Development pledge.

On the other hand, the productive mobilization of the Asiatic masses leaves a carbon imprint that is extremely dangerous to the global environment. In 2000, during my first visit to China, I was told that the country proudly counted a new middle class that was 56 million strong. Today’s estimates are that, by 2039, the Chinese middle class will include 361 million people –more than the entire population of the US in 2008. Among city residents in China, the average per capita disposable income in 1978 was $46. In 2006, it was $1,404! In the countryside, disposable income moved from $18 in 1978 to $436 in 2006. By any measure, the progress has been spectacular. The same is happening in India. But what happens when these new middle classes start driving automobiles and turn on their air conditioners in the summer? It would be sad indeed to conquer poverty at the price of atmospheric pollution and the irreversible deterioration of the environment.

It would be a worthless victory for humanity and more like an ironic epitaph if it came to pass that our alleged “superiority” over other species collapses at the very moment of our evolutionary “triumph.” Should this occur, we would join the dinosaurs in the heap of vanished creatures, with one thing in favor of the dinosaurs: at least they were destroyed by an external and cataclysmic event (the impact of a large meteorite), whereas we would be the victims of our own folly, as dumb suicidal predators of the planet.

But we should not be afraid of paradox. The discovery of contradictions acts as a stimulus to creative thinking. Every historical process is driven by contradictions. Contradiction is the motor of development. We should search in the very process of contradictory development that is taking place in East Asia before our very eyes the kernel of a future and successful synthesis.

The future of China –and perhaps of the entire world—is being gestated in an island to the North of the great city of Shanghai. The name of the island is Chongming. It is situated at the mouth of a legendary river: the Yangtze, also known as Chang Jiang, which is the longest river in Asia. In Latin America, the equivalent site would be Belem do Para –a city at the mouth of the Amazon River that is known for its density, pollution, and poverty. A few years ago, the Chinese government chose Chongming as the site for an experiment in urban and rural development of the “clean” or “green” kind. The charge was to develop a settlement that would be ecologically autonomous, economically self-sustaining, and without collateral damage from industrial pollution and human waste. A company named SOM won the bid for the project and developed the master plan for island. The basic outline of the entire project can be seen at the following Internet site: http://www.som.com/content.cfm/an_island_in_the_sustainable_stream.

The projected city in the island is called Dongtan. It is scheduled to house some 10,000 inhabitants in 2010 and some 500,000 by 2040. From any point of view, the master plan seems like an environmentalist’s dream. Only one third of the island (with an approximate surface of 22,000 acres) will be inhabited. The rest is devoted to organic farming and managed wetlands. The energy will be provided exclusively from clean and renewable sources, to wit: wind turbines, solar panels, and bio-fuels. Inside the island, the main mode of transportation is bicycles and human traction. The island sports a network of bicycle paths and walkways. The few allowable vehicles will be powered by electricity and fuel cells. The population of the island will sustain itself from local farm products, local water, and locally generated energy. In short, it will not depend on long-distance transport of the necessities of modern life. The emission of noxious gases is null.

At first blush, this small experiment seems negligible in the vast context of Chinese society. However, it represents two very important things. First, it is a harbinger of things to come throughout China and the world in the decades ahead. The Chinese authorities, which form a government that is not democratic if judged by Western standards, have this advantage over Western politicians: they are better able to see ahead into the future. Their time horizon is longer than the next election. And what they see in the middle and long run is a developmental wreck unless they begin to tackle the environmental implications of economic growth. Their sponsorship of clean, green development is driven not by fuzzy dreams or opportunistic promises but by the cold and realistic calculus of national interest. To them, environmentally sustainable development is an imperative.

Second, a type of urban planning that is ecologically sustainable gives rise to a whole series of practices and products that can be marketed in their own right. The “clean industries” that China is developing on an experimental basis will soon become tradable goods, capable of being exported to other countries, or at least imitated by the latter. From the administration of Den Xiaoping onwards, China has shown the world that political centralization is quite compatible with market liberalization –first outside and then inside the country itself. Den’s famous formula “a cat may be black or white; if it catches mice, it is a good cat” expressed the pragmatism of the Chinese leadership and was the key to its extraordinary success.
In the more developed capitalist countries, whose economies are more agile but also more prone to cyclical ups and downs, a different sort of necessity is the mother of innovation. Today, on the verge of a recession that promises to be both deep and prolonged throughout 2008 and 2009, the United States is witnessing the retrenchment of some economic activities, while some other branches of the economy continue on a growth path. Among the latter I would mention health services, education, and energy. In areas, which are especially vulnerable to the economic downturn, like the state of Michigan (cradle of a declining automotive industry), a new industry of wind turbines and solar panels is in full swing. What in China is the product of state planning and pro-market coordination, in America is happening as the “natural” adaptation to the pressures of the economic cycle –a perfect example of what Schumpeter called “creative destruction.”ii

Despite this hopeful portrait of good things to come, as the Chongming experiment shows, the present overall reality of Chinese environmental degradation is grim. During my second visit to China I stayed for a week in Beijing and another week in Shanghai. During that fortnight only one day could I see blue skies and, to my surprise, the range of mountains nears the capital. The rest of the time, a thick haze hampered visibility and made breathing somewhat difficult. For one day only, the wind shifted and swept away the smog. The statistics I could gather lent support to my personal experience. China hosts 16 of the 20 most polluted cities in the world. 90% of the water used in Chinese cities is polluted and needs to be de-contaminated. In 2006 such efforts to clean up the environment entailed the expenditure of 200 billion dollars, or 10% of Chinese GDP. Worse yet, Chinese pollution goes well beyond the country’s borders. It is estimated that 40% of the air pollution in Japan and South Korea comes from China. Across the Pacific, the city of Los Angeles gets its share of Chinese pollution as well.

In short, the green city of Dongtan is not the norm in China. The reason is as simple as it is ominous: Chinese economic growth has accomplished in 20 years what it took the United States 100 to produce –both the industrial and the information revolutions in one sweep. As I have stated before, the positive side of this astounding achievement has been the reduction of poverty. But the productive incorporation of the poor into Chinese society now demands urgent action to stabilize the environment. The central authorities are well aware of the dilemma. Without massive and intelligent intervention, the environmental crisis can produce an economic catastrophe. In a matter of months, 1.3 billion human beings could be deprived of clean water to drink, to use in industry, and to water the crops. In the old days, many an imperial dynasty was swept away by a crisis in the old irrigation system. As the ancient sages used to say, “it lost the mandate of Heaven.” History may repeat itself, unless new technologies are applied to all activities. The new marching order in China is no longer “the great leap forward towards communism” but “let us embark upon clean development.” Public investment in the sector is huge, and there is a commensurate large flow of private capital, venture and otherwise, to green technologies and eco-friendly human settlements. Soon China will export not only sneakers, but integrated ecological systems as well. Here is a piece of good news: the Natural resources Defense Council (an American organization) is already collaborating with the Chinese government in processes of water purification and air pollution control.

The environmental revolution is well under way. In China, the same strategy is applied today that was used several decades ago by Mao’s successor, Den Xiaoping. In those days, the government declared certain areas of the country “free market” zones. National and foreign capital flocked to them, and the great capitalist experiment began, which later flooded the rest of China with all sorts of dynamic industrial centers. Today, Den’s successors are applying the same strategy to “green” development. Western venture capital is already active in funding eco-friendly initiatives. Such capital infusion grew by a whopping 147% between 2005 and 2006. The leading sector is the production of wind turbines, and the principal investors come from the United States.

The opportunities for collaboration between Chinese and foreign enterprises have multiplied. These green industries will first cater to the Chinese internal market, by replacing the extensive use of coal, and will then leap to global markets, which are avid for new solutions. As an example, last year China already sold solar powered water heaters for a total of 2.6 billion dollars. China is also the leading world producer of solar panels. There is not a single sector of the Chinese economy that does not receive large funds (mostly from the state) to clean the productive processes. The next goal is the construction and retrofitting of “green buildings”, an area where China lags behind Japan and the US. As in many other countries, in China too the central government is well ahead of provincial governments in sponsoring green initiatives. Local authorities are often so eager to attract investments that they are often lax in the enforcement of environmental regulations. But the overall lesson is loud and clear: China has entered in full the era of clean development.

Will Latin America learn from the Chinese example? Latin America is riding the bandwagon of global growth from the caboose of rising commodity prices. But how long will these last? It is high time to take advantage of these “good times” to prepare for a sustainable, diversified, and productive future. This future is dawning in East Asia, which shows to Latin America that growth is something more than the occasional byproduct of “luck”: in the long run, it is a function of proper development, which means foresight, investment, productive re-organization, and education, education, and more education –the true locomotive of progress.

Notes:

i. See the World Bank Report “Global Economic Prospects: Managing the Next Wave of Globalization,” Washington, D.C., 200.7

ii. In 2007 American venture capitalists invested 3 billion dollars in 221 companies that produce green Technologies, from solar panels to infrastructure systems to support electric cars. The sum represents a 43% increase over the previous year.

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