How China’s slowing economy could help battle climate change

When economic historians look back on the first 15 years of the 21st century, here’s the headline: China built a lot of stuff and most everyone else bought that stuff.

Last summer though, that model looked like it was crashing to a halt. The Shanghai Stock Exchange plunged sharply, pulling down markets across the globe and creating a panic among investors.

It was stunning and scary to many, but economists who follow China’s economic growth weren’t caught off guard.

“We always knew that was not going to be sustainable for the very long term,” says Robert Kahn, a senior fellow for international economics with the Council on Foreign Relations.

China’s economy had been growing by 10, 12, even 14 percent in recent years. Over the next few years, Kahn expects China to grow at closer to 5 or 6 percent annually, similar to forecasts from the International Monetary Fund.

“Now to you and me, that’s still a very good number,” says Kahn. 

Many environmentalists also say it’s a better number for the planet.

“The take-make-waste model that we have at the moment in our economy — you manufacture something, you throw it away in landfill — it’s not going to be what’s going to work for the rest of this century. It can’t be, because we’re running out resources and it will result in dangerous climate change,” says Jamie Plotnek with The Carbon Trust, a London-based organization that helps governments and businesses transition to a low-carbon economy.  

Climate change has been made more dangerous by how China builds things for the rest of the world.

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A team of researchers recently quantified the environmental costs — the carbon dioxide emissions — in manufacturing 15 products in China.

“And what we show, the difference between making them in Europe and China is large,” says Laura Diaz Anadon, an assistant professor of public policy at Harvard’s Kennedy School of Government and visiting senior lecturer at the University College, London.

“So on average, emissions per unit mass of each product are 4.4 times greater in China than if you make them in the EU.”

There are a few key reasons for this. First, China relies heavily on coal as its primary energy source, which produces a lot of greenhouse gasses. (China is committing to reducing its reliance on that fuel source.) Second, Anadon says China tends to use equipment that is less energy efficient.

Now, it would be easy at this point for an environmentalist to say, OK, I’ll just buy less stuff made in China. Easier said than done. Consider your refrigerator — there’s a lot of parts making it go. Anadon’s research focuses on the parts inside made from copper, steel, and iron, the early part of the supply chain.

“In terms of the consumer, I think it is actually quite hard to know what you should buy,” says Anadon. “If you were able to find out, this is made from copper made in China, or something like this, than you would know that this product has a component that has a very high carbon intensity.”

“It’s an incredibly difficult question for most consumers,” says Jamie Plotnek with The Carbon Trust.

He says consumers can minimize their carbon footprint by doing things like buying a smaller car, rather than an SUV. But with most products it’s really up to manufacturers to build smarter.  

“And that might involve, for example, a more circular approach to manufacturing where companies will design products that are supposed to be remanufactured,” says Plotnek.

“You’re already seeing this now where companies, particularly in the automotive industry, are looking at remanufacturing engines and gear boxes. Then you don’t need to extract the same metals again. You can extract the economic value from that waste so actually it can be better for those companies.”

Besides manufacturing smarter, China may also be moving toward manufacturing less, transitioning to a different type of economy.

“That transition, or what we’ve been calling a rebalancing, meant shifting away from a manufacturing-driven model to one that was more consumer based, more oriented towards retail and financial services and the like,” says Robert Kahn.

Kahn says this transition should take 5 to 7 years and will also reverberate to countries that supply China’s raw materials, places like Brazil and Australia. The climate crisis is also forcing these countries to rethink how their economies grow.

Add it all up and the headlines about the next phase of globalization could read very differently.