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Hype or Hope?

There is enough common ground on the future of the planet to ensure continued US-China climate cooperation, argues Dr. Henning Stein.

The US and China have been engaged in a boom-and-bust cycle of mutual admiration and reciprocal fear for more than 200 years. Periods of benevolence and esteem have mixed with spells of disillusionment, disenchantment and even outright contempt.

On balance, the situation today is arguably nearer the latter end of the spectrum. After Donald Trump’s presidency brought a marked rise in tensions, culminating in a trade war and sanctions, Joe Biden has largely maintained the US’s tough stance.

Yet politics is one thing; the planet is another altogether. In the face of the climate crisis, the US and China are at least united by this much: they are the biggest polluters on Earth, and they are committed to doing something about it.

Although it might be hard to believe, the two have actually been collaborating on issues such as renewable energy for more than 40 years. Their efforts commenced in earnest in 1979, with the signing of the Memorandum of Understanding for Bilateral Energy Agreements.

The Energy and Environmental Cooperation Initiative, launched in 1997, aimed to take the pair’s fledgling partnership to another level. Involving multiple agencies and acknowledging concerns such as urban air quality, it explicitly linked the development of new energy sources to ecological safeguarding.

By 2006, under the US-China Strategic Economic Dialogue, the US’s Department of Energy and China’s Ministry of Science and Technology were meeting regularly. By 2009, following a Beijing summit between Presidents Barack Obama and Hu Jintao, climate change – described as a challenge “neither of our nations can solve by acting alone” – was steadily rising up a shared agenda.

The race to be green

The US’s withdrawal from the Paris Agreement undid much of this formative work. When an incumbent hegemon renounces its claim on global leadership, as the Trump administration did in rejecting the accord, it is only natural that the hegemon-in-waiting should try to fill the void.

The response from President Xi Jinping was unequivocal: the West is in decline, China is in the ascendancy, and Beijing should take the reins. His message applied not only to climate action but to world affairs in general.

It was left to Biden to reverse this narrative upon entering the White House, and nowhere was the turnaround more rapid than in America’s re-embracing of green policies. With the US’s return to the Paris Agreement quickly followed by a revised nationally determined contribution, environmental sustainability was placed at the heart of the new President’s infrastructure objectives.

Meanwhile, China unveiled an emissions-trading scheme of unprecedented scale and threw its weight behind proposals for a green taxonomy. It also pressed ahead with plans to require mandatory ESG disclosures from all listed companies.

Xi further proclaimed that the far-reaching Belt and Road Initiative would be “green, low-carbon, circular and sustainable”. In addition, China attained pre-eminence in sales of electric vehicles.

Both superpowers, then, might profess to be at the vanguard of humanity’s push for positive, lasting transformation – notwithstanding China’s controversial co-hosting of last year’s COP 15 UN Biodiversity Conference. Yet what remains to be seen is whether they will ever march in lockstep. Is this a sincerely concerted undertaking or merely a classic case of West-versus-East one-upmanship?

Jostling for position

In April 2021, amid the ravages of Covid-19, the US hosted a virtual summit on climate change. Xi’s participation appeared in doubt, but in the end he could not resist an opportunity to once again tout China’s environmental credentials – delivering a speech in which he acclaimed his country as “a trailblazer in global ecological conservation”.

Although this may be something of a stretch on current evidence, the prospect of China becoming a leader in this field should not be ruled out. The environment is now a strategic priority for Xi – and experience indicates any task the Chinese Communist Party (CCP) prioritises tends to be accomplished.

The drive towards the frontier of innovation is likely to be vital here. China boasts a prodigious talent pool, especially in the arenas of science and engineering, and is resolute in its support for tech.

For now, with coal clearly still crucial to short-term energy security and the CCP calling for patience, the goal is to achieve carbon neutrality by 2060. Yet it is conceivable that China’s journey to net zero could prove more accelerated than most.

For its part, the US has been keen to assert Western dominance in setting new technological standards. A firm front against China seems to be an essential element of this campaign.

Two years ago, for example, the US Senate passed the Innovation and Competition Act – a mammoth bill that authorised channelling hundreds of billions of dollars into research in areas such as renewable energy. A raft of further legislation intended to temper China’s ambitions continues to churn through the Capitol Hill wringer.

Politics versus the planet

Little of this suggests a hope-filled future in which US-China cooperation on the environment entails much beyond signing accords and taking part in occasional conclaves. It may be difficult to imagine, for instance, that the two would willingly share breakthrough climate-related technologies capable of handing either a substantial edge.

Of course, stranger things have happened. There was a time when the US and its then arch-foe, the Soviet Union, were locked in the Space Race; subsequently, following the collapse of the USSR, the ferocity of Cold War competition gave way to the cosy convenience of joint missions.

Yet China is unlikely to suffer an enfeebling, Soviet-style disintegration anytime soon. Moreover, the cause of globalisation as a whole has been in retreat for some years.

The Covid-19 pandemic and Russia’s invasion of Ukraine have only hastened the shift from peak economic interconnectedness. A possible outcome is the perpetuation of a bipolar world in which the US and China endure as the superpowers around which other nations must gather.

Alternatively, we could eventually see the emergence of a more multipolar geopolitical landscape. The conflict between the predominantly American model of decentralised innovation and China’s state-led charge towards the cutting edge is likely to intensify in such circumstances.

With all this in mind, where does the preservation of politics end and the protection of the planet begin? Are we set for a more terrestrial version of the Space Race or are the respective paths of the Eagle and the Dragon really converging through the prism of environmental awareness?

In search of common ground and firm foundations

In seeking grounds for optimism, we might usefully reflect on the role of crisis. As the pandemic illustrated, crisis invariably sparks invention and creativity – and also often serves as a catalyst for collaboration.

Both the US and China increasingly see climate change as a crisis that obliges an urgent and comprehensive reaction. So does it automatically follow that they will truly cooperate?

Encouragingly, the recent visit to Beijing by John Kerry, the US’s Special Presidential Envoy for Climate, has been credited with re-establishing a “bilateral climate hotline”. Further opportunities to reignite the spirit of partnership await at next month’s UN SDG Summit and at COP 28, to be held in November and December.

Even so, there is likely a long road ahead – and the US and China might well decline to travel it hand in hand. They might adopt a strictly limited approach to bilateralism. They might indulge in finger-pointing, virtue-signalling and even duplicity.

Yet maybe what matters today is simply that both recognise something needs to be done. By extension, both must surely accept their respective trajectories will intersect at some stage.

For now, not just as investors but as citizens, we should take comfort from the underlying fact that the two most powerful countries on Earth agree climate change must be tackled. Even in the absence of a genuine partnership, they will likely spur each other to ever more progress and compel others to follow their lead. In the final reckoning, frankly, anything else would be a bonus.

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