China's carbon footprint

What's the role of the small Chinese middle class in driving China's carbon footprint?

David Gray / Reuters / File
A coal-burning power plant can be seen behind a factory in the city of Baotou, in China's Inner Mongolia Autonomous Region, Oct. 31. China's $736-billion push to harness nuclear, wind, solar and biomass energy hinges on making the cleaner fuels competitive with cheap and CO2-intensive coal without derailing surging industrial growth.

David Leonhardt has increased his carbon footprint to study Consumption in China. If David had asked me to co-write this long article with him, I would have suggested that we focus on a couple of families and look at their actual consumption patterns. I know some very successful academic economists in Beijing. By U.S standards, they live a middle class life as they live in a small apartment that is modestly furnished in a high rise tower that shares a little bit of green space with several other towers. They own a small car that they drive infrequently.

These successful academics save their salaries for several reasons. They are unsure of what retirement pension they will receive. They are unsure of what health benefits they will have access to. Anticipating a long life, and that they may have to care for their parents, they are saving for their future. If the Chinese state used its capital account surplus to offer a FDR New Deal of Social Security and LBJ Medicare and Medicaid then I bet you would see Chinese households save less and consume more goodies and plasma TVs today.

In David L's piece, he talks about high home prices in the superstar cities and this certainly encourages savings today but this raises the question of why "2nd tier" cities are not booming? In the United States, cities such as Phoenix and Las Vegas exploded in growth because of their cheap housing! People cashed out their small San Francisco home and bought something real nice in these growing, cheap land cities. Why isn't the same thing happening in China? Is government policy acting to "force" urbanites to live in the eastern coastal cities? Why aren't free market forces encouraging decentralization and the push of jobs and people to cheaper land cities?

If the equivalent of a Las Vegas could grow in China, then households would have more $ after housing to spend on consumption stuff and the U.S might have a new export market?


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