International Consultants Ltd

1
Andrew Leung

• International Consultants Ltd

A Sustainable China in a Turbulent
World Survival, Adaptation and
Transformation
Andrew K P Leung, SBS, FRSA
A presentation for the TOChina Program
University of Turin, Italy

Wednesday, 5 May, 2010
2
Stage is set in 21st Century

• The World is Flat, Thomas Friedman, 2005
  Walmart Just-In-Time UPS 2 world GDP across the
  globe internet sans frontiers (Facebook,
  Twitter,LinkedIn etc)
• Global value chain migration (Rolls Royce 60
  research and 70 components) creative
  destruction and world competition (Bear outside
  your tent)
• Communist Manifesto, Karl Marx,expanding
  markets over the entire surface of the globe
  ,,,,, new wants products of distant lands and
  climes universal interdependence of nations
• Power shifts into individuals - Cosmocrats
  A Future Perfect The Challenge and Hidden
  Opportunities of Globalization, John Micklethwait
  Adrian Woodridge, 2000
• Three Billion New Capitalists, Clyde Prestowitz,
  2005
• Future profits lie in scale, knowledge,
  creativity, technology and brands - 1 profit DVD
  player 1.65 value of iPod, Google becoming
  worlds most profitable
• China launched Going Global strategy 2001
• Globalization and Its Discontents, 2002 Making
  Globalization Work, 2006, Joseph Stiglitz The
  Theory of Moral Sentiments, Adam Smith
• Global Financial and Economic Crisis and Rising
  Protectionism

3
The swing of the global pendulum

• National Intelligence Council Report Project
  2025
• US leadership capacity weakening (EU fractious) v
  rise of BRIC ME
• New developing countries alliances e.g. ASEAN
  3, SCO pose challenge to old-styled UN, IMF, WB
• Global industrialization - geopolitics and
  geo-economics of energy, food, water and climate
  security
• Struggle for development in failing states Arc
  of Instability
• Chinas dramatic growth Beijing Consensus set
  to play a key role in new world order
• Emerging Markets lead contributers to world
  growth China 27 v US 21 to growth DCs 15 v
  US/EU_at_23 world GDP)

Emerging Markets lead contributers to world
growth China 27 v US 21 DCs15 v US/EU_at_23
world GDP)
4
Some New Power Brokers

• Foreign assets (T) MGI, July 2009
• 2007
  2008 2013(est)
• Pension Funds 30.4 25
• Mutual Funds 26.2 18.8
• Insurance assets 18.9 16.2
  
• Oil Producers 5.1 5
  8.9 13.2
• Asian SWFs 4.35 4.76 (!)
  7.5 8.5
• Hedge Funds 1.9 1.4
  1.5 2.4
• Private Equity 0.906 0.938
  1 1.2
• 
  
• (!) Increase virtually all due to China
• Total 4.5b _at_day

Net capital outflow from surplus countries
(b, 2006) (Mckinsey Co)
1995 2006 Oil
producers 35 484 East
Asia 133 446 West
Europe 110 308
Rest of World 4 81
____
___ 282
1319
5
East Asia dynamics re-defined

• (When China Rules the World, Martin Jacques,
  2009)
• Complex supply chain centred on China
• ASEAN 3 ACFTA (largest FTA with 2b people)
  2003 Treaty of Amity Cooperation Chiang Mai
  Initiative (currency swaps)East Asia FTA
  Asian Monetary Fund ASEAN 6
  Process-oriented Constructivism (Socialization of
  Power Influence without Authority) Qin Yaqing
  Wei Ling, in Chinas Ascent, Cornell University
  Press, 2008)
• China now South Koreas largest trading partner
  Singapore Philippines Thailand all closer to
  China (all formal US allies)
• Intra-NE Asia trade (China, Japan, Taiwan 2
  Koreas) 52 total 5, ASEAN imports 30-40 p.a.
• 4 x US aid to Philippines 2 x Indonesia far gt
  US to Laos, Cambodia, Myanmar (Chinese navy
  access to Indian Ocean)
• Increasing Mandarin learning Chinese tourists
• Australia double benefit rising resource export
  and cheap imports
• Taiwan more accommodating
• Japan - Manufacturing trade gt US, influence lt
  Japanese nationalism

6
Africa becoming more China-centric

• (When China Rules the World, Martin Jacques,
  2009)
• FOCAC 2006 Beijing (48 countries 2007-9 Action
  Plan 5b Development Fund, 5b preferential
  loans credits schools, hospitals, professional
  training etc )
• Chinas share of Africas export of selected
  commodities
• Crude Oil
  Metals Wood Cotton
• Angola 100
• Sudan 98.8
• Nigeria 88.9
• Congo 85.9
• Gabon 54.8
  42.3
• DRC
  99.6
• Ghanna
  59.8
• SA
  46.5
• Cameroon
  39.7
• Tanzania
  24.3 53.8
• Africas 3rd trading partner (US, France) gt UK
  soon 1st
• Africa gt 30 of Chinas total oil imports
• Angola gt Saudi Arabia as Chinas largest oil
  supplier (15)
• More direct flights Africa/China gt few Africa/US

7
Threshold of Chinas Renaissance

• (When China Rules the World, Martin Jacques,
  2009)
• Ranking of economies (Goldman Sachs, 2007)
• 2025
  2050
• 1. US (20T) China
  (70T)
• 2. China (18T)) US
  (38T)
• 3. Japan (5T) India
  (38T)
• 4. India
  Brazil
• 5. Germany
  Mexico
• 6. Russia
  Russia
• 7. UK
  Indonesia
• 8. France
  Japan
• 9. Brazil
  UK
• 10. Italy
  Germany
• 11. Mexico
  Nigeria
• 12. Korea
  France
• 13. Canada
  Korea
• 14. Indonesia
  Turkey

• Already EUs and Japans largest trading
  partner leading in SE Asia and Africa Latin
  Americas 2nd largest trading partner by 2010
• Peoples satisfaction - China 72, UK 44, US
  39, France 28, Germany 25 etc
• gt 40 m Chinese Disapora
• All roads lead to China ? - Pax Sinica?

8
Grand Design v Dengs caution

• Grand Design nationalism,????? (Unhappy China)
  2009
• Global Realities, Risks and Constraints
• Internal
• Inequalities, 5 Imbalances, Corruption, Rule of
  (gt by) Law, Governance, Checks and Balance,
  Environment, Ethnic Harmony, Aging (4-2-1)
• Population Burden now _at_ GDP lt 100 countries,
  2025/50 _at_ GDP gt Turkey 2050 5.4 (86.4m) of
  projected 1.6 b population still in farming
• External
• Global military reach, energy and resources,
  technological gap, creativity and innovation,
  financial expertise, ideas and values, global
  institutions, conflict with Western norms
• Dangers and Opportunities of Power Transition
  Institutionalized International Order gt Security
  Dilemma - Chinas Ascent Power, Security, and
  the future of International Politics, Robert S.
  Ross Zhu Feng (Editors, Cornell University
  Press, 2008) Chinas Rise Challenges and
  Opportunities, Bergsten, Freeman, Lardy, and
  Mitchell, Petersen Institute and CSIS, Washington
  DC, 2008
• Dengs 28-word caution ????,????,????,????,????,
  ???? (in line with conclusions of ???? Study
  Project Neoliberal Defensive Realism, Tang
  Shiping, in Chinas Ascent, Cornell University
  Press, 2008)

9
How Open is Chinas Economy?

• Open economy- Closed society? No Pepsi in
  Danone, CocaCola v Huiyuan (Anti-Trust?),
  Diageo v Shui Jing Fang ???
• Trade 75 GDP (v US lt 40, Japan, India,
  Brazil 25 35)
• Chinas foreign trade growing faster than GDP
  over past 25 yrs
• FDI 90b, first amongst developing countries, 3rd
  largest in world
• Massive IPOs - BoC (9.7b), ICBC (21.9b),
  Alibaba (1.5 b, largest Internet IPO v Google
  Sinopec (7.3b 100 Swiss Addax Petroleum 2009
  China XD Electric (1.5b largest 2010) global
  IPO 5.6 b Jan 2010 (only 72 m, 2009) - 4.5 b
  or 79 by China.
• Private sector 70 economy (Hu Angang)
• Growing consumption Retail 800 b (2006) lt only
  US, Japan, gt rest of Asia. 30 global retail
  growth 2003-8, 1.3 T by 2012 Worlds largest
  car market (13.5 m v 10.9 m in US), 48.7m v 250 m
  cars in US. 2009 best selling BYD Multi-hybrid.
  Most buyers households lt mileage (Why gasoline
  consumption doesnt gel!)
• FDI policies -SEZs, tech parks distort market
  (China Daily 27.2.08 )
• States Visible Hand RMB, exchange control,
  SOEs ( Big Four Banks 34.5 total lending)
  macro-adjustment policies. Total loans fell 22
  to RMB7.5 T v 95 2009, moderating M2
  expansion to 17 2010 v 28 2009. Budget
  deficit to be 2.9 GDP 2010, v 2.4 last year.
  Target GDP 8 2010 v 8.7 2009
• TFP (inc Tech Efficiency) 4 p.a. v1990 fastest
  in world history (UBS report 2009)
• Unstable, Unbalanced, Uncoordinated, and
  Unsustainable 17TH Party Congress, Premier Wen,
  15.03.07. (5 Imbalances Regional, Environmental,
  Social, Central-Local, Outward )

10
Adam Smith Too little or Too much?

• (Mckinsey Quarterly, 2006) except
• China GDP Lending Financial stock
• SOE Private Bank
  deposits Equity GDP 23
  52 US 19
  34 Lending 35
  27 China 72
  15
• Equity GDP Corporate Debt
  GDP
• US 139
  US 145
• China 17
  China 1
• Public Debt GDP Household Debt
  
• US 60 (105 by 2012) US
  140
• China 18
  China 14

11
The Triffin Dilemma

• Article by Zhou Xiaochuan, Governor, PBOC
• 1960s USD glut (Marshall Plan exuberant US
  economy) led to abandoning the Gold Standard
• Triffin Dilemma Conflict of Goals or Interest
  between national v global monetary requirements
• Reinforced SDRs to be managed by IMF supported
  by a pool of currencies SDR-denominated
  securities and assets SDRs as medium of
  international trade
• Unlikely to materialize anytime soon but apparent
  support from
• Benn Steil, Director of International Economics,
  US Council of Foreign Relations
• Joseph Stiglitz, Nobel Prize laureate and head of
  UN Panel
• Jeffrey Sachs, Professor of Columbia University
  and Special Advisor to UN Seccretary-General
• Dominique Strauss-Kahn, Managing Director, IMF
• Brazilian President
• Russian Presidential aide
• Subject to Voting Rights adjustment, China
  willing to assume more proactive IMF role (a) to
  help regulate global finances (b) to address the
  Triffin Dilemma (c) to help protect Chinas USD
  Savings (d) to build up the RMB as an
  international currency for eventual
  convertibility

12
Getting out of the US Dollar Trap

• The USD Trap (Paul Krugman, Nobel Prize laureate)
  
• Zhou Xiaochuan, Governor, PBOC hinted at
  unofficial USD peg being temporary (FT
  6.03.2010)
• Three Ways out of the USD (Nomura, 5 March 2010)
• (1) Incremental Diversification out of US
  Treasuries (Dec 2009 foreign-held UST dropped
  53b of which 34.2 due to China)
• (2) Reducing current account surplus (gradual
  RMB appreciation, more imports, more
  consumption, outward FDI (inc SWF) especially in
  resources e.g.
• Aluminum Corp of China (Chinalco) 19.5 b in Rio
  Tinto
• 25 b loan for 15 m tons crude for 20 yrs with
  Russias Rosneft and Transneft
• 10 b loan for oil deal with Kazakhstan
• 10 b Sinopec deal with Petrobras (20.5.2009)

13
MegaTrend 1 Massive Urbanization

• McKinsey Global Institute (Preparing for Chinas
  Urban Billion, March 2008)
• 1 b urbanites by 2025, 350 m in 221 cities each
  gt 1 m population (EU35)
• 15 super-cities each gt 25 m population
• 11 hub-and-spoke conurbations each gt 60 m
  population
• Westward Ho! Most new urbanization to spawn in
  currently-less-developed central, north-east and
  western provinces
• Concentrated mode of urbanization projected to
  save 35 of carbon footprint and 2.5 GDP in
  government expenditure
• A YouTube snapshot
• http//www.youtube.com/watch?vcBqsSrPhyz4
• Global implications resources, business
  opportunities, experimentation, civil society

14
MegaTrend 2 Rapid Mobility

• Extensive inter-provincial highway network 2nd
  only to US Interstate in 17 years
• Railway (6 of world total length, 25 total
  traffic) to increase from 78,000 km to 100,000 km
  by 2020 (worlds largest railway expansion since
  19th century)
• More city conurbations to be linked by integrated
  transport infrastructure e.g. 1.64b
  sea-spanning bridge over Hangzhou Bay linking
  Shanghai to Ningbo and other cities in the
  Provinces of Zhejiang and Jiangsu with a combined
  population of 72.4 million
• Global implications rapidly developing Chinese
  middle-class, changing lifestyles, vast supply
  chains

15
MegaTrend 3 Rise of the middle-class

• Combined urban disposable income of _at_annual
  household income gt RMB 100,001 to 200,000 to grow
  from 0.1 of total 2005 to 36.4 by 2025 (Serving
  the New Chinese Consumer, The McKinsey Quarterly,
  2006 Special Edition).
• Largely come from 100 m single-child
  generation, inc post-80s, post-90s, and 21st
  century new-comers
• Luxury goods sales already 12 by value of
  worlds total, to grow to 33 by 2015
• Car ownership to expand from 11/1,000 towards
  world average 120/1,000 (ltUS 500/1,000) 500 m
  cars by 2050 (Goldman Sachs)
• Young entrepreneurs to jump from current 300,000
• Average 50,000 USD millionaires to be added
  annually
• A more consumer-oriented economy emerging in
  coming decades
• Global implications reducing over-reliance on
  exports, mitigating economic imbalance with the
  US.

16
MegaTrend 4 Largest moderate-income economy

• China gt US by 2027/28 and gt by 75 by 2050 (when
  India US) (Goldman Sachs, The Economist,
  30.6.2007)
• Chinas _at_GDP ranks lt 100 in the world some
  poorest countries in Africa. By 2050, _at_GDP
  middle-income nation in Asia or Eastern Europe
• Aging population profile ( gt 30 to be aged 60 or
  over by 2050) Subsidized voluntary basic pension
  plan for rural population to grow from 60 in
  2010 to 80 by 2015
• Legacy of One-Child Policy, 4-2-1 phenomenon,
  relaxed if both parents single children, likely
  to be relaxed further
• Still gt 100 m with lt 1 a day v 800 m such in
  1978. Poverty to shrink significantly in coming
  decades
• Global implications China will get old before
  getting rich. Needs a benign internal and
  external environment to consolidate an economic
  foundation to face social and financial burden of
  a looming aged profile

17
MegaTrend 5 Quiet Green Revolution

• Green Great Wall 4,480 km forestation absorbing
  8 or 500m tons emissions p.a.- 20 or 1 b tons
  absorption by 2010.
• Small coal-power plants of lt 10m kW capacity
  closed by 2007. Most of lt 50m kW likely to be
  cleared or expanded within a decade.
• To invest 2.3 trillion in energy development
  2001-30, inc 200b to increase renewable energies
  from 8.3 to 10 of primary energy by 2010 and
  15 by 2020, 7 to 10 p.a. by 2010 and 20
  p.a. by 2020, inc hydro-electric, nuclear,
  coal-seam gas, biomass, wind, solar, terrestrial
  heat and wave energies (IEA)
• Hydro-electric power worlds first in installed
  capacity 145 m kW and 482.9 billion kWh power
  generation
• Total of 110 million square meters of solar
  panels by far the worlds largest
• Wind power has increased 7 x to gt 6 m kW, 5th
  largest
• 2 nuclear power stations p.a. for the next 15
  years.
• BYD, (Shenzhen) introduced 15.12.2008 worlds
  first mass-produced plug-in hybrid electric
  vehicle _at_US22,000, range 100 km on electric
  engine. Miles XS500, range 120 miles at 80 mph,
  to launch in Tianjin in 2009 (Iain Carson and
  Vijay V Vaitheeswaran, Zoom The Global Race to
  Fuel the Car of the Future, Hachette Book Group,
  2007)
• Dongtan eco-city concept of sustainable housing
  and urban design on the cards for new cities,
  towns and villages. Eco-friendly lifestyle
  catching on with rising middle-class. Methane gas
  from human and animal waste in villages
• Law on the Circular Economy effective 1.1.2009
  mandating energy, water, and material recycling,
  conservation and emission reduction supported by
  tax breaks and fines.
• Global implications an ecologically-conscious
  society with 1/5 mankind worlds car industries
  to be revolutionized

18
MegaTrend 6 Science, Technology and Innovation

• Change-1 Moon Probe (2007), Shenzhou-7 Space
  Walk (2008). Planned Tiantong-1 small space
  station in 2010 -11 docking with Shenzhou 8, 9,
  10 Lunar Rover on moon surface 2013-17 Lunar
  Rover exploration and return 2017-20 planned
  satellite Yinghuo-1( Russian Phobos-Grunt) to
  fly towards Mars 2009 possible participation in
  European Space Agencys Aurora manned Mars
  exploration program 2030
• 5m university graduates p.a. mainly engineers and
  technologists, top in nos.scientific papers. Vast
  majority no productive research. Still no
  home-grown Nobel Prize laureates. Committee
  representation, let alone chairmanship, extremely
  low in world-class scientific organizations
• But fast developing technologies in energy and
  water resources, environmental conservation,
  proprietary technologies, life sciences,
  aeronautics, and ocean sciences
• Various silicon valleys, leading science parks e,
  g. Beijings Zhongguancun and high-tech cities
  like Hefei, Anhui. 40 of overseas post-doctoral
  students in US are from China. Growing numbers of
  scientific returnees to seek greener pastures
• International corporate R D centres 750 (100 in
  India), 35 v UK 47 and US 59
• Shenyang Aircraft Corporation joint ventures in
  assembly and fuselage manufacture with Boeing,
  Airbus and Bombardier. May 2008, Commercial
  Aircraft Corporation of China formed with
  capitalization of 2.7 billion to compete with
  Boeing and Airbus. Chinas home-made regional jet
  ARJ21 maiden flight on 28.11.2008 with an order
  book gt 100 aircraft
• Global implications Chinas aerospace industry,
  including commercial satellites, is set to grow
  by leaps and bounds. International space program
  cooperation. Growing competition in worlds
  aircraft industries. Advances in life and
  environmental sciences and commercialization

19
MegaTrend 7 China goes more Global

• 3 world top 5 by market capitalization -
  PetroChina (1trillion, 2 x ExxonMobile), ICBC
  (worlds largest bank), and ChinaMobile
• Chinese corporations SWFs taking equity in
  financial and energy companies ICBC 20 in
  Standard Bank, Africas largest bank CHINALCO
  (Aluminum Corp of China) planned 30 stake in
  bauxite mine of Rio Tinto Geely bought Volvo
  from Ford for 1.8b and majority stake in
  Magnanese Bronze (London Black Cab)
• Controlled outflow - 10b (Deutsche Bank)
  Liberalising QDII - 50 overseas investment quota
  for approved equity funds
• 4 of Big Five state-controlled banks have
  embraced foreign equity HSBC 19.9 of BoCom BoA
  10 of CCB Goldman Sachs 10 of ICBC RBSs
  (recently divested) 10 of BoC. Local
  incorporation of foreign banks Citibank, HSBC,
  SCB, BEA
• China to grow RMB private equity Wu Xiaoling,
  Dep Gov, PBoC, 2007 China M A Annual
  Conference, Tianjin. Launch of stock index
  futures approved in principle (08.01.2010)
• RMB as storage of value and stable means of
  exchange. RMB-denominated transactions and
  financial products more acceptable for
  China-related businesses. Eventual full
  convertibility.
• China to build 3 transnational high-speed
  (200-350 km/hr) rail links by 2025 (a) Kunming to
  SE Asia (Vietnam, Thailand, Myanmar, Malaysia,
  Singapore) (b) Urumqi to Kazakhstan, Uzbekistan,
  Turkmenistan, - Germany?) (c) Heilongjiang
  Siberia W Europe (BJ/Lon in 2 days) (SCMP 8
  March 2010)

20
MegaTrend 8 - Defense

• Historical trauma with continental-sized borders
  and coastline anxious to protect territorial
  integrity (including Taiwan) choke-points of
  life-blood energy supply
• Total defense expenditure (2/3 for personnel,
  training and maintenance) lt UK, Japan, France,
  and Germany v US expenditure gt rest of world
  combined. As GDP, much lt UK, Russia and France
  v US (Chinas 2006 National Defense White Paper)
• In light of US repeatedly rejection of call from
  160 countries, China included, to de-militarize
  space, China showed capability of killing moving
  satellite as space defense deterrence
• Already a nuclear power, only major country
  without a single aircraft carrier, doubt about
  cost- benefit of blue-water navy regional
  diplomatic interests giving way to clear signal
  (Defense Minster, 20.3.09)
• Likely to to keep up with modern military
  technology for more cost-effective credible
  deterrence, including submarines and asymmetric
  warfare
• Global implications need for more transparency
  to ease ungrounded fears (China needs benign
  environment to continue survival) scope for more
  international cooperation for peace-keeping and
  fight against piracy

21
MegaTrend 9 Building a Harmonious World

• Best defense is having no enemies Confucian
  Harmony Also joining no blocs.
• Simply cannot afford to be aggressive. Need for
  benign environment to build solid foundation -
  numerous challenges and contradictions looming
  aging population profile
• US - Leadership accepted except where national
  interests undermined, but differences on Chinas
  internal issues and international approach to
  conflict resolution remain
• EU- main trading partner and plenty of scope for
  economic, trade, investment, technological, and
  scientific cooperation, but differences on
  Chinas internal issues remain, less so v US
• Russia Energy partner and balance against
  uni-polarity
• ME Main oil supply source eager to see more
  stability (geopolitics) but unlikely to intervene
  in ME politics
• ASEAN and the Asia community growing importance
  in global supply chain geopolitical advantages
  in the Asia-Pacific
• Central Asia - Shanghai Cooperation Organization
  harmony in neighboring region and alternative
  energy supply route national security
• Africa for 3rd world cooperation and
  trade/investment in resources
• Latin America also 3rd world support
  Venezuela (energy support in US backyard)
  Brazil (soybeans and resources)

22
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23
MegaTrend 10 Civil Society

• Vibrant civil society rapidly developing, e.g.
  spontaneous response to Sichuan earthquake
• Quarter of a million local NGOs campaign for
  consumer rights environment the
  under-privileged
• 80 to 100 million practising Christians (Jesus in
  Beijing, David Aikman, 2003)
• Vibrant 36 million blogs.
• More public hearings for major polices, often
  mandated by law
• Local elections held for all village and county
  chiefs and urban neighborhood committees
• More party secretaries and senior officials
  monitor public feedback through the internet
• CPC government for the people, law-based
  governance, official accountability, public
  transparency, public consultation, fight against
  corruption, more freedom of expression as
  instruments for legitimacy. Direct entry to
  government through public examinations.
  Competitive progression to high office. Confucian
  ideal of Mandate of Heaven shi ren xinzhe, shi
  tianxia (He who loses the hearts and minds of
  the people, loses the world).
• CPC think-tank on reform of political system
  post-17th Party Congress NPC and CPPCC,
  centralizing power to appoint judges in the
  provinces (Storming the Citadel, Professor Zhou
  Tianyong et al, November 2007).
• Global network of Confucius Institutes,
  ultra-modern CCTV English channels, ancient
  culture and architecture, UNESCO-designated world
  heritage sites, colorful arts and customs all
  attracting an ever-mounting number of foreign
  tourists trade, business, professional,
  academic, and educational visitors from all
  corners of world

24
A roadmap for Sustainable Industrial Development

• State Council, October 2008
• Value-added hi-tech industries 5 IT,
  bio-eng, aeronautics, space aviation, new energy
  materials, marine industries
• Energy efficiency, conservation emission
  reduction in processes, projects and buildings
  restrict energy-and-emission intensive industries
  (coal 77.2 1980 - 69.4 2007)Energy Law in
  draft 12th FYP 2011-15
• Renewable energies - nuclear, hydro, solar, wind,
  biomass, marsh gas, solid liquid bio-fuels as
  primary energy by up to 10 coal-bed gas up to
  10 bcm
• Less input, consumption, emission high
  efficiency, including energy optimization,
  energy conservation and eco-preservation
• Concrete progress building water-conserving
  society complete anti-flood systems large rivers
  drought resistance of farmlands
• Recycling Economy - Circular Economy Promotion
  Law 29.8.08
• Accelerate service sector - value-added
  contribution to GDP by 3
• S T international cooperation C but
  Differentiated R
• State Council February, 2009

25
Chinas Green Opportunity

• McKinsey Quarterly, May 2009
• 2005 GHG emissions mgt CO2 equivalent
  6.8
• Unrestrained growth
  
  16.1
• 2030 frozen technology scenario
  22.9
• Policy reduction (policies, targets, tech
  development) - 8.4
• 2030 Policy scenario
  
  14.5
• Full technical abatement potential
  - 6.7
• 2030 Abatement scenario
  7.8
• Green Power 2005 Coal (81) 2030 Coal
  (34) hydro (19), nuclear (16), wind (12), solar
  (8), gas (8), other (4)
• Green Transport 330m cars by 2030 gt US
  100 green cars by 2020 oil import less 30-40
• Green Industry 1/3 of energy consumed 44
  emissions technology, efficiency, standards,
  conservation, recycling (e.g. coal-bed methane),
  agric waste, CCS
• Green Buildings eco-villages, towns and
  cities natural gas, CFL (compact fluorescent
  light-bulbs) green designs, efficient heating
  and ventilation
• Green Ecosystems Forest coverage being
  raised from 11 to 20 by 2010 regulated grazing
  widespread use of agricultural methane (already
  23m homes) sustainable agriculture land
  management, desertification and water management

26
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27
Lessons from Financial and Ecological Collapse

• Survival, Adaptation, and Transformation
• Global Financial and Economic Crisis
• Overleveraging (1.4 quadrillion debt, some still
  underneath the carpet)
• Excessive fundamentalism
• Adam Smiths missing Visible Hand
• Global economic imbalance
• Who Moved My Cheese? Spencer Johnson, 1999
• Chrysler, Volvo, Magnanese Bronze v GM, GE, IBM,
  R J Reynolds, BYD, Suntech, Alibaba
• Collapse, How Societies Choose to Fail or
  Succeed, Jared Diamond, Penguin Books, 2009
• Easter Island Splendid isolation, 1400 m from
  nearest habitable island first settled 900 A.D,
  original pristine paradise, Giant Palm (80 ft
  tall, 6 ft diameter) statue (moai) production
  peaked 1200-1500, _at_up to 65 ft tall 270 tons
  accumulative deforestation collapse of food
  chain by 1700 population crashing wars, all
  statues toppled by 1884, today only 2 small trees
  and 2 small shrubs left
• Greenland Inuit v Norse Adapted sewn-skin kayak
  harpoons with bladder floats as efficient
  hunting machines for resource-rich whales Norse
  tied to European origin church, walrus tusks for
  income (wiped out by new supply of ivory from new
  colonial era)

28
Andrew Leung

• International Consultants Ltd

Thank you
Andrew K P Leung, SBS,
FRSA www.andrewleunginternationalconsul
tants.com