China: The New King in the Wings?

Yes, China’s ear-deafening economic engine is now pulling heads–but does it have the capacity to stay at such pace?

Whether China will be able to sustain its rapid economic growth and surpass United States as the world's largest economy remains anyone's guess. Just like China, in the past export-oriented powerhouses such as Japan and Germany were once tipped to accomplish the mission, but none of them is successful until present.

Amidst the storm from the recent financial crisis, which has seen most economies in the world to decelerate, little seems to be taking effect on China as its economy accelerates as fast as ever. Its economy grows to 11.9% in the first quarter this year, a staggering number which is far way ahead from its compatriots in the developing world could produce.

It is hard to deny the fact that China’s road to sustain its economic growth and become a future economic superpower is beset with thorny challenges ahead. Of all the upbeat forecasts of China, the sustainability of its economic growth in the long run is still in question, concerning the forthcoming predicaments.

First and foremost, China is dealing with serious problem on its ageing population. Because of the one-child policy, in the future Chinese working population will decline in number –and as the consequence, tomorrow labor in China would not be as cheap as they are today. As labor price rises and China’s industry becoming less competitive, investors will likely relocate their factories in other labor-intensive countries like Indonesia or Vietnam. With low-cost industry as the backbone that is responsible for the largest share of its economic growth, analysts predicted that China’s export-led growth model will be seriously disrupted by this demographic challenge.

Then, what else can be worse for a country than being blamed as the world’s enemy number one? That is what’s happening on China right now in terms of environmental issues, and this inconvenient situation can stand in the way of China’s ambition to keep its high economic growth long-lasting. Amidst global effort to reduce carbon emission, China now becomes the main perpetrator of the world by piling up pollution: in 2007, the country overtook United States as the world’s largest emitter and has seen a significant increase in carbon emission number since.

Environmentalists all over the world slam China as they deem the country is buying current economic growth at the expense of world’s future. And as time unfolds and its pollution grows, China will surely see more and more condemnations, which will put more pressure for Beijing to implement the green technology and apply strict measures to its dirty factories. These are costly and can reduce industry’s efficiency, and may possibly be the brake that hampers China’s economy from revving full throttle in the long run.

Also, China’s 10 percent-plus recent economic growth is mainly fueled by economic stimulus projects –a short term economic policy which the government implemented to prevent the economy from decelerating during the last financial crisis. And while the economic stimulus project is responsible for the significant swell of bank lending number and growth in credit these days –which instigates fears of the emergence of inflation and China’s property prices bubble–, the growth that it generates is indeed unsustainable in the long run.

Cool it the China way

Concerns regarding the matter have not fallen on deaf ears; with recent developments showing that Chinese officials and policymakers actually understand the threats that country faces no worse than the external observers.

If the main issue is short-term threat of economic overheating, some of the economic policies China’s policymakers implemented show their intention to put their economy in a safer, more sustainable level. In 2010, the Chinese central bankers are not so lenient in giving banks too much freedom. The amount of bank lending may have reached its peak last year, but this year reserve requirements have been repeatedly raised to prevent the market to be inundated with too much liquidity.

In the first quarter this year, China saw its housing prices to surge 10.7% –its highest since the last two years–, which instigated anxiety if the economy of China is experiencing an identical housing bubble problem as United States’. But China’s government has also started to implement restrictive policies on the housing market to cool its most overheated sector.

China’s recent decision to slightly loosen the currency’s peg to the dollar may be seen as the successful outcome of continuous pressure from various world leaders, but the truth is the implementation came cleverly just at the time when China desperately needs to cool its economy to prevent it from overheating.

Indeed, stronger renminbi may lead to less competitive Chinese goods in the global market (which is why this decision is strongly deplored by Chinese exporters). But during post-crisis period like this, loosening renminbi’s peg seems inevitable: at the time when other countries struggle to bounce back from global recession, you definitely do not want to be labeled as “global villain” whose undervalued currency and oversized export numbers continue to deteriorate other countries’ trade balances.

Another effort to encumber its too-fast economic growth can also be heard in the statement of Wen Jiabao, China’s Minister of Industry and Technology, who recently vowed to shut at least 2,000 highly-polluting factories that have not met environmental standards.

The statement is a fresh tonic for environmentalists; but what’s actually behind this? Because for some who remember how China’s representatives wrecked the Copenhagen deal by vetoing the deal of 50% global emission cut by 2050 to be taken out from the accord, how they suddenly change their mind may seem puzzling.

Applying strict environmental measures to Chinese manufacturers may decrease Chinese industries’ output, while loosening renminbi’s peg may possibly weaken China’s exports. But today China’s economy is very prone to overheating, and China’s ignorance towards environmental issues and its egoistic policy to maintain their currency undervalued start taking the headlines. At times like this, implementing policies which can cool down your economy and please the world’s citizens at the same time is indeed a very smart gambit.

Even though it’s still too early to call all these policies a success, reports show that economic growth in China has fallen to 10.3% in the second quarter, with both housing prices and bank lending amount also plummet. The sustainability of China’s economic growth is still in question, but the latest data on China’s economy should calm the world that Chinese policymakers are not unaware of their too strong economic growth and the downside risks that follow.

Crouching Eagle, Hidden Dragon

China’s recent achievement in overtaking Japan as the world’s second-largest economy is putting China in the spotlight as well as drawing attentions from many countries around the world –especially United States, the current frontrunner at the race that is checking his rearview mirror fretfully now because of the boisterous economic engine which Hu Jintao possess behind his car’s hood.

With Hu Jintao in the driver’s seat, previously China has successfully surpassed the economy of Britain and France in 2005, Germany in 2007, and Japan in 2010. Prophecies from oracles like PriceWaterhouseCoopers and Goldman Sachs, meanwhile, have predicted that between 2020 until 2030 the red car will overtake the star-spangled frontrunner as the world’s largest economy.

Yet sometimes to become number one “how” is a more crucial word to be addressed rather than “when”. It does not really matter when China will overtake United States as the world’s largest economy (in 10 years time in 2020 or 20 years from now in 2030). Actually what’s more crucial is how China can sustain its current growth and shunning their economy away from the looming threat of economic overheating, so they can ultimately sit at the top of the world.

One thing for certain is that China now is very different compared to 30 years ago, where its economy was still isolated from the world, as it currently stands right in the heart of the global economy. Now China plays an indispensable role in international trade: the number of goods they export around the world is staggering, and the gigantic demand from its 1.3 billion population became energizer to some recession-plagued countries which have been struggling to find buyer for their tradable items during the last financial crisis.

That’s precisely why China’s economic sustainability matters for the rest of the world: because if the car in red gathers steams and runs off the track, it will take the whole world with it. The commentators and racing pundits can utter everything they want to warn China against such upcoming threats, but so far it seems that the dragon and its rider understand and know exactly what they are doing.

Or are we seeing nothing yet and there’s actually more to come from China? Some of China’s immense potential, however, remain hidden and underestimated. The fact is; there’s a possibility that China’s engine will rev even louder in the future -political reform and information freedom are yet to be fully implemented, with China’s renminbi also waiting in the wings to be used as global currency.

With such menacing power possessed by the red dragon by now, the bald eagle has all the reasons to be worried.

Indonesia: The 10 Natural Sanctuaries Revealed

Indonesia, with thousand of islands and hectares of forests spread across its archipelago, is illustrious worldwide as one of the top-notch ecotourism destinations. Yet apart from the common and already-congested places, there are other parts in Indonesia that remain somewhat unnoticed, or underrated, both by domestic and foreign sightseers. As you can read below, our marines are blessed with astonishing underwater landscape, and our forests hide faunas that could hardly be found anywhere else in the world beneath its diverse vegetations. These 10 places are relatively remote and their beauties are still concealed, yet they are really, really too precious to be overlooked.

Derawan, East Kalimantan

Few tourists go to East Kalimantan to dive. Some go for the wildlife experience of strolling in its natural and well-protected forest; while some go for its rich gas, coal, and mining bonanza (as it is considered one of the wealthiest provinces in Indonesia and many mining companies run their businesses here). If only divers know something about Derawan, a band of small islands scattered in the province of East Kalimantan. In Derawan, there is an island named Kakaban, where a single lake is home to 4 world's most unique stingless jellyfish species; and Sangalaki island, whose immaculate white sands is Southeast Asia’s largest nesting grounds for endangered green and hawksbill turtles. Derawan is also reportedly to have more than 50 manta ray species and various seahorses and squids. Boasting the most unusual of marine species any diver could ever behold, Derawan is a must-place visit for divers who want to confirm the richness of marine biodiversities that Indonesia inherits.

Komodo Island, Flores

What could be a crucial factor for a place to become a perfect ecotourism destination? Is it because of its pristine coastline and astonishing underwater scenery? Or is it a divine landscape that matters most? But when one possesses both, plus its status as the only place on earth where the remaining Jurassic species wanders, there you have Komodo Island. Formerly nominated as the new 7 wonder of the world, Komodo Island boasts not only its Komodo dragon, but also a Lord of the Ring–like, beautiful meadows. Indeed, Komodo dragon is its main attraction for tourists, but because of that its beach and underwater scenery are underrated. In fact, divers should know that Komodo Island is located at the juncture of Pacific and Indian oceans, which is why hundreds of colorful coral reefs are present under its water. If Komodo Island is not considered a perfect ecotourism destination; I don’t know what else is.

Lore Lindu National Park, Central Sulawesi

Alfred Wallace, a renowned 20^th century naturalist, once said: “The life of wild animals is struggle for existence. The full exertion of all their faculties and all their energies is required to preserve their own existence and provide for that of their infant offspring.” Of all the wild animals he ever encountered during his voyage, he wrote in his journal that the uniqueness and the richness of animal species in Sulawesi region is unrivaled –and that’s how the famous Wallace line was established. Deep in the thick forest of Lore Lindu in Central Sulawesi, live 227 bird species, 77 of which are found nowhere else on earth. Besides, the forest is also the shelter of Sulawesi’s endemic species such as mountain anoa, giant butterfly (a butterfly that is bigger than human hand), dwarf buffalo, babirusa, and three species of tarsier (the world’s smallest primate). Visiting this national park, therefore, offers its visitors a rare experience to encounter various endemic and rare animals in Sulawesi which have been struggling for existence.

Morowali, Central Sulawesi

What Morowali hides beneath its thick forest is similar than one could encounter in Lore Lindu, except one thing: it is a Nature Reserve, not a National Park, which means Morowali has higher protection from the government because of its status. The vegetation is somewhat different, as the still-virgin forest of Morowali is the only wet lowland forest in Sulawesi and, different from other forests in Sulawesi, is bordered by the sea. Morowali Nature Reserve possesses the uniqueness of various Sulawesi’s endemic faunas, which are hardly found anywhere else in the world.

Nusa Penida, Bali

Tourists could be forgiven for overlooking Nusa Penida when they visit Bali, as the island is blessed with various sparkling tourist attractions already: from Kuta Beach, Tanah Lot, or Mountain Agung. But heading west, there’s another thing to do beside watching sunset or surfing. Nusa Penida is the best in diving business in Bali, offering divers various diving spots, each with their unique characteristics. Other diving spots usually only provide the magnificent view of their coral reef collections, but here in Nusa Penida there are unusual diving spots like Crystal Bay, which offers an underwater cave system in your diving experience, or Manta Bay, which is rich of Manta Ray and Tuna fish species below its water.

Raja Ampat, West Papua

In local language, Raja Ampat means “Four Kings”, and it terms of marine biodiversity the facts justify the name precisely. When an expedition was first carried out in obscure islands on west side of Papua in 2001, its shocking result struck the conservation world: Indonesia’s Raja Ampat is the place with the richest marine biodiversity in earth. Almost ten years later with countless explorations, roughly 70% of world coral species –that’s 10 times than the coral species from the entire Caribbean island combined– and more than 1,000 fish species are found in this area. With continuing support from the government to protect and develop the area, the rich marine biodiversity that this area possesses could soon eclipse the popularity of its counterpart in the south, the Great Barrier Reef, as a famous diving spot.

Savu Sea, Flores

There are few sea in the world that become migratory area for whale species which human could visit, Savu Sea in Flores is among those rare spots. Located in the rendezvous of Indian and Pacific ocean, deep beneath the water of Savu live many endangered whale species such as Sperm Whale or even the gigantic Blue Whale. Whale hunting tradition still persists among locals and could be an exotic show for tourists, yet it rarely occurs today. This site offer a unique diving experience as beside its role as major migratory area for whales, it is also home to other endangered and rare animals, such as Green Sea Turtle.

Segah, East Kalimantan

Compared to its counterparts in East Kalimantan, access to this area is a bit tricky and orangutan is rarely seen here, as the forest is located in higher altitude than Wehea and Lesan. But as it is pitted in the area of small mountains and hills, the landscape of Segah is simply amazing. Here Dayak people in Segah are far from modern as they are scattered up on the hills instead of on densely populated lowland.

Wakatobi, Southeast Sulawesi

One lecturer in my university once said during his class, “Have you ever been to Wakatobi? The place’s great, it’s more beautiful than Hawaii.” He was mistaken, of course, because what Wakatobi has below its water is as beautiful as what can be found above. Its white sands and unspoiled beaches are awesome, but just like Raja Ampat, Wakatobi is prominent among divers for being the home to one of the richest marine biodiversities in the world. While there are 300 coral reef species in the entire Atlantic ocean, there are reportedly more than 600 coral reefs found in Wakatobi alone. Moreover, beside possessing one of the richest reef complexes underwater, Wakatobi is also home the longest atoll structure in the world. Somebody should tell my lecturer about that.

Wehea and Lesan, East Kalimantan

Indonesian forest is among the biggest, the healthiest, and the most diverse in earth, equal to huge forests in Brazil and Congo. The richness of biodiversity in rainforest in forests at sub-district Wehea and Lesan (both at East Kalimantan province) is staggering: it is said that new species will be discovered every time a new ecological expedition is conducted on the areas. Besides, forests in Wehea and Lesan are both home to the endangered orangutan, arguably the most intelligent mammal on earth whose population continue to decline to the critical tally of 2,000 in the world. Ecotourism in these two forests presents great experience not only because of its natural wild adventure, but also the cultural picture that tourists can behold from the local Dayak tribe.

This article will be published in the magazine of American Chamber of Commerce. This article represents The Nature Conservancy, a US-based NGO working in conservation issues. All the 10 places here are among the marine and forest sites that TNC protects in Indonesia.

Climate Change: The Failure of Reaching the Consensus

NOWHERE TO HIDE. Thanks to human's deeds now it is just a matter of time before increasing global temperature and thawing ices cause animals, like this Polar Bear, to be left with almost no place to live.

During the Copenhagen Summit, no common ground was established and the end result of the conference was a shocking loss for all environmentalists. The expectations from the summit is to see whether if countries leaders who set their foot at Copenhagen can assemble specific numbers of carbon emission cut or anything necessary to solve the climate change problem. In such predictable end, the output from the conference turned into zilch, which left many people wonder: if there was no tangible outcome generated from the summit itself, then why wasting time being at Copenhagen anyway?

Few were surprised when those conferences in Copenhagen –as well as at Kyoto or Bali– failed to deliver a solid way out from the climate change issue. Thanks to mankind deeds now the earth is getting sicker. The doomsday’s sign is becoming clearer as global temperature is becoming hotter, yet human beings –who are considered as the most responsible party for the whole problem–stand still and do almost nothing to evade the looming catastrophe.

Also, efforts from countries all over the world were always considered courteousness and there was actually no such thing as tangible actions from them to cure mother earth. World leaders who attended such conferences (which were deemed by them as integrated efforts to fix the climate change problem) walked away from the conferences with huge expectations on their shoulders yet did almost nothing at home. We must accept a bitter fact that so-called integrated endeavour from countries all over the world to fix the situation, in fact, is still yet to be defined.

Indeed, there is still clash of interests among both parties involved. On one hand, environmentalists argue that finding a way out from the hotter-than-ever earth is necessary before the situation becoming any worse in the long run. The ending of the story of our earth and all human beings, of course, will be scary if that happens. But the policymakers, especially those who currently run countries with booming industries like China, still observes things in the short-run as they think that strict regulations, as carbon emission limitation, will disrupt their industries and eventually hamper the massive surge of their economic growth.

This is the decade which will be best remembered by the story of how developing countries are dominating the world’s economy. Economy in China and India are growing at unprecedented rate, and if the condition remains unchanged, it is only a matter of time before they take over the lead from developed countries like United States and United Kingdom. The rise of China –and other developing countries as well– comes with a predictable repercussion: as the economy surges, so does the carbon emission which it generates from their booming industries. It is, indeed, an absolutely distressing fact for the environmentalists.

When great power is not always followed by great responsibility

When the economy of United States grew rapid in the mid-90s (thanks to the scrumptious blend of economic policies from Bill Clinton and Alan Greenspan), the country drew many criticisms from all over the world for the massive pollution it generated as well as its ignorance in the environmental issues. By the end of 2000, United States generated 24% of the world emission, making them the world’s largest polluter at that time.

Most of the questions pointed to United States’ government simply were why it can be so unaware of the environmental problem amid the fact that it has more than enough power to help reducing the emission which it produced. Many can understand if developing countries, who have insufficient funds to apply environmental-friendly technologies to reduce carbon emission, was lagging behind on the effort of tackling the environmental issue. But people wondered why it can occur in United States, a well-developed country which was deemed as one of the economic superpowers during that period.

Yet what happens today is China, not United States, who is actually making headlines on newspapers like Wall Street Journal or Financial Times. Today’s generation are the beholders of how China is pushing very hard to overtake United States as the new economic superpower: its economy is growing with a seemingly unstoppable rate, and it seems only economic overheating can stop its economy from growing as even the financial woes of 2008 could not curb it.

But as China’s economy grows, so does its carbon emission –or to put it in a better way: its ignorance to the environmental issue. According to Netherlands Environmental Assessment Agency, in 2007 the soaring economy of the Chinese saw their carbon dioxide pollution to swell to the level of 24%, while United States is trailing behind at the second place with the level of 22%, two percent adrift behind the new champion.

In various matters like the olympics and the economy China has been breathing on United States’ neck for years and ready to overtake it any time, but in terms of carbon emission production currently China has become the new leader in the pack, successfully overtaking the US in 2005. Massive growth of economy in China yields not only rising GDP but also an increase in carbon emission production, which lately has been deemed as responsible for environmentalists’ resentment towards the country. India, according to the Energy Information Administration, is also predicted to have significant growth rate of carbon emission over the next 20 years. According to the Energy Information Administration's Emissions of Greenhouse Gases in the United States 2004, carbon emissions are expected to surge in Asia over the next 20 years, and based on the same report, the emerging markets will have the largest growth rate of carbon emission over the same period of time.

Environmentalists vs. Industrialists: The clash of the convoluted interests

Source: Energy International Agency

This 2007 data shown clearly that China, India, South Korea, and Australia (countries that are involved in the ASEAN free trade treaty) can become vulnerable preys for environmentalists’ condemnation as they go well within the environmentalists’ shooting range because of their carbon emission numbers. In addition, the ASEAN free trade treaty will intensify their trade activities as well as their industries further –and thanks to the ASEAN’s zero-tariff policy as well, those countries will see their industries rising to an unforeseen level and it is very likely they will be more ignorant towards the carbon emission which they generate.

Led by BRIC Countries: Brazil, Russia, India and China, the economies of emerging markets will be growing significantly which is indicated by their staggering number of GDP growth. So, if there is question asking whether economies activities are the major cause of carbon emission or not, the answer will be mostly yes since it means the use of fuel for production activities and the consumption of products which are the major sources of carbon emission.

And f the original purpose of the installment of the Kyoto Protocol was to reduce the global carbon emission, then we can say that it fails to fulfill the initial expectation. Based on our present situation we can see that –irrespective of the limitation from Kyoto Protocol– the world has seen a rise in carbon emission numbers, which are not only driven by developed countries such as United States and European Countries but also emerging economies like China and India, who have seen a considerable increase in the global emission they produce.

The problem of climate change is trapped in a difficult deadlock and therefore we might well ask whether there is a key or not to break this lingering standstill. Looking at how the world progresses at the moment, it is clear that so far we simply have not done anything. The major difficulties in overcoming this unsolved issue is that many countries, especially developing countries with massive growth like China, fear that the limitation of gas emission will decrease industries’ efficiency and eventually engender a slower economic growth.

Today, environmentalists are like cats on the hot bricks –and what was shown by our carbon emission number we have at the moment may make their blood runs even colder. The earth currently is in a terrible health and the signs of doomsday caused by global warming are becoming more apparent. As if as An Inconvenient Truth movie with its various signs of imminent armageddon are not enough, the cumulative number of world emission continues to surge for years and, unfortunately, it shows no sign of stopping for years to come.

This article was part of the 20-page paper presented at Young Economists' Convention 2010 in De La Salle University, Manila, Philippines. The paper, titling "The Integration of ASEAN and Taking Advantage of the ASEAN Free Trade in Tackling Climate Change", was the first-prize winner in the competition.