President
Xi Jinping of China will be making history by starting a national program in
2017 that will limit and put a price on greenhouse gas emissions in China. The
program President Jinping is planning to implement is a called a cap-and-trade
system. Cap-and-trade is a regulatory system
that is meant to reduce certain kinds of emissions and pollution and to provide
companies with a profit incentive to reduce their pollution levels faster than
their peers. Under a cap-and-trade program, a limit on certain types of
emissions or pollutions is set, and companies are permitted to sell the unused
portion of their limits to other companies that are struggling to comply. This
will greatly reduce the negative externalities that come with the high
pollution emissions in China that has caused countless social issues across the
country.
Tension
between the two nations is still heated caused by countless cyber-attacks over
the past several weeks waged by China. But this program will bring about change
and is the first step for China and America collaboration to achieve one
ultimate goal of reducing pollution emissions in the two largest economies in
the world. On the hand, the Chinese economy will be taking a bit hit when this
program is implemented. China always strived on having high production output
but with regulations in place, the expenses for various industries will
increase and they will have no choice to reduce output. This might lead to a
decrease in foreign investment and they will relocate to an area where there are
fewer regulations.
4 comments:
I feel that this is a great first step for the Chinese government to limit emissions caused by pollution, but much more will need to be done in the area of social tension in order to see the plan through to completion. The ramifications of this program on the Chinese economy in the eyes of industries are devastating, from lower production outputs to an increase in output expenses... With this cap-and-trade reform, businesses will benefit by reducing their emissions and can even gain by selling off the unused portion of their limits. While this will cause for a slight drop in real GDP for a short-time being, I feel that overall this will benefit the Chinese economy immensely.
The degree of pollution in the air in Chinese cities is horrifying and needs to be confronted today - which is exactly what the President of China is doing with this cap-and-trade reform with the aid of the U.S. President. I feel that Chinese citizens will accept the ramifications in order to attain a better standard of living and with a little push, President Xi Jinping will succeed in his reform if he gets the people on his side. The businesses will feel the hurt in the beginning, but once the reform is set in place, not only will profits increase once more, but the standard of living of the entire nation will also increase. The question now becomes, how long until the reform will help limit emissions in Chinese cities and the standard of living rises?
I think it is exciting to see the Chines government take this approach. Their air quality is pretty much unanimously perceived as an externality that needs controlled. The best part is that the government decided on a solution using markets rather than placing firm limits or dictating a specific technology. Hopefully we will see positive outcomes in the near future.
I think this is a great step for the Chinese economy in an attempt to update their environmental policies. One question I think that needs answering moving forward is what does this mean for the current Chinese economy that is so dependent on output, like you said. Is there going to be a huge influx in foreign production in a new country/countries as companies decided to keep costs low and production high?
It is exciting to see China finally wanting to take their emissions seriously which not only is beneficial in the China US relations, but it will also better the standards of living for those living in China as well. In order for this to happen however, there will have to be great advances in innovation within the manufacturing industry in order for China to still be able to produce at the high rates it is used to producing at. It will be interesting to see what ideas and solutions they will come up with to fulfill this goal and better the environment around them and reduce emissions.
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