The industrialised countries who ratified the Kyoto Protocol cut their emissions in 201o to a level 7.5% below year 1990 levels.  The picture however is being blurred by the emerging countries such as India and China which increased their fraction of total emissions over this period from 1/3 to 1/2. In 2010 33 billion tons of CO2 were poured into the atmosphere, the highest level in world history. Industrialised countries will, overall, hit their Kyoto targets though there is considerable variation in national responses.

Converging per capita emissions levels are becoming very interesting.  China now emits 6.8t/capita CO2 compared to the EU-27′s 8.1t and the US’s 16.9t. China is catching up to the low carbon developing countries.  The enormous sleeper whose emissions have the potential to expand enormously is India whose per capita emissions at 1.7t/capita – a tiny fraction of developed country levels. Both India and China have relatively high levels of CO2 emissions per dollar of output  - they have high emissions intensities – indicating huge potential for ‘no regrets’ energy conservation policies of the type currently comprising much of their CO2 mitigation response.

An excellent report and well worth reading.

I have enjoyed some dinners with former students of mine at Peking University and with former friends among staff here.   These events meant much to me.

Professor Mirrlees gave a paper on optimal borrowing and savings in an open economy and applied not to China.  I have to say that I thought it misconceived. It was a Ramsey-type argument with a country being able to borrow at a fixed rate and not facing any adjustment costs in adding to capital stocks.  The predictable response was a pulse adjustment in capital stocks followed by higher consumption than would otherwise obtain along with current account deficits.  Mirrlees acknowledged that the assumption of zero adjustment costs was unreal but argued the model captured the main features of the current situation. I cannot agree.

China is currently investing 44% of its output and the idea that this should be increased seems incredible to me. There are real labour and planning shortages that do impose very substantial adjustment costs. If these are big enough the zero adjustment cost model will be unrealistic.  If they are large enough then capital exports might make sense rather than the dramatic current account deficits Mirrlees envisages. My question: How does Mirrlees know such costs will be small enough to drive his conclusions?

I’ll write further on this if the Mirrlees paper gets published.

I also attended a presentation by a climate change denialist (Ross McKitrick) who really went the whole hog. Climate isn’t really changing and even if it was policies wouldn’t work and the world would need to deindustrialise to deal with it. Hence China should ignore the climate change issue. All of these claims are wrong in terms of science and the economic evidence. Several delegates were stunned by the claims and fortunately, as I discovered afterwards, the Chinese participants did not take these claims seriously.

Beijing itself is very smoggy and the traffic congestion seems noticebly worse than a year ago.

I also notice the better dress sense and appearance of Asian/Chinese women particularly relative to their Australian counterparts – this is a peculiarly Australian rather than a general Western trait.  Among Westerners, European women dress better and with more style while American women are well groomed with attractive hair styles.

Asian/Chinese women typically take care of their appearance than Australian women. They invest a higher fraction of their incomes in their appearance. They wear make-up, wash and style their hair and don’t wear deodorants that smell like insect spray.  Many Western women are lazy in caring for their appearance. Their tossed salad, greasy, unwashed hairstyles are nondescript.  Their amorphous, sagging, braless boobs – often under a cheap t-shirt are - coupled with the standard crinkled, faded jeans that bunch at the knees. Footwear are clunky runners not shoes. The overall impression to outsiders must be that our convict heritage lives on.  Indeed, some have suggested Aussies dress like slobs to hide any sense of social class.

You notice the distinctive Aussie lack of interest in personal appearance when flying back to Australia on a mixed flight of Aussies and foreign tourists.  The foreigners generally look smart and their kids are tidy and well-behaved.  The Aussie men wear shorts and thongs, haven’t shaved while the women look almost dirty with uncombed hair, cheap fake designer t-shirts with a somewhat insecure ‘what-are-you?’ scowl plastered on their face.   

Many are criticizing Amy Chua’s strong views. I would turn the question around and ask why do Western women undervalue their children and why do Australian women (and many men) undervalue themselves by investing so little in their appearances?

Here are figures on predictions on tourist numbers for 2011 (Source is Tourism Research Australia). Growth in numbers from China is expected to be 28.7%.

New Zealand 573,000; Britain 324,000; Japan 307,000; China 260,000; US 232,000.

Numbers of Chinese visitors to Australia in 2011 are expected to be 531,000 up 21.9%.

The irony, of course,  is that the wealthy Yao Min owns the Shanghai Sharks basketball team.

What would really make me happy would be if China enacted a general law against animal cruelty.  Current laws protect endangered species but do not protect the welfare of animals in general.  There are private groups in China seeking to improve the status of animals in China.

Many of the proposed policies I really like. Some I don’t like much.  Overall the policies are a dramatic determination of the administration in Beijing to address looming terrible traffic concerns in the city and I congratulate them for adopting that sense of urgency. 

• The main policy is to restrict the number of new car licenses to 240,000 per year by means of a quota.  Cars under this quota will be issued by a lottery system.
•  There will be a 5 year ban on official cars although I did not understand how this was consistent with the report that official cars would get up to 10% of the quota.
•  Car numbers will be limited on basis of odd and even number plates.  This was the policy adopted during the Beijing Olympics. 
• Parking fees will be increased and will be highest in congested zones.  
• Congestion pricing will be introduced at an ‘appropriate time’.  
• Bicycles will be publicly-provided to make free short trips from 200 locations in the city.  
• Extra trains and buses will be provided 
• Park-and-ride facilities will be provided at subway stations at low cost.  
• A whole set of new roads and tunnels will be built.

The big policy is the car quota which will cut growth in car numbers by more than 50%. 

 The policy will have an impact. Note that the quota is not being auctioned so the gains from the policy will accrue to those who get a number plate. Gains will also be conferred on existing car owners since the resale value of their vehicles will increase. If the cars can be resold these will be real capital gains to some. You get some measure of efficiency but it is imperfect since the price here is related to car ownership not congestion-causing travel.

 Having got a car there will be triple convergence incentives to use it a lot.  In simple terms once you get a car you will have enhanced incentives to use it given that there are fewer other drivers on the road.  Depending on the size of these ‘rebound’ effects (and ultimately on the scale of latent demands for travel) these effects can range from insignificant to effects large enough to destroy any advantages from the licensing scheme.

 Of course too this scheme will only slow the growth of new cars.  Unless the quotas are tightened there will still be catastrophically large numbers of vehicles in Beijing but it will take longer.  This extra time is an interim solution which permits introduction of a more efficient longer-term scheme such as congestion pricing.

 Of course I would have liked congestion pricing now which directly targets the externality in an efficient way.  Those with high-valued journeys will pay for them.

Presumably the park-and-ride policies will involve very large subsidies to those using these services. The subway stations in Beijing are in areas where property values are very high.

The supply options are inevitably subject to triple convergence problems.  My guess is that most will work short-term but fail longer-term.

It will be interesting to see how this scheme works out. I asked my BEDA students to keep me posted!