11/24/2004, 00.00
CHINA
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Economy must grow or the system breaks down

by Maurizio d'Orlando

Oil imports must rise to quench the country's energy thirst. Coal has already done enough damage to people and environment.

Milan (AsiaNews) – The Chinese government cannot afford a lower rate of economic growth without taking the risk that the country's internal contradictions will undermine the system's cohesion. But to do so it must quench an insatiable thirst for energy that the country itself cannot supply.

Practically in everyone of China's 23 provinces staggered black-outs have become the norm: in some regions, power rationing is affecting daytime operations.

The use of coal, which satisfies 61 per cent of China's energy needs, cannot increase, not because of any consideration for the tens of thousands of miners who die each year in mining operations, but because of coal's political and economic costs.

First of all, China must reduce its dependency on coal because its transportation chokes rail and road networks effectively paralysing the economy and its extraordinary growth rate.

However, the country's Communist leadership cannot afford a lower growth rate without taking the risk that the country's internal contradictions might come out into the open and undermine the Communist Party's monopoly of power with violent consequences, this in a country where communism's price tag has been 150 million people.

Secondly, China's coal burning plants are both less efficient and more polluting that those operating in the West. Again, this is a point of concern not because of any environmental considerations—China's leadership has shown little interest in public health and environmental issues (i.e. acid rain)—but because of their economic and political consequences.

Particle emissions from obsolete power plants screen the sun and have a major impact on the climate. Rainfall is reduced increasing flooding in some areas and favouring desertification in others. The country thus risks losing its food self-sufficiency, especially in grains such as corn and rice.

The need for large scale grain imports from Australia, Canada, the US and even Latin America has political and strategic consequences. First and foremost, China cannot afford to antagonise its major food suppliers. But this in turn tends to remove the last shred of the legitimacy for Communist rule, namely the nationalism that the Communist Party had inherited from the SunYat-sen.

Finally, even if China did put its coal reserves to full use, it still could not satisfy its energy needs. Currently, coal-fired power plants already have insufficient supplies and limited reserves.

In other words, to avoid system breakdown, China's economy must expand but to do so it must substantially increase oil imports. If its annual rate of economic growth has been around 9 per cent, its energy use in the last two years has risen by about 16 per cent and its oil imports in the last six months by 40 per cent.

Given the situation, China has been trying to find alternative energy supplies and this means hydroelectric and nuclear. Other options that are promoted by environmentalists around the world appear to be too unrealistic from a Chinese point of view, utopian dreams for small but rich nations.

Never the less, hydroelectric and nuclear power are not a good solution either. In both cases, plant construction requires long-term fixed capital investments which China and its banks do not have. And in the case of hydro, there are other objective limits and this despite the 28 plants under construction, namely the number of potential rivers that can be dammed and their dam capacity are finite.

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