Conducted by Matthew Ellison

Elizabeth Economy is the C. V. Starr senior fellow and director of Asian studies at the Council on Foreign Relations. Her most recent book is The River Runs Black: The Environmental Challenge to China’s Future. 

In a January 25 column in the Washington Post, you wrote, “China’s rise will be as disruptive and difficult as that of any other global power.” Is this inevitable, or can other countries—particularly the U.S.—work with the Chinese to make this rise as smooth and undisruptive as possible?

I think that the policy of the United States for the past three decades has been to engage China and to try to ensure that as China rises, its rise is, in fact, as peaceful and non-disruptive as possible. I think that is the general approach of the U.S., of the EU, of most of the rest of the world. The point that I was trying to make in the piece really is that at a certain point in time, the responsibility really rests with China. The way that China conducts itself when it is abroad, the policies that it sets out to govern its foreign relations, how it deals with issues of transparency in its foreign policy—all these are things that, yes, the external world can help to influence, can try to persuade, but in the end, the responsibility and the right really rests with China.

Conventional wisdom has long held that once capitalism emerged in a country, political liberalization was never far behind. But that does not seem to have held in the case of China. Why does China still remain politically authoritarian even as its economy has become more open, and how do you see this issue playing out in years to come?

Never say never. The jury is far from out as to how China’s political system is going to evolve over the next decade or two. Chinese leadership has done a very effective job of opening its economy and has permitted a certain amount of civil society to develop while at the same time maintaining a relatively strong degree of political control. Nongovernmental organizations to some extent are flourishing in China. The media, while it has an uncertain relationship with the government, is certainly far more open today than it was a few decades ago. So there have been advances, but by and large the Chinese leadership has been relatively successful in maintaining a more repressive political system than I think many people would have anticipated. Having said that, I think the rubber is meeting the road. I think that the range of social, political, and economic challenges that China faces on the ground, whether you’re talking about corruption or the environment or rural-urban income inequality or illegal land grabs. All of these things demand a level of real political reform in local governance. I think the Chinese government is reluctant to advance this kind of reform, but I think in the end it’s not going to have any choice. There’s really no other way to make local officials accountable. You simply can’t pluck out every corrupt official from the country without some form of electoral reform.

What effect do you foresee the 2008 Olympics having on the politics and economy of China and on its foreign policy?

Six years ago when China won the Olympic bid, there was a lot of anticipation in the international community about how the Olympics were going to have transformative effect on China, particularly in the area of the environment. But I think more broadly, people felt as though we were going to see an opening up of the system, that this was going to be part and parcel of China’s joining the international community. That kind of logic, that kind of understanding has pretty much been put to rest at this point. I don’t see the Olympics as having a profound impact on China’s domestic political and economic situation. In terms of its foreign policy, I think that for the Chinese people, for the Chinese leadership, it certainly serves as a symbol of national pride. It serves as a symbol of China’s revival as a great power, as a major player on the international scene. But I don’t think that it has any real or far-reaching impact on its foreign policy. We’re less than a year from the Olympics at this point. I think that if there were going to be this kind of transformative impact, we would have seen some sign of it by now.

An issue that has already had wide-reaching consequences throughout the world, including in the U.S. and Mexico, is the issue of low Chinese labor standards. China, because it gains many jobs from other countries with higher labor standards, is reluctant to change. How can we convince China to raise labor standards so that we can continue our productive economic relationship without engaging in a so-called “race to the bottom”?

I think there are two forces at work that argue toward improving China’s labor standards. One is labor competition in China, which is certainly happening in some of the manufacturing industries, forcing increases in salary. Second is the degree to which multinationals insist that the factories from which they source, for example, operate at only the highest standards. A company like Wal-Mart, which sources down the supply chain from probably 60,000 factories, certainly can have a reasonably profound impact on labor standards if it so desires. There are at least those two forces at work, and there’s probably a third—which is Chinese labor laws that are in the works, reflecting the growing insistence that the multinationals have labor unions. All of these things have the potential to ensure that, down the line, China’s labor standards will rise. I would say that that’s going to happen first in the coastal provinces and that we’re still going to see the same kind of low labor standards in the interior part of China because it will take a longer period of time before we see those standards raised.

As the Chinese economy grows, it will consume more energy and emit more greenhouse gases into the atmosphere. According to a 1998 World Health Organization report, seven of the world’s ten most polluted cities are in China. Acid rain falls on 30 percent of China’s land area. What should the Chinese government do and what is it doing to grow in a more environmentally-friendly way?

There’s no doubt that the leadership of President Hu Jintao and Premier Wen Jiabao places a high priority on the environment in large measure not because of the environment itself but because of how the environment is affecting a range of other social, political, and economic issues. For example, the environment is one of the leading causes of social unrest in China. Environmental degradation is impinging on economic growth in some areas of the country. The environment impacts public health. So I think we now have in China an awareness of the significant impact that the environment can have on the country’s future political and economic development. The real issue is whether the Chinese government will be willing or able to put in place the political and economic incentives for local officials and local businesses to do the right thing when it comes to the environment. For example, China has on its books plans to reduce energy intensity by 20 percent by 2010, but they’ve already missed their 2006 target for this. So what are they going to do to change their progress? What kinds of fines are they going to place on polluting enterprises? Are they going to raise the price of natural resources to encourage conservation or more efficient use? China is in the midst of a building boom. Its buildings are two and a half times less energy efficient than buildings in comparable climates in other countries. How are they going to ensure that developers adhere to the new energy-efficient building codes, which to date, have had a compliance rate of about five percent? The real question is not whether China passes the laws, nor is it whether China is interested in doing the right thing. The real issue is whether China is willing and able to put in place incentives or disincentives to make it easy for the people who hold the real power when it comes to developing the economy and protecting the environment—the local officials and the local businesses—to do the right thing.

Can the U.S. do anything to help China move down an environmentally-friendly path?

The international community as a whole is directly and enormously engaged in the environmental protection effort in China. China is the largest recipient of environmental assistance, both bilateral and from international governmental organizations in the world. Most every environmental NGO, many of which are based in the United States—Natural Resources Defense Council, Environmental Defense, Conservation International—are deeply engaged in China. China is the great frontier for environmental protection, not only because of the country’s own environmental situation but also because of the impact that China has on the global environment.

Is there more that the U.S. government could do? Certainly. We could be more engaged. There are still some limits on the kind of aid that we can provide. The Environmental Protection Agency doesn’t have much funding to do cooperative work with China. On the issue of climate change, we are engaged in the Asia-Pacific Partnership on Clean Development and Climate, which is an effort along with Japan, South Korea, Australia, and India to exchange information and help develop and implement new technologies to control greenhouse gas emissions. There are these kinds of cooperative ventures underway at all different levels. Some of our most environmentally proactive corporations like General Electric are working with the Chinese on energy efficient technologies or technologies that will help sequester carbon. There’s an awful lot going on today between the United States and China.

When you think about China’s environmental problems, the truth is, at this point in time, the real change, the real effort needs to come within China itself. There’s no sense in doing yet one more energy efficient building demonstration project in China supported by a range of U.S. companies if in fact China doesn’t have in place the mechanisms to take that demonstration seriously and have its lessons spread throughout the country. The real challenge is putting in place those economic and political incentives that make it worthwhile to protect the environment.

Another problem stemming from China’s increased energy usage centers around, as you put it in your January 25 column, “China’s insistence that it doesn’t mix business with politics in foreign relations.” China’s oil-driven economic relationship with the Sudanese government has severely complicated efforts to take action on the genocide in Darfur. How can the rest of the world convince China to soften this stance in Sudan and more generally with their policy of not interfering in humanitarian issues involving their oil suppliers?

First let me say that I think the issue goes beyond oil to include other resources, other commodities. It could be timber, it could be diamonds, it could be copper, so this is a challenge that is derived from, in part, China’s global resource quest. It’s not just a function of oil. I think there has been some evolution in China’s position on Darfur, in particular. Ambassador Wang Guangya here in New York 

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