Can China go green?

Sometime last year, amidst election night debates over the need for the US to spark a green revolution, it began to occur to me that China might be a more natural place for a green economy to take root. This might seem surprising: China is better known for its blackened rivers and lead-tainted toys. Yet China’s green transformation is coming about not despite these environmental problems, but because of them.

After all, most of the technologies we’re talking about — from solar panels, to batteries, to green IT — are manufactured goods already made mostly in China. What’s more, China needs new investment in energy capacity more desperately than any other country and is spending more per year than most developed countries put together. Then there’s the political part of the equation. Toxic air, water and earth are eroding quality of life for China’s emerging middle class. As Thomas Friedman suggested in a NYTM piece last year, China’s one-party policitical system has maintained its grip on power by delivering better quality of life year in year out. If that formula fails, latent desires for a more responsive government will surface. Put simply: environmental degradation is a threat to the Communist Party.

Put it all together and it becomes clear. China makes most of the world’s stuff and faces a dire need to clean up its environment. China is likely to first become the manufacturing and export base for many of the green technologies the US will buy, as is already the case with solar panels. In time China will likely become the largest market for these same goods, since it is spending far more than the US to build cities, grids, housing, and power plants.

What’s surprised me is how fast this has come to be. Over the past three months, I’ve worked with a team of BusinessWeek colleagues to identify some of the companies emerging in China’s green economy. To be sure, this is happening at the edges: Growth comes first and foremost there, so headlines about China’s green issues will be dominated more by its intransigence about greenhouse gasses output than its progress. Just today, Friedman’s colleague Paul Krugman tackled this in the NYT, pointing at what’s likely to be one of the most vexing issues in the dawn of carbon limits in the U.S.: how to handle the carbon content of imported goods.

But change is afoot in China. And the country’s green awakening, however nascent, opens up many questions. Is China, ironically, the best hope for low-cost green technologies? How should we treat the carbon content in goods it sells to the US? And will the “China price” for green technologies suffocate their development here?

Read more on these issues here in our special report, Can China Go Green?, and let me know your thoughts here, too.

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