China/Copenhagen: Copenhagen's talks about global warming were supposed to bring the nations of the world together in agreement. After all, countries may disagree about borders, finance and economics, but they all surely want to prevent the apocalypse. Yet with just a week to go until an accord must be reached, the UN's two-week environmental powwow has become a new source of global instability.
Consider some of the fault lines. China is now the world's largest single emitter of greenhouse gas emissions. It wants the United States and other rich nations to pay the cost of its own clean-up. Yet, China's position as spokesman for the underdog is also under threat. Tuvalu, a tiny island nation that will literally be wiped off the map if sea levels rise, wants all nations to commit to legally binding terms. That proposal has been rejected by China, India and other large, poor nations.
China's position isn't really consistent. On one hand, it won't pay for the gases it creates in making cheap products for Western consumers. But, nor is it prepared to see the buyers pay, through increased charges on carbon-heavy imported goods.
A too hard Chinese push may backfire, by giving credibility to unilateral actions that damage global trade. Take the idea of "border carbon taxes". Were industrial countries to meet targeted 14-18 per cent cuts in emissions by taxing imports based on the amount of carbon used to make these, Chinese manufacturing exports might fall 21 per cent, according to a World Bank analysis.
The effects of that would be grave. At best, China might devalue its currency to recoup export market share in the United States. At worst, it might impose copycat tariffs of its own, and begin a punishing sell-off of its $1 trillion-plus of dollar-denominated assets, removing a central pillar of support for the international trade system.
When world leaders meet in Copenhagen next week, they should remember that distant global warming needs to be weighed up against the possibility of a much more immediate economic freeze.
