Wednesday, February 04, 2009

Ryan Pyle Blog: What the Stimulus Package Means for Green

Image Caption: Who wants a front row seat to an environmental disaster?


In November 2008 China issued a statement saying that it would release around US$600 to stimulate the economy to help cushion the difficulties brought on by slowing western demand for Chinese products and slower growth at home.

The stimulus package was well received by much of the world, but a few notes should be made:

The money has been earmarked for infrastructure, housing and loans for businesses. So basically the money will funnel down to construction companies, cement companies, steal companies, property developers and some small business; which to me sounds like the government basically wrote itself a big cheque beacause most of the industries I listed above are either controlled by the government or are private companies with government appointed executives. This is to be expected because the government still, for all the media hype about capitalism and free markets, still dominates business in China.

Digging deeper, as the world tries to green itself, what does a massive stimulus package like this mean to environmentalists around the world? Well, the news is not good. For Australia specifically, and any country producing raw materials, the news is great as mining will pick up again. Oil producing countries are surely pleased and this mini boom will further opportunity to mineral exploration both in the sea and below the earth. So basically the world is set to get a whole lot dirtier in the name of short term financial gain.

Sure green technologies are available, but are they ready to step in and fill the big shoes of coal and gas? Not yet. Maybe we can make the transition during the next recession. Until then, the world wide consensus seems to be lets just roll on with our polluting ways.

It's safe to say that over the next few months pollution is at the bottom of the agenda in the minds of Chinese officials, even more so than normal. This is because in the short term, politics could become tense here in China. The government needs to keep migrant workers busy, so that they don't protest, and that means either low paying manufacturing jobs or construction. The construction industry is easier to manage because it's state dominated so that is where the investment will be. More steal and concrete are on the way, two of the most dirty industries in existence; and China will need more coal fired power plants to fuel the archaic (inefficient), old steel and concrete mills. Progress for the greens over the coming years is not looking good. And for all of those who are downwind from China, namely Korea, Japan and even California, beware.

Pollution levels at home in Shanghai for the next years, who knows. For those in the worse affected areas be ready for higher rates of birth defects and lung cancer for air-born pollution and stomach cancel for those drawing water from industry and fertilizer polluted water ways. But for those of us who don't live in rural China next to a coal fire power plant or a chemical company, let's think of all the money we can make if we time the stock market right.


Ryan Pyle

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Ryan Pyle