International Agreements, Internal Heterogeneity, and Climate Change: The “Two Chinas” Problem

[Daniel Abebe and Jonathan S. Masur are Assistant Professors of Law at the University of Chicago Law School. Their Article may be found here.]

On July 8th and 9th, 2009, the New York Times published two seemingly unconnected articles about China. One focused on China’s rejection of an agreement to curb greenhouse gas emissions, while the other concerned clashes between Uighurs and Han in Xinjiang Province in Western China. Although these two stories appeared to have little to do with one another, they were actually closely linked. China’s unwillingness to join a climate change agreement is related to its internal political, economic, and social dynamics: the regime’s future depends on its ability to ensure social stability in Western China by guaranteeing high rates of economic growth. A climate change agreement threatens this continued growth, and thus threatens China’s internal balance.

Scholars miss this because they mistakenly treat China as a “black box”: a unitary state whose domestic idiosyncrasies are unimportant. This error has consequences, producing overly optimistic projections about China’s incentives to fight climate change and producing an inability to appreciate the international impact of China’s internal challenges.

The conventional wisdom on China’s willingness to join a climate change agreement reflects this error. The consensus is that the world would benefit from such an agreement, and that such an agreement would be worthless without China. Scholars acknowledge that joining an agreement is not in China’s self-interest. China’s will lose from emissions limitations, while China has little to gain because it stands to lose relatively little if global warming occurs. Despite this difficult problem, scholars conclude that China can be persuaded relatively easily through a series of side payments and that this can be accomplished in a manner that is palatable to the U.S. and Europe.

We believe that this conclusion is flawed. We pry the lid off the Chinese “black box” and explore the impact of internal dynamics on China’s interest in an agreement. Our conclusions suggest that it will be far more difficult to reach a meaningful agreement in the immediate future.

China has several striking internal characteristics. First, China has delegated tremendous authority to provincial and local governments. Second, the Chinese Communist Party’s (CCP’s) success is measured by its ability to create private-sector economic growth. Third, China encompasses an industrialized, prosperous East, and a more agrarian and poor West. Among industrialized nations, China is remarkable in its domestic heterogeneity.

The presence of “Two Chinas” will create problems for negotiating a meaningful agreement. First, the CCP has adopted economic growth to justify its rule. In Eastern China, the CCP’s growth policy worked. Western China, however, is far behind: per capita GDP in Western China is less than half of Eastern China, resulting in income inequality and social instability. Economic growth in Western China has become important and the CCP has prioritized it. China is likely to balk at any agreement that might imperil growth.

Second, as a result of its growth-driven delegation of power, the CCP suffers from an erosion of state capacity: the provinces often ignore the central government, frequently without meaningful consequences. Environmental regulatory agencies are often subordinate to the bodies they regulate.

Finally, the vast majority of economic and scientific projections appear to have underestimated China’s future emissions by failing to account for internal heterogeneity. Eastern China is already industrialized and wealthy; it will likely move towards cleaner technologies and services. Western China is poorer and more agrarian, and the development pattern for such an area involves a shift towards industrialization and higher per capita energy consumption—and Western China is moving in this direction.

Every quantitative forecast of Chinese emissions—save for two—uses only national-level data and washes out distinctions between East and West. Of the two that employ sub-national data, one projects higher emissions than any of the national-level studies; the other projects much higher emissions. This suggests that Chinese carbon emissions in the future may be greater than the models have anticipated, increasing the cost to China of an agreement. Given the importance of economic growth, the structure of Chinese governance, and the need to develop Western China, the prospects for China choosing to join such an agreement in the immediate future seem slim.