China’s hope to see the stars - CHAFTA the platform for collaboration

Night sky
6 March 2015

“I am always more interested in what I am about to do than in what I have already done”

(Rachel Carson, the Silent Spring)

“When a wise man points at the moon the imbecile examines the finger”

(Chinese proverb)

Under the Dome released on Sunday by the Chinese journalist Chai Jing about China’s air pollution has caused a storm, with more than 200 million Chinese viewers already. Over two hours long, Under the Dome highlights the complex problem of pollution in China graphically capturing villagers in Shaanxi province, whose lives were engulfed by smoke from nearby coal plants and her six-year-old daughter who has never seen blue sky. Set in a context of the importance of building sustainable growth for the benefit of generations. It is first and foremost a story of children, intergenerational equity and the need to build a society that is worth being a part of.

The documentary, stunning in its critique of government policy (particularly in the context of President Xi’s tightening of internet controls), was publicly supported by China’s new Environment Minister, Chen Jining, (appointed one day before the documentary was released). In his first press conference the day after his appointment, he commented that he had already watched the documentary and had phoned Chai Jing to thank her for her contribution.

In the documentary fossil fuels, particularly coal, emerge as a major culprit in the nation’s smog plague. Chai Jing clearly articulates the policy tension of reducing coal consumption and the impact on the livelihood of those working in steel mills and power plants in provinces throughout China. Under the Dome does more than bear witness – it (together with the National Economic and Social Development Plan) represents a significant opportunity for Australian / Chinese collaboration and opportunities for Australian business. It is not the end of a relationship with Australian coal manufacturers but a beginning – moving away from low energy, high ash and sulphur towards better alternatives and new opportunities.

In its 2015 Draft Plan for National Economic and Social Development (issued on the first day of the National Party Congress on Thursday 5 March) the National Development and Reform Commission indicates a key element to support the transformation of China to a services economy is innovation in energy production and consumption (including the reduction of carbon dioxide and sulphur dioxide emissions) coupled with the expansion of investment in projects aimed at environmental protection and ecological improvement and the phasing out of outdated production capacity. In further support to clean the coal industry, the Ministry of Industry and Information Technology announced that as part of the 13th Year Plan (to commence in 2016) China will launch a five-year action plan to make the industrial use of coal cleaner and more efficient.

China’s hope to see the stars is the perfect opportunity for Australia/China collaboration and CHAFTA presents the platform. More than half billion tonnes of coal is mined in Australia each year from national reserves that are the fourth largest in the world and until recently was a significant beneficiary of China’s demand for coal. As we have previously argued while CHAFTA is a giant step forward in trade relations between China and Australia, it is not an end in itself. “Brand Australia” needs to emerge (see Australia's FTA with China - Better to grow slowly than to stand still).

The clean coal technology being developed by Australian companies and the CSIRO represents the opportunity to reposition Australia’s coal industry and "Brand Australia" as a leading destination for research, development and technology. Direct Injection Carbon Engines (supported by the industry Coal21 Fund and CSIRO), BCB Technology (supported by industry and CSIRO) are real and exciting opportunities for Brand Australia. Initiatives such as the Australia China Joint Coordination Group on Clean Coal Technology show the power of combined funding and collaboration on low emission coal technology.

It is clear that companies with the most appeal to Chinese investors and capital will be those that address China’s pollution challenge. Australia as a quarry, a farm or a hotel will not deliver long term prosperity. Forging an Australia / China cleantech collaboration will meet the needs in two markets and build the foundation for future prosperity.

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.

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Lizzie Knight

Partner. Sydney
+61 2 9210 6437