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Back from Europe with new thoughts on China

I had a wonderful three weeks in Germany and Denmark, where I attended a wedding and met my wife’s distant relatives. It was a time full of conversation and reflection that reminded me of the dangers of being a China blogger: I start entirely too many sentences with “In China…”, and everything reminds me of China.

So today I’d like to share a few thoughts I had on China during my travels, and then we’ll get back to the usual 5 posts a week on China in the modern world.

And yes, I am very aware of the dangers of a quick visit (consider that link required reading), so these observations are coming from recurring themes in conversations with a few dozen people.

People consume as much as they can

This is an economic view of the world (quite different from my religious hopes), that people will consume as much as their resources allow. It’s no secret that over-consumption is becoming an American characteristic, but after seeing Europe, I think it has less to do with culture than incentives.

American wages are relatively higher than Chinese, and prices in the States are much lower than in Europe (where $4 cokes were a common sight at the gas station). I think American’s consume huge amounts simply because we can.

Despite hearing from a number of smug Europeans that their fondness for bicycle riding and solar panels was born out of their deeper appreciation for the environment, I was told many times that this was not the case for everyone. With gas costing $7-8/gallon in Denmark, many of the relatives told us that people bike because they can’t afford to drive. A German told me that he had only covered his roof in solar panels because he had been convinced that the gov’t incentives would make it a good investment, but after poor performance wishes he had spent his money elsewhere. This was supported by the lack of solar panels in Denmark that did not have a similar policy.

This reminded me that even though China points to its low power consumption per capita, it is also not out of environmental concerns, but because people simply can’t afford to buy the devices that suck up the wattage.

Incentives work, but can go terribly wrong

However, these high prices and solar incentives are working incredibly well when it comes to protecting the environment. In Germany I mused daily over the fact that they have the 4th largest GDP, but everywhere you look it is green, green, green. Germany is a small country, with a small population (compared to China), but it’s population density is comparable to some of China’s central regions (no where close though to Beijing and Shanghai). Yet in China, you have to travel to its most remote regions for a breath of fresh air (something Germans were completely disgusted by).

To me Europe seems to be proof that incentives can be used to encourage people to make the decisions that ultimately benefit the whole society, and China is slowly moving in this same direction (except in the area of consumption). A good first step might be to stop subsidizing oil, which only encourages its use (China now imports a larger percentage of its oil than the US). To me it seems that China must move in a direction that is decidedly more European, but I know that increasing the cost of living would be counter to the Party’s primary objective – Stability.

Hopefully in the next few years China’s priorities will shift toward creating a more sustainable economy, and someday we will marvel at how China managed to turn its problems around.

For the last two days at least, I’ve caught glimpses of blue sky over Nanjing, so I’m feeling unusually optimistic.


10 Comments

  1. Anonymous says:

    Tom, I am continually amazed how your global perspective influences what you see and what you write. How important for the United States to grow in our understanding of being part of a global community and increasingly share our experience, insights and development with the rest of the world community WITH also an openness to learn from others. Glad you had such a good vacation experience!

    • Tom says:

      I think Germany and Denmark are much closer to how the future will look than what we see in the US at the moment, and even though taxes are amazingly high, it seemed like people felt that they were actually getting something in return.

      • Diederik says:

        They do. Higher education is way cheaper in those countries than it is in the US for example.

        Off topic; it’s the first time I post a reply, but I am enjoying reading your blog for some weeks now. Keep up the good job!

      • Tom says:

        Thanks for your support diederik.

  2. Paul says:

    I doubt it, Tom. I think (most) European countries have excessively generous social welfare that just doesn’t pan out without massive deficits. Couple that with the US essentially giving them a free ride on National Defense (something we probably won’t be doing much longer as we focus more on Asia and move to cut back our spending in other regions) and I think Europe will have to significantly cut back on their welfare programs (or raise taxes even further).

    Personally, I think the US has to move a bit more in Europe’s direction and Europe has to move a bit in our direction. Our tax rates are quite low compared to other “rich” countries. It is extremely frustrating to hear our (mostly republican)politicians demonize anybody that attempts to raise taxes, but I think it will have to happen.

    • Paul says:

      My point is, I think the future will be a middle way between the US and European systems.

    • Tom says:

      They are getting subsidized security, and many of their programs are struggling during the economic recession. However I don’t think EU-US relations are going to be changing anytime soon, so they will continue to enjoy that for sometime (As well as the attacks that come with being our partner).
      I think the US has huge distances to cover in accepting that taxes can create benefits, and that gov’ts should play a role in creating a more livable society. Europe isn’t perfect, but it is a more equitable society and at the moment, I’m not very optimistic about politics in the US, and neither was anyone in Europe.

  3. yaxue c. says:

    Welcome back, Tom. Having never setting foot in Europe, I will just enjoy the conversation quietly.

  4. Thanks for this informative post, I also enjoy reading your blog every week!

  5. […] you’ve read my post, Back from Europe with new thoughts on China, you know I enjoy contemplating the connection between business, culture, and gov’t. So while […]

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