Those of us who sweltered through the heatwave that swept northern India last month might feel that the worst rigours of climate change have already arrived. They would be wrong. An editorial in the Business Standard quotes a grim forecast from a recent report of the National Bureau of Economic Research (NBER): the damage from climate change will be around six times larger than earlier estimates. To be specific, a rise of 3°C by 2100 in the average global temperature above the pre-industrial level – as deemed likely by the United Nations Environment Programme in its Emissions Gap Report for 2023 – would mean a 36% drop in global output, even if all countries fully implement their climate change mitigation commitments. Tropical and subtropical countries like India will be severely affected, and people in general would be 50% poorer by 2100 than they would have been otherwise. Achieving “Viksit Bharat 2047” – a formidable target at any time – will be even more challenging.
Logically, such a dire outlook should propel every country to harness their scientific and financial resources and come together to counter this threat to humanity. But undertaking collective action is always hard, and particularly so when the costs occur today with the benefits following in the distant future. As a result, global cooperation on climate mitigation has been consistently slow, fitful and ungenerous over the years. In recent times, the wars in Europe and the Middle East along with the growing US-China stand-off, have complicated these prospects even further.
Consider another piece of news. The Economist last month published an item titled “China has become a scientific superpower”. This assertion relies on a range of data, including citations of ‘high-impact scientific papers’, patent figures, R&D manpower, investment statistics and publications in prestigious journals such as Nature, Science and Lancet. In particular, China seems to lead in the physical sciences, chemistry, agriculture and the environmental/earth sciences.
Despite US suspicions and its “small yard, high fence” approach to collaboration with China, about 25-30% of its scientific collaborations in the fields of telecom, imaging, chemistry and new materials are with Chinese universities or research institutions. Robotics and AI – where China has a 40% share of published papers – is off-limits for the US, but it is still involved in about 20% of other Chinese research. The global circulation of scientific ideas, whilst constricted, has not ceased completely between these increasingly hostile camps.
On the technological front, China has a clear lead in green mobility and green energy. China’s electric vehicles (EVs) are not only highly efficient and inexpensive but are also catching up in style and design. As the world’s largest producer of EVs, China makes 93% of the world’s photovoltaic cells, where demand has been escalating exponentially. The World Resources Institute says that at least 75% of the planet’s cars must be electric by 2030 for the Paris agreement climate goals to be met. Could China’s leadership in climate-mitigating technology be harnessed to face this challenge? Logically, it is difficult to see how any global climate initiative can succeed without China’s full participation, but the current 100% import duties levied by the US on Chinese EVs (and 25% on batteries) are not encouraging. However, the reaction from Europe has been more nuanced and is worth studying carefully by us in India.
On top of an existing tariff of 10%, Europe has just imposed a levy of 38.1% on EVs imported from China. This precise figure – it seems – has been calculated to arrive at a sale price that will permit the most efficient Chinese manufacturers to make a modest profit, whilst protecting Europe from a deluge of cheap EVs. However, to become effective, this tax awaits approval from individual European countries, so there is yet some space for bargaining with China on Europe’s counter-demands. Still, tariffs are blunt instruments, easy to introduce but thereafter highly addictive for both industry and government, and come with a range of negative effects, familiar to us with our long experience of the licence-permit raj.
Fortunately, there is a second string to Europe’s bow. Some countries like Hungary and Poland have encouraged Chinese companies like BYD, the battery-maker CATL and upstream suppliers to invest and produce EVs, batteries and a whole EV ancillary eco-system in partnership with European companies. This collaborative model not only creates local employment but allows European producers room to modernise and develop their own businesses into niches of globally competitive expertise. It is an approach that India could well consider.
In the wake of the Galwan shock in 2020, India imposed a range of restrictions on Chinese imports, investments and business activities in India, with the intention of developing greater self-sufficiency, at least in critical items. Four years later, we continue to remain as dependent upon the Chinese supply chain – even for our key exports including pharmaceuticals, auto-components, electronics and iPhones – as ever. We need Chinese technicians to install and commission equipment that we have already bought from them. Further, the recent elections have sent a very clear message. People want jobs, not just hand-outs.
Though climate change was not a specific election issue, the increasing pollution of air, water and soil, as well as the rising frequency of adverse weather events, is a worry for rich and poor alike. And if India’s manufacturing businesses – large, medium, small and start-ups – are modernised, they are best placed to tackle both these issues. To do so, they need investment, R&D inputs, key skills and technology. Why not start with a clean slate?
First, let the government clearly specify a limited ‘negative list’ where any Chinese involvement is not permitted on security grounds.
Second – other than those restrictions – let Indian companies freely choose their source for all these inputs (including from China), based on their business and risk assessments.
At the end of the day, China is the world’s second-largest economy, a manufacturing giant and a significant scientific and technological player. Such a move would revitalise our manufacturing industry, create jobs and accelerate our fight against climate change. Let us welcome all companies – whether from China, the West or elsewhere – to partner us on Indian soil and create prosperity for our citizens.
Ravi Bhoothalingam is a corporate coach and an Honorary Fellow of the Institute of Chinese Studies, Delhi.)
