Greening with Chinese Characteristics
In the midst of the Olympics, I missed an interesting story about a car tax that will go into effect September 1. Ostensibly it is designed to reduce pollution and vehicles that use a lot of gasoline. However, as the Economist points out, the real goal is to reduce imports from foreign car manufacturers, who conveniently make most gas-guzzlers.
Yet, while that sounds sinister, there is no real way to be cynical about this move. Even though China did not come up with this idea with the environment in mind, it nonetheless shows how the WTO can help promote a more efficient marketplace. After the WTO Court ruled that China’s import tariffs were in violation of their committments to free trade last month, the government came up with a creative way to continue to protect its local auto industry.
One might argue that this is protectionism, and it is. But the Chinese have managed to create a genius and positive form of it. They were only able to implement this policy because the local car industry has a natural advantage over foreign competition: its fleet is more fuel efficient. If, for example, things were reversed and domestic industry was producing gas guzzlers, the Chinese never could have gotten away with taxing smaller engines. Instead, China can promote this policy because it is in the interest of the enviornment, an area that the free market typically ignores (free market economics never work well with externalities).
So I say kudos to an increasingly sophisticated group of Chinese lawmakers. Regardless of the motives behind the move, the results will be positive. Not only will more of the cars on the road be of the Chinese small-engine variety, which use less gas, but you should also expect to see foreign competitors building more models that fit the mold. And don’t be surprised if many of them end up in markets outside of China, cleaning the air for those in the rest of the world as well.
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Nick responds:
Posted: August 28th, 2008 at 6:51 pm →
Great news. I applaud China for this development. Next step is to lay the smack down on the dicks driving grey market hummers . You mentioned it in your post: America’s export to China, Arrogance.. “The attitude is I can afford a huge car, so I should have one.” If I had a kuai for each person that asked me to import them a car I’d have about 20 kuai in my bank account by now..accumulating interest.
克来夫 responds:
Posted: August 29th, 2008 at 4:12 am →
Yes, whichever way you view it the outlook should be good.
stuart responds:
Posted: August 30th, 2008 at 9:45 am →
Having read Imagethief’s post on the post-Olympic return of Beijing’s smog, the policy is also necessary.
However, I suspect that the Chinese obsession with size as a status symbol will ensure that Hummers and the like will be roaming the streets for many years to come.
nanheyangrouchuan responds:
Posted: September 1st, 2008 at 12:29 am →
Then how do you justify the same tariffs on small, fuel efficient cars from foreign makers? Also, are you so sure that Chinese cars have cleaner emissions than foreign ones, regardless of mpg efficiency? A small engine doesn’t mean much if the combustion is sloppy and the catalytic converter is junk.
chineselives.info responds:
Posted: September 4th, 2008 at 9:35 am →
Wto is where nations fight for their best benefits. i m glad China can stand out for its own. Imported cars are sold nearly double the original price, I guess it is out of protectionism. But who do not have protectionism to their weak and growing industry?
Le misure ambientaliste a Pechino? Dimenticate » Panorama.it - Mondo responds:
Posted: September 22nd, 2008 at 5:08 pm →
[...] il Paese è entrata in vigore una normativa che prevede l’applicazione di una sorta di “tassa verde” sulle automobili. Presentata come manovra utile per tenere sotto controllo i livelli di [...]