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China, air pollution and Peter Thiel

15/10/2014

One of the striking features visiting China when coming from New Zealand is most definitely the ubiquitous smog which clouds up the sky due to air pollution.

In fact while I was there, two Americans I spoke to showed me the air pollution app they have on their smart phones showing the number of particulates at that current moment in time. The first time I saw it Shanghai registered 57 officially and 110 (this is apparently good) according to the US consulate while from memory Beijing registered 349 (this was severely polluted).

There is some more on the science of air pollution here and of particulates here for those who are so inclined. This helps to explain the prevalence of surgical masks in these centres (although I must say I did not notice very many masks in Shanghai as compared to Beijing which I visited 5 years ago). Here is a quartz post on the most polluted cities in the world where Chinese cities rank surprisingly low.

This brings me to the heavily discussed Chinese economic miracle. It may have seemed almost heretical to CCP insiders at the time but many Chinese in the major cities have adopted economic reformer Deng Xiaopeng’s aphorism that “to grow rich is glorious”.

The reduction in absolute poverty levels which has followed the reforms in China are tremendous and worth celebrating. The significant rise in Chinese income per capita from 1980-2000 is well demonstrated by this graphic.

At the Frankfurt airport as I passed through I bought Peter Thiel’s book Zero to One: Notes on Startups or how to build the future. Thiel is the billionaire entrepreneur and investor who co-founded paypal and palantir industries and was an early investor in Facebook.

The interesting question Thiel asks in his book is how do you create something entirely new? Creating something new means going from zero to one and not simply copying an existing idea or product. Thiel describes this as vertical progress as opposed to horizontal progress which is copying existing methods which work well. According to Thiel technology represents vertical progress and globalisation represents horizontal progress.

Thiel believes China is making horizontal progress:

China can grow so fast only because its starting point is so low. The easiest way for China to grow is to relentlessly copy what has already worked in the West. And that’s exactly what it’s doing: executing definite plans by burning ever more coal to build ever more factories and skyscrapers. But with a huge population pushing resource prices higher, there’s no way Chinese living standards can ever actually catch up to those of the richest countries and the Chinese know it. This is why the Chinese leadership is obsessed with the way in which things threaten to go worse.

A fairly sober view. China daily news reported a 5 year plan had been outlined by the government to raise targets for renewable energy but time will tell as to the effectiveness of such a policy. Environmental concerns coupled with protests for democracy taking place in Hong Kong make the question of what China will look like in the next 20 years a fascinating one.

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