China Eye October 2014 Issue 6 by China Energy Fund Committee

China Energy Fund Committee (CEFC) is a nongovernmental, nonpartisan, not-for-profit Chinese think-tank registered in Hong Kong. It has Special Consultative Status with the United Nations Economic and Social Council (UN ECOSOC). CEFC is dedicated to fostering international dialogue and understanding of cultural values, regional cooperation, energy security, and issues relating to China’s emerging place in the world. We aim to promote international cooperation and mutual respect through public diplomacy. We believe an enhanced understanding of one another’s historic legacy and cultural values would lead to a more accurate interpretation of our respective actions.

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Appeal for Support China Energy Fund Committee (CEFC) is a not-for-profit civil society organization and a public charity under Sec. 501(c)(3) of the Internal Revenue Code of the USA. It relies on contributions entirely from the public, individuals, groups and foundations. With your financial support, we are able to deliver research programs, launch cultural exchanges, lectures and briefings led by international specialists, enabling us to fulfill our mission to promote international understanding, cooperation, and mutual respect through public diplomacy. CEFC is also registered as a tax-exempt non-governmental organization in Hong Kong. All contributions are tax deductible to the full extent allowed by law. For more information about CEFC activities, please contact JohnTsang@chinaenergyfund.org. We appreciate gifts of any amount. Please make your check payable to China Energy Fund Committee (USA) INC. and mail it to our office which is located at 1100 Wilson Blvd, Suite 2500, Arlington, VA 22209. Please also provide us with your name and mailing address, so that a tax deductible receipt may be sent to you. Thank you for your generous support!

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Editorial Board (編輯委員會) Chairman: YE Jianming (葉簡明) Vice Chairman: CHAN Chau To (陳秋途) Member: HO Chi Ping Patrick (何志平) Member: LO Cheung On (路祥安) Member: ZHANG Ya (張雅) Editor-in-Chief (主編) HO Chi Ping Patrick (何志平) Deputy Editor (副主編) LO Cheung On (路祥安) Executive Editor (執行編輯) ZHANG Ya (張雅) Editorial Assistants (編輯助理) Daniyal NASIR (黎庭耀) LEE Ching Hang Koch (李政恆) --------------------------------Published by China Energy Fund Committee 34/F, Convention Plaza Office Tower, 1 Harbour Road, Wanchai, Hong Kong , China Visit our website at www.cefc-ngo.co --------------------------------For enquiries of distribution in the United States, Please contact CEFC U.S. Office 25/F, 1100 Wilson Boulevard, Arlington, VA 22209, U.S. --------------------------------Editor’s Note The authors whose original contributions were written in Chinese have given their permission for the articles to be translated into English, although not necessarily having vetted the English translation. -------------------------------All rights reserved. No part of this publication may be reproduced in any form or by any means without the written permission of the publisher. ISSN 2311-2506

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Editor’s Note

International Cooperation in a Changing World (變動世界中的國際能源合作) We live in an increasingly interconnected and turbulent world. Looking back, 2013 has proven to be an unusual and unsettling year, with the fall of governments and terrorist attacks to revelations of eavesdropping on politicians and spying on ordinary citizens, not to mention continued bloodshed in the Middle East. On the other side of the globe, increasing tensions in the Korean Peninsula constitute the single likeliest source of instability and military conflict in the region. A resolution of the maritime disputes in the East China Sea is still far from being reached. While the US considers the most destabilizing factor to be in the Korean Peninsula, both China and Japan consider each other the greatest threat to stability in the region. The year 2013 has been an extraordinary year in China’s development. In the 12th National People’s Congress, China’s new central leadership put forward the Chinese dream of realizing the great renewal of the Chinese nation. The Third Plenum of the 18th CPC Central Committee sounded the clarion call for comprehensive deepening of reform in China. What development path will China take in the future? What domestic and foreign policies will it pursue? Can China rise peacefully? Is mutual trust a term of convenience or does it really come into the equation of international relationships? The “Thucydides Trap” – Origin of Mistrust or Insecurity? As China keeps enjoying rapid development over the years, various versions of “China Threat” have surfaced – that China may walk down the beaten path, that a country will inevitably become arrogant and seek hegemony when it grows in strength. Perhaps those perceptions are deeply rooted in a Cold War mentality and the hypotheses made by offensive realists. John Mearsheimer of Chicago presupposes that it is impossible for states to be sure about each other’s intentions, especially future intentions. In an anarchic system where there is no ultimate arbiter, states that want to survive have little choice but to assume the worst about the intentions of other states and to compete for power with them. This is the tragedy of great power politics.1 Graham Allison of Harvard also warns the United States and China not to fall into the “Thucydides Trap”. Allison is referring to Thucydides’ famous statement that it was the rise of Athenian power and the fear it inspired in Sparta that constituted the true cause of the Peloponnesian War.2 Given anarchy and mistrust, security seeking states will pursue aggressive policies up to and including war. This conflict will sometimes lead to tragic outcomes, because in some cases, both

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sides will be motivated by an urgent sense of insecurity – a defensive consideration, not aggression – and an anxious anticipation of the worst scenario befalling them. In fact, the popular belief that a rising China will severely threaten U.S. security could become a self-fulfilling prophecy when China is encouraged or provoked to engage in adventurous policies, or when the United States overreacts out of fear. Should Washington fail to understand that China’s growing military capabilities do not threaten vital U.S. interests, it may adopt overly competitive military and foreign policies, which may in turn signal to China that the United States has malign motives. Should China then feel threatened and less secure, it will be more likely to adopt competitive policies that the United States will see as more threatening. A vicious cycle is thus kick-started with a negative spiral, driven not by the international situation the states are actually facing, but by the exaggerated threat anticipated. This is the “security dilemma” we have to address today. China as a Stability-seeking State As Chinese Foreign Minister Wang Yi said at the General Debate of the UN last year, “the culture of a country determines its values, and its history points the way to its future”. The Chinese nation loves peace and Chinese culture values harmony. Throughout history, what the Chinese pursued was foreign contact and trade, not foreign aggression and expansion. What guided them was patriotism to defend the nation, not colonialism to occupy new territories.3 Whereas Julius Caesar said “I came, I saw, I conquered”, the Chinese leader said “I came, I saw, I made friends, and I went home”. Not one foreign battle was fought, not one colony seized, and nobody was enslaved. Looking back over the past thirty years since China adopted its reform and opening-up policy, there have been no civil wars and no invasions or aggression outside its borders. There has been no refugee problem, no conflict or financial crisis triggered by China. As many scholars observed, although China’s relative power has grown significantly in recent decades, the main tasks of Chinese foreign policy have been defensive and have not changed much since the Cold War era: to blunt destabilizing influences from abroad, avoid territorial losses, reduce its neighbors’ suspicions, and maintain economic growth.4 China has and will continue to honor its promise, serve as a staunch force for upholding world peace and restrain from meddling in other countries’ internal affairs. Resolution of Territorial Disputes Territorial disputes are often mentioned as having the potential to trigger conflicts between China and its neighbors. Indeed, some observers have often argued that China is no longer maintaining its decades-long “Tao Guang Yang Hui” (韜光養晦) approach (meaning “not to show off one’s capability but to keep a low profile”), and has adopted a more assertive foreign policy, supported by its behavior in the recent territorial disputes. Is China likely to resort to force over territory as many have argued? According to Taylor Fravel of MIT, the short answer is that Beijing has always exhibited a preference for peacefully resolving territorial disputes through negotiations. In fact, since 1949 China negotiated compromises in 17

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out of 23 territorial disputes, often agreeing to accept less than half of the territory being disputed. And, the compromise in 15 disputes created conditions for a final territorial settlement through bilateral agreements. Fears that China’s rise will lead to territorial conflicts are unsupported by its historical record. The concept of today’s nation state comes from the Peace of Westphalia of 1648 following the Thirty Years’ War in Europe. However, China, with five thousand years of history and having been through more than 15 different dynasties, each with a differing size of governing territory, can best be regarded as a civilization state. Our cultural values and concept of time and history are different, and this affects our policy with regard to disputes with some countries over territorial sovereignty and maritime rights and interests. Those disputes that cannot be solved for the time being should best be shelved for wiser future resolution. We can wait for another ten years, twenty years or fifty years, as fifty years is just a blink of an eye in the long history of China. The Chinese have eyes for a generation or two, while politicians in other countries can only focus on fewer than the next four years – the term of their appointment. With regards to Sino-Japanese relations, Premier Zhou Enlai (周恩來) once said that China and Japan have been friends for 2,000 years and have had only 50 years of misfortune. When we examine our relations, we should cast our eyes on the history over the past 2,000 years and also learn from the lessons of the last 50 years. We should take history as a mirror and walk hand in hand with each other into the future. Cooperation benefits us both, while confrontation hurts both. Mutual Reassurance and Energy Cooperation In general, cooperative behavior tends to reassure. Indeed, reassurance can be defined as the process of building trust. Dialogue can reduce misperceptions, enhance communication, and provide venues for personal relationships among government officials, military officers, and scholars. Through an earnest exchange of views and feelings, we might discover that we all have more in common than we have differences. We are all subject to the devastation of natural disasters, such as the 2008 Sichuan earthquake in China and the 2011 Tōhoku earthquake in Japan. We are all in need of energy for development and are all victims of the exorbitant price of natural gas sold to this area. Indeed, perhaps the best entry point for international cooperation, especially among the great powers, is energy. This is one reason why we discuss energy cooperation in the same breath as we do geopolitics. In my previous capacity as the Secretary for Home Affairs of the Hong Kong Special Administrative Region, I have come to learn that mutual trust and respect are the prerequisites to any conflict resolution. Mutual trust and respect comes from a better understanding of each other’s history, culture and social norms, which is why CEFC, apart from addressing energy issues, takes an intense interest in promoting Chinese culture and values. After all, from major-states relationship to peaceful world order, the common denominator is respect: respect of man’s own spiritual needs, respect of nature’s needs, and respect of our fellowmen’s needs, as well as respect of our future generations’ needs.

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We are truly living in historic times, and building new confidence and trust is one of the greatest challenges in the region. I am confident that our peoples will have the wisdom and courage to truly grasp this moment and begin to build a better world in the years ahead.

Editor-in-Chief Dr. HO Chi Ping Patrick (何志平) Deputy Chairman and Secretary-General China Energy Fund Committee

* The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

1 2

3 4

Mearsheimer, John J. (2010). Structural Realism. In T. Dunne, M. Kurki & S.Smith (Ed.), International Relations Theories: Discipline and Diversity, (2nd Ed., p. 81), New York: Oxford University Press. Allison, G. T. (2013, June 6). Obama and Xi Must Think Broadly to Avoid a Classic Trap. The New York Times [New York]. Retrieved from http://www.nytimes.com/2013/06/07/opinion/obama-and-xi-must-think-broadly-toavoid-a-classic-trap.html?_r=1& Wang, Y. (2013, September 28). China at a New Starting Point. Retrieved January 2, 2014, from http://www.fmprc. gov.cn/eng/wjdt/zyjh/t1082330.shtml Nathan, A. J., & Scobell, A. (2012, August 16). “How China Sees America”. Foreign Affairs. Retrieved April 1, 2013, from http://www.foreignaffairs.com/articles/138009/andrew-j-nathan-and-andrew-scobell/how-chinasees-america

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contents Editor’s Note International Cooperation in a Changing World

(變動世界中的國際能源合作)

HO Chi Ping Patrick (何志平)

Foreign Affairs The Philosophical Perspective of China’s Diplomacy

(中國外交的哲學理念)

QU Xing (曲星)

100 years after World War I

(一次大戰百年之后)

HO Chi Ping Patrick (何志平)

Respect as a Prescription for Security Frictions (尊重別人﹕防衛磨擦的不二解方)

FALLON, William J.

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Sustainable Development The Post-2015 Development Agenda: Setting the Stage!

(2015年后的發展議程：做好準備！)

ASHE, John W.

The Age of the Anthropocene

(“人類世”的時代)

SACHS, Jeffrey

New-Type Urbanization and Sustainable Cities in China: Critical Issues and Policy Choices 36 (中國新型城鎮化的關鍵問題與政策選擇)

ZHU Dajian (諸大建)

Transformative Urbanization in China: Inclusiveness, Livability and Sustainability

(中國的城鎮化轉型：包容、宜居、可持續)

PAN Jiahua (潘家華)

Energy Diplomacy Possible Changes in International Energy Relations and Their Effects in the Next Decade

(未來十年國際能源關係的可能變化及其影響)

WANG Haiyun (王海運)

The Increasing Influence of Japan’s Energy Policy on its Foreign Policy

(日本能源政策對外交政策的影響)

HAMADA Takujiro (濱田卓二郎)

Energy Partnership among China, the United States, and Japan

(中美日三國的能源合作伙伴關係)

TOYODA Masakazu (豐田正和)

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Changing World Order and Energy Security in the 21st Century

(轉化中的世界秩序與二十一世紀能源安全)

JEREMIC, Vuk CUYAUBE, Miguel Angel Moratinos BENAISSA, Mohammad WANG Yiwei (王義桅)

Energy Cooperation and Nuclear Security in the Age of Sustainable Development

(可持續發展時代中的能源合作與核能安全)

JEREMIC, Vuk AL-SABAH, Sheikh Muhammad Sabah Al-Salem WIRAJUDA, Nur Hassan

Nuclear Energy The Real Nuclear Threat

(真正的核子威脅)

AZIZ, Shaukat

Global Governance and International Regimes for Nuclear Energy

(全球治理和國際核能機制)

TANIGUCHI Tomihiro (谷口富裕)

Recent Advances in China’s Nuclear Energy Development (中國的核能發展新進展)

WANG Biao (王彪)

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The Philosophical Perspective of China’s Diplomacy QU Xing (曲星)

Foreign Affairs The Philosophical Perspective of China’s Diplomacy (中國外交的哲學理念)

QU Xing (曲星) 100 years after World War I (一次大戰百年之后)

HO Chi Ping Patrick (何志平) Respect as a Prescription for Security Frictions (尊重別人﹕防衛磨擦的不二解方)

FALLON, William J.

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The Philosophical Perspective of China’s Diplomacy QU Xing (曲星)

The Philosophical Perspective of China’s Diplomacy (中國外交的哲學理念) QU Xing (曲星) President of the China Institute of International Studies (CIIS) Former Minister in the Chinese Embassy in France

nternational order is governed by codes of conduct which are formed by a series of international rules, regulations, guidelines, ideologies and laws. These codes of conduct are formed mainly to safeguard world peace and promote global development, so that people of all countries can lead a better life. Any country acting contrary to the codes of conduct will be condemned by other countries, and may have to pay the price. Macroscopically speaking, each international order was formed after a drastic change of relations among great powers. In 1648, after the Thirty Years’ War in Europe, the Westphalia System was formed; In 1815, after the Napoleonic Wars, the Vienna system was formed; After World War I in 1918, the Versailles - Washington system was formed; And in 1945, after World War II, the Yalta system was formed. Microscopically speaking, international order is a reflection of relative national strength. The international order changes as national strengths change. From the micro to the macro, this is a cumulative process. Precisely for this reason, there has been a lot of speculation of the current international order. The Chinese people were, in general, unaware of the significance of the Westphalian and Vienna system. In the past, China had established a system of international order in East Asia and held a dominant position within it. At the time, the Chinese were content with

this, oblivious to the changes occurring in other parts of the world. It was not until 1840, when European powers invaded China in the First Opium War, that China began to very painfully build relations with foreign countries. This process lasted for almost 100 years, where, every ten to twenty years, there was a foreign invasion. Meanwhile, China suffered from numerous civil wars brought about by foreign intervention. Up until 1949, China was a victim of this type of an international order, and there was a general sense of injustice among the Chinese at the time. During the thirty years after the founding of the PRC, China was in discord with international order. The U.S. and China did not have diplomatic relations, and the relationship between the Soviet Union and China later deteriorated. Therefore, when Indonesian President Sukarno proposed to establish the revolutionary United Nations, China showed strong support. Later, China also proposed to establish a new international order. After the reform and opening up, China found that the international order after World War II, though not perfect and needed improvement, maintained basic stability. Despite incessant localized conflicts, the fact that relationships among major powers were basically stable meant that global peace on a macro level was maintained. Conflicts among major powers can more or less be eased or even resolved within the framework of the international system. In

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The Philosophical Perspective of China’s Diplomacy QU Xing (曲星)

QU Xing at the Luncheon talk organized by the China Energy Fund Committee

such a system, the Chinese economy has gained rapid development. Today, China is the world’s second largest economy, with a trade volume expected to top the list. In other words, China gained the opportunity for development from the current international system. In a word, China used to be a revolutionist in the international order, whereas now it is a reformist of the system. That is to say, China does not consider the current international order as perfect, nor does it want to overthrow it to build a new one. Therefore, China and other countries in the world have a lot in common. Historically, the greatest threat to international order has stemmed from rising powers challenging the great powers of the time. This is the so-called Thucydides’s Trap. The ancient Greek historian Thucydides pointed out in The History of The Peloponnesian War, that “the growth of the power of Athens, and the alarm which this inspired in Lacedaemon, made war inevitable”. In the theory of international relations, there is always conflict

between rising and established powers. During the 20th century, challenges from rising powers against international order inevitably led to war. It is for this reason that many people believe that a rising China will similarly threaten the position of the U.S., and a “Thucydides trap” will appear. From the point of view of traditional Chinese culture, for thousands of years the Chinese have advocated benevolence, not hegemony. Benevolence calls for reasoning, and not oppression. In political reality, China’s constitution contains anti-hegemony provisions, opposing not only the hegemony of other countries, but also China becoming a hegemon itself. In 1974, Deng Xiaoping said at the UN General Assembly that “China will never become a superpower. If, one day, China also becomes a superpower, then people in China and abroad are welcome to overthrow this hegemony-seeking Chinese government”. Never before on the international stage has the leader

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The Philosophical Perspective of China’s Diplomacy QU Xing (曲星)

of a country expressed his/her determination to oppose hegemony in such a way. China has repeatedly emphasized that it does not intend to challenge the U.S. This is not diplomatic talk, but a sober understanding of reality. Over the course of the First and Second World War, many American soldiers lost their lives in Europe. The dominance of the United States today was exchanged with the lives and blood of these American Soldiers in Europe. The Chinese are acutely aware of this, and therefore have no intention of challenging the U.S. Historically speaking, China and the U.S. are more often allies than not. In the late Qing Dynasty, when China faced being divided up by foreign powers, the U.S. proposed an “open door, equal opportunities” policy. Of course, the U.S. had its own interests in mind, but objectively speaking, this inhibited the divide of China. In World War II, the two countries fought side by side and defeated fascist Japan. Although Sino-US relation went through ups and downs as a result of the Chinese Civil War, in the 1970s, the two countries found common interests in constraining Soviet hegemony. Without a full understanding of the Thucydides trap or exact measures to prevent it, their relationship could turn sour under mutual suspicion. Therefore, when Chinese leaders proposed to establish a new model for majorcountry relationships, a core aspect was to avoid the historical circle of “power leading to hegemony”, that rising powers and established powers cannot coexist in a win-win situation. To this perspective, U.S. President Barack Obama has also offered a positive response. The Chinese collective leadership in session has stressed the importance of achieving a winwin situation in foreign diplomacy. In the past, it was “peace, development and cooperation”. The Eighteenth National Congress amended this to “peace, development, cooperation and mutual success”. China hopes to create an international environment conducive for countries seeking development opportunities

for larger wealth. When the PRC was founded, it had territorial issues with twelve neighboring countries. Now, 90 percent of China’s land territories have been clearly demarcated. I myself have studied Chinese diplomatic history for over 20 years and am familiar with every stage of diplomatic negotiation and resolution. I know how China resolved problems in a practical manner through mutual understanding and discerning the rights and wrongs of history. Take Hong Kong for example. There were a series of unequal treaties which could have been completely abolished. But acting in a realistic manner, China acknowledged the development of capitalism in Hong Kong, resulting in the “one country, two systems” policy. This demonstrates the pragmatism of the Chinese. Hence, China does not consider the resolution of territorial disputes a precondition for establishing diplomatic relations. Territorial issues are very difficult to resolve. If this were a prerequisite to establish diplomatic relations, there wouldn’t be any diplomatic relations. China’s method is to first establish diplomatic relations, and then to solve the problems within this diplomatic framework. Should the negotiations fail to result in an agreement, China’s approach is to set the issue aside, and leave it to the next generation. China’s relationship with other nations is governed by more than just territorial disputes. For example, Sino-Japanese relations are like a big tree with many branches. One of these branches has a tumor. China’s approach is to freeze it, to prevent it from spreading and allow the other branches to grow. This way, there will be less divergence and more cooperation. When cooperation reaches a certain stage, it will be much less difficult to deal with any differences. With respect to the diplomatic incidents last year, it was not China who acted to change the status quo. China would also like the international community to help solve the conundrum in East Asia. We should sit down and negotiate, rather than quarrel at every

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The Philosophical Perspective of China’s Diplomacy QU Xing (曲星)

turn at international conferences. Quarrelling will only succeed in stirring up emotions, and it is less likely that agreements will be reached. Of course, this does not mean that China will remain silent when others attempt to change the status quo. This is the history, cultural background and philosophy of Chinese diplomacy. * The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

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100 years after World War I HO Chi Ping Patrick (何志平)

100 years after World War I (一次大戰百年之后) HO Chi Ping Patrick (何志平) Deputy Chairman and Secretary General, China Energy Fund Committee Former Secretary for Home Affairs of the HKSAR Government

he world is unlikely to repeat the catastrophe of past great wars because of new communication channels and diversified interests. 2014 has already been a significant year. With the Ukraine face-off between Russia and the West, the world is now a very different place. What makes 2014 even more remarkable is the fact that it might also be the year of historical analogies. While some in the West drew parallels between Nazi Germany’s annexation of territories in the 1930s and the on-going situation involving the Crimea, in the East, Japan’s Prime Minister Shinzo Abe claimed that current tensions in East Asia are akin to those between Britain and Germany on the eve of the First World War. Will 2014 be a repeat of 1914? Will China’s re-emergence threaten a new world war? Modern China has WWI to thank. China, right after the revolution that overthrew the imperial dynasty, and barely organized enough to stand on its feet, joined WWI in 1917 and declared war on Germany. It was thousands of miles away from the European theatre but the Allies wanted China, perhaps, to stop Germany from siphoning off its resources and assets in the Qingdao (Tsingtao) colony in Shandong so as to help finance its war in Europe. Germany was defeated and in the Paris peace conference in 1918, China participated as equals for the first time but only to be humiliated by the allies when the former German colony of Qingdao in China was returned not to China but to Japan. That resulted in the May Fourth movement in

1919. It started as a student movement, and then developed into a youth movement and ultimately a movement among the Chinese intelligentsia to search for an ideological basis for China’s future development. They chose Marxism. And in 1921, the Chinese Communist Party was formed in Shanghai. And the rest is history... With recent changes in balance of power, unresolved territorial and maritime disputes, arm races and nuclear proliferation, it is not surprising that the memory of 1914 may trigger the most concern in East Asia. However, a closer look at this region suggests that fundamental conditions today are in fact nothing like those in Europe in 1914. SEVEN REASONS FOR PEACE First are the new channels of communication between nations which largely reduce the possibility of war due to misinterpretation and miscalculation. One hundred years ago the telegraph was relied on mostly for long-distance messages. Communication of the news to the general public was limited to newspapers and magazines. Today, even in the most remote parts of the planet, people can easily communicate with any other part of the world with the smart phones in their pockets. Prime-ministerial hotlines were installed, intended to diffuse tensions between countries during crises. Moreover, in contrast with Europe in 1914, where there was no effective multilateral institution to settle disputes and maintain world order, we now have plenty of supranational

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100 years after World War I HO Chi Ping Patrick (何志平)

HO Chi Ping Patrick at the “The European Tragedy of 1914 and the Multipolar World of 2014: Lessons Learned”

organizations and unofficial channels for dealing with different matters, to resolve disputes, to enforce justices and to promote cooperation, either through Track-One or Track-Two platforms. Apart from the League of Nations and the United Nations which were established after the two World Wars in an attempt to preserve collective security, Asia is seeing new progress in regional cooperation in terms of economics and security. FTAs and security cooperation projects were proposed by China’s new administration, such as the Silk Road Economic Belt, the establishment of an Asia Infrastructure Investment Bank, the China-ASEAN community of common destiny, and most recently, enhancing the capacity and institutional building of the Conference on Interaction and Confidence Building Measures in Asia (CICA), turning it into a security dialogue and cooperation platform covering the whole of Asia. Miscalculations are always possible, but the risk of this can be minimized

by efficient and effective communication. Secondly, unlike Europe on the eve of the First World War, where the quest for national prestige strengthened imperial motives, in today’s Asia, personalities, face and shame, humiliation and honor, play second fiddle to cold hard reasoning and analyses. Nationalism may grow in the area where historical resentment and territorial disputes remains, but no country is so bellicose or confident to want even a limited war, let alone a full scale total war. Media and separation of powers among government branches constitutes a system of check and balance which holds politicians more accountable for their words and actions, and more significantly, discourages inappropriate, aggressive and risk taking actions. Third – wars are costly. The number of casualties in the First World War was about 9.4 million: an average of roughly 6,000 deaths for every day of the war, making it one of the deadliest wars in human history. In

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100 years after World War I HO Chi Ping Patrick (何志平)

economic terms, the First World War - fought at an estimated cost of $208 billion - caused the greatest global depression of the 20th century. Given the high cost of wars, looking back, none would have entered the war if given a second chance. Fourth – due to the peculiar characteristics of mutually assured destruction, nuclear weapons have greatly reduced military conflicts between major countries in the last 60 years and provided a unique stability in the Cold War as shown in the Cuban missile crisis. As Joseph Nye argued, nuclear weapons give political leaders the equivalent of a crystal ball that shows what their world would look like after military escalation. “Perhaps if the Emperor, the Kaiser and the Czar had had crystal balls showing their empires destroyed and their thrones lost in 1918, they would have been more prudent in 1914.” Fifth – interests are too diversified to engage all sections of society and all the countries to lead to a “total war” or “world war”. In fact, total war is a particularly demanding form of international conflict which requires a strong sense of collective identity in addition to shared interests. Unlike 100 years ago, when rivalries for colonies as well as colonial trade and trade routes developed among European powers, globalization has bound all countries closely together, greatly diminishing major countries’ desire to opt for confrontation. With our interests so intertwined, we rise and fall together, and there is either security for all or security for none. War is not the answer to settling disputes in the 21st century. Sixth – international tensions can be easily escalated through the alliance system. It was argued that European alliance systems in the early 20th century were responsible for the outbreak of the First World War by allowing a small conflict between Serbia and the AustroHungarian Empire to quickly expand and involve other great powers such as Britain, Germany, Russia and France. However, unlike the alliance systems we saw in Europe 100 years ago, where fears and envies among countries

had been accumulating, political alignments and regional security today is distinguished in two important ways. One is that the ideological differences among countries are much weaker nowadays. In addition, security alliances are loosely bound, in which each has its own consideration and best interest in mind. As seen in the conflicts in Syria and Ukraine, the United States and its allies may have different positions on military intervention and economic sanctions due to their differing interests in those regions. Escalation of a regional conflict into a total war involving opposing alliances is impossible. Seventh – security takes on a different perspective and context, distinguished from a century ago when military conflict was the only form of confrontation available between nations. The security concept today has been extended to economical, informational, social, cultural, digital, health, food, water, and other unconventional securities, as well as color revolutions. The use of the military is an extreme case. HISTORY DOES RHYME Therefore, in answering the question “Will 2014 be a repeat of 1914?”, I shall quote an old proverb by Mark Twain, “History does not repeat itself, but it does rhyme.” It depends on what scenario you are talking about. A future total war or a full-scale world war? Impossible War? Unlikely. Regional conflicts? Maybe. Local skirmishes? likely. Today, much has been discussed about power transition and the “Thucydides Trap.” Yet historically, it seemed inevitable for major countries, especially emerging powers and established powers, to engage in competition and end up in confrontation or even conflict. In fact, many people argue that the First World War was inevitable because of the rise of Germany and the fear that this created in Britain. They claim that it was a deliberate preventive war by Germany against Britain. But it was also made more probable by Germany’s fearful response

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100 years after World War I HO Chi Ping Patrick (何志平)

to Russia’s rising power. Along with this logic, a rising but still weaker state is inclined to avoid provoking a declining hegemon. On the contrary, a declining hegemon may prefer to escalate the conflict now in order to prevent a worsened situation in the future. The only fear of a future total war is rooted in a declining hegemon’s “Samson option”, a “last resort” strategy to destroy its enemies, and itself, by massive offensive means which may include nuclear weapons. This is because nations in decline feel increasingly insecure and become more susceptible to fantasies that promise to restore their rightful place by a bold stroke. Will the decline of a hegemon be slow and reasonably dignified? or will the whole world be dragged down with it? Still, with no endgame in sight, I will keep my eye on four issues which are basic elements for the future world order: 1) The US abetting the deconstruction of its own unipolar world order, pivoting to Asia and Europe and everywhere else. 2) Russia pivoting to Asia. 3) China pivoting itself across the world. 4) BRICS hard at work trying to bring about the new Eurasian Century. Achieving sustainable and long-lasting security will be the world’s overriding challenge in this century. War is never inevitable, though the belief that it is can become one of its causes. On this earth, the greatest enemy is not one another or among ourselves, but is that part of human nature that has rendered our existence on this earth unsustainable. This should be our number one enemy. This should be our common foe. Joining hands together we still might have a chance, but not divided and acting alone. We have different pasts, but we do have a common future to face. If we want to prevent a repeat of the tragedy of great power politics a hundred years ago, it is important for great powers to develop a new model of major-country relationship and renew the concept of security. As President Xi Jinping said a few days ago, “One cannot live in the 21st century with the outdated thinking of the

Cold War and zero-sum games… We need to innovate in our security concept, establish a new regional security cooperation architecture, and jointly build a shared, win-win road for Asian security”. * This article summarizes the key points made by Dr. Patrick Ho in a panel discussion on “The European Tragedy of 1914 and the Multipolar World of 2014: Lessons Learned” which took place in Belgrade on 30/31 May 2014. Ho, being the only Chinese panelist at the conference, discussed the lessons of WWI and the 21st-century East Asia with former Prime Minister of Australia Kevin Rudd, former Prime Minister of Pakistan Shaukat Aziz, former Minister of Foreign Affairs of Indonesia Nur Hassan Wirajuda, and former Permanent Representative of Japan to the United Nations Tsuneo Nishida.

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Respect as a Prescription for Security Frictions FALLON, William J.

Respect as a Prescription for Security Frictions (尊重別人：防衛磨擦的不二解方) FALLON, William J. Former Commander of U.S. Central Command, Pacific Command, and Fleet Forces Command

quick review of the past year, in my mind, highlights some very positive occurrences and, some, decidedly less positive. On the plus side, if you take this forum and its emphasis on energy as a way to potentially pull people together – certainly a subject of high interest and importance for the economic viability of each of the nations represented here and, frankly, for people around the world – then I would see very positive change. Just in the two years since this forum began, we have seen the potential for energy as a solution to problems as opposed to a trigger point or flash point for conflict. And that is primarily through the application of science and exploration to the discovery of additional sources of energy – oil and gas, and frankly the partial resolution of some other conflicts that have significantly expanded the reality of resources that are available. Another possible trend is the very recent but important dialogue that is going on involving Iran, and the future of, not only that region, but the world. Of course, this touches upon lots of issues, from the business of nuclear development and nuclear weapons to regional stability and influence throughout the Middle East, which continues to be a flash point. But the fact is that finally we have, after decades of complete isolation, particularly between US and Iran, people actually talking. There is a lesson here, it seems to me – I’ll talk a little bit about history shortly – but the lesson is that conflicts and disputes and challenges have gone

on through history, but sooner or later they are going to be resolved when people actually sit down and begin to discuss them and to work on the solutions. Another positive trend, in my mind, is the slow but steady, generally upward progress in resolving the economic crisis that plunged the world into severe disarray and chaos just a few years ago. In most places around the world progress is being made, solutions are being applied, and people are benefitting from these things. There are certainly negatives. Right in this neighborhood, the continued escalation of tension here in the East China Sea and South China Sea, between neighboring countries, has been discouraging. And I would look at a near term picture, a year ago at this time tensions were very high. We had an interesting discussion in this forum about the causes and potential results. And I was very pleased that during the course of most of last year, tensions kind of receded. It seemed that more rational discussion took place, but then, unfortunately, we have seen in recent months a rise again of these challenges. So I believe this is still a negative aspect. Certainly the continuing conflict in Syria and the greater Middle Eastern challenges of instability are not helpful. They involve most countries in the world either directly or peripherally, and the negative aspect of this particular scenario is that many countries have chosen to take political stances in favor of one

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Respect as a Prescription for Security Frictions FALLON, William J.

FALLON, William J. at the “Sino-US Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation”

thing or another, often little to do with Syria itself and the people who continued to suffer, but more to do with other aspirations around the world. A recent development here, which, in and of itself, could be fairly neutral or fairly benign but certainly hasn’t been taken that way, is the recent Chinese announcement of the application of the Air Defense Identification Zone over areas of the East China Sea. This is nothing new to me, certainly, and several people in the room are very familiar with the aspects of this. It’s not necessarily a bad thing, but certainly, due to the way it’s been applied, the timing, the discussion about it has tended to be very negative rather than positive, and this has not been helpful to the regional situation. There are some things that have gone good, and some, not so good, and they kind of go back and forth, day-to day, week-to week, and month-to month. I would put two things of particular importance to this region in that

category. Firstly, the China-Japan relationship, which kind of ebbs and flows. This is something which in my opinion is not going to be solved by the U.S. or by other people outside the region. It’s going to have to be, sooner or later, discussed, negotiated, and some agreement will have to be made between the two nations. However, in this case I think the U.S. could play a significant role in assisting, because of our long-term relationship with both countries. I’m not going to repeat the history, which I think most of you are well aware of, but this is the situation. If we listen to the wrong voices, it could be a problem, and that’s certainly not where we want to go. I’ll tell you something very practical in the next point that I make that’s very close to my experience and my interest, and that is, as a navy man who has spent many, many decades in and around this region. I have watched the relationship between the US Navy and the PLA Navy, also go back and forth, ebb and flow. It is

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Respect as a Prescription for Security Frictions FALLON, William J.

not where it needs to be and we have had far too many years of being a partner and not talking. But I have seen some – in the last month or two – some developments that I think are possible. There is more discussion, more dialogue, and in fact, on this issue, we had a very, very interesting visit from the Chief of the Chinese Navy to the Fleet Headquarters in California for some very practical discussion. So, how do we look at these developments in the bigger picture of the world and the current world order? The world order has decidedly gone in a multi-polar direction. Just twenty years, from the US view point – and again, I would tell you that this is my view – we have come from the situation at the end of the Cold War where the U.S. was the dominant entity in almost every measure, but in twenty years’ time, there have been significant changes. I don’t want to rehash all this but the key point to me is that the world is much more interdependent. There is clearly a trend towards multi-polarity, and at the same time there has been a general erosion of the long term stability, whether it’s the military or economic or world institution’s ability to kind of have a framework for discussion and for interaction. So, what does this do? I think it leaves people with a bit of anxiety and concern. I am a realist. I know, for example, that in the discussion between the U.S. and China, we have different values and two very, very different political systems. We have seen these kinds of things in the past. It means that we need to work hard at cooperating in areas that we can find cooperation and slowly try to build the foundation of trust based on respect. But one thing is for sure. The world is changing constantly, and the idea that we can just sit back and look at the past, and use that to dictate our actions, I think, is not appropriate. The situation today is that we hear many voices saying different things. On the negative side, we have some long term motivators of behaviors in this world: fear and greed, have been around for as long as mankind. If we allow these attributes, these negative attributes

of ourselves, to dominate, we’re going to have trouble. The history is pretty clear on that. So, who do we listen to? Do we listen to the voices of extremism? As I look back at history, if we take the negatives, if we emphasize the fears, we emphasize the other negative aspects of behavior, we are likely to have problems. So, who dominates? That’s a good question for us and for this world. Look among those in attendance here, we have many distinguished scholars, politicians and leaders from many walks of life. We have an opportunity in this group to influence decisions. There are lots of frictions, there are interpretations. Pick the subject, ask a hundred people what they think about it and you’re probably going to get dozens of different answers. These transcend our national boundaries and these are common to each of us: environmental issues, issues of health, education, poverty, security. Since I spent many decades in the “security business”, if you would, my view of security is much more personal and much more local for a vast majority of the people in this world, than those who worry about state values and international politics and disputes. Most people, frankly, wish somebody else would take care of that problem and most people care about things very close to them, wherever you live. But certainly there are going to be continuing disasters, the natural kind that we see, and of course, the man-made kind, the self-inflicted. With each of these, opportunity arises. My experience is that the Tsunami at the end of 2004 devastated huge areas of the region, and yet, from it, a lot of good ensued, through cooperation. So, to summarize, what’s my prescription for us? First of all, to listen, not to prescribe. It pains me to have people stand up and say: “This is what you need to do, you!” Wait a minute, get a mirror, put it in front of yourself and look at yourself. Talk to yourself first, it seems to me. I strongly suggest that people try to explain to others what they feel, why they feel, but don’t begin by dictating to others: “you must do this,

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Respect as a Prescription for Security Frictions FALLON, William J.

you must do that”. It doesn’t work. Look forward, not back, forward. We can’t change the past, you can talk about it, you can cry about it, you can rail about it, but you are not going to change it. But we can change from today forward. That’s what I think we ought to do. What we need is initiative, we need people who are willing to step up and do things. We need leadership, not just mumbles. We need people that will step up, take responsibility and lead. We need action. Certainly, the value of the dialogue, such as this conference, is difficult to over estimate. It’s very important. But from the dialogue, steps need to be taken. People want to see results and they aren’t going to get results just from discussion, there have to be actions to follow. We have to manage risk. There are risks everywhere; we live in a risk environment. There is not much in this world, nothing that I can think of, that is risk free. It’s a reality. So, how do you do that? Understanding, knowledge, education and avenues for communication, like this. We have to talk to everyone; we have to attempt to get positions across, have people understand what it is we feel, what it is we think we know, and then listen. And from that you will find, certainty, lots of common ground. Building trust – we talk about it all the time. How do you get there? You have to build confidence in one go. Some people in this room I have known for many years. Over that time you get to know them. You watch them, you watch them, you watch them – you see what they do. Not just what they say, but what they do. If they are moving in the right direction, you build confidence out of it, and that’s the foundation for trust. I’ll go back to one word that Patrick Ho used this morning – “respect”. You must have respect for others, as human beings, as individuals, respect for their opinions – you may not agree or you may not like it – but hey, they’ve got an opinion. Hear it, let them hear you, and then go forward. We have plenty of wonderful opportunities. The world is constantly changing. Every day,

every challenge that pops up, gives us an opportunity to do better. * The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

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The Post-2015 Development Agenda: Setting the Stage! ASHE, John W.

Sustainable Development The Post-2015 Development Agenda: Setting the Stage! (2015年后的發展議程：做好準備)

ASHE, John W. The Age of the Anthropocene (“人類世”的時代)

SACHS, Jeffrey New-Type Urbanization and Sustainable Cities in China: Critical Issues and Policy Choices (中國新型城鎮化的關鍵問題與政策選擇)

ZHU Dajian (諸大建) Transformative Urbanization in China: Inclusiveness, Livability and Sustainability (中國的城鎮化轉型：包容、宜居、可持續)

PAN Jiahua (潘家華)

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The Post-2015 Development Agenda: Setting the Stage! ASHE, John W.

The Post-2015 Development Agenda: Setting the Stage! (2015年后的發展議程：做好準備！) ASHE, John W. President of the 68th Session of the UN General Assembly

n 2000, heads of state and government got together in New York at a summit and adopted a set of goals which are known as the Millennium Development Goals(MDG). There are eight in all and they gave themselves fifteen years to implement these goals. A key one is this – ‘Eradicate extreme poverty and hunger’. There are eight of them and each of them has the same time frame, which I’m sure you will realize is a flaw. If they were staged or staggered, that is, if we agreed that we would do this in ten years, that in five years and so on, and allow some mechanism to check along the way , perhaps by 2015 we would all look back and say we were successful. But that was not the case in 2000. Along the goals there were a set of targets. One that is frequently quoted and pointed out is this one. It says that in eradicating poverty, here is what we are going to aim for: to try and reduce the number of people by 50% that have an income of less than one dollar a day. You can see for obvious reasons, if you are going to try to eradicate poverty, why would you want to have a target like this? We are at a point where we are less than 700 days from the end-date of these Millennium Development Goals – as I said, December 31st 2015 – so we can look back at this point in time and say whether or not we have been successful. So here is where we are in terms of successes. You can see that we have largely succeeded with the poverty goal, and here we are on the question of providing drinking water,

slum dwellers, HIV etc. There are less than 700 days to go. You can see here where we are in this part of the world – Southeast Asia – in particular, in China. As you can see there is still a lot of work to be done. We have had tremendous success in subSaharan Africa. Now, the first question that arises, I hope, is why is this so? Partly it’s the international community’s fault and partly it is not. Why do I say that? You will remember back in 2008 and 2009 we had the financial and economic crises, and the glue that holds all these together, as with most things in life, is funding and financing. With the twin crises of 08 and 09, it caused a tremendous set back to the implementation of these goals. Now, I guess in an ideal world we probably would have achieved these goals, we don’t know, but we can look back to those events and say they have caused a setback in the implementation of the goals. So as we go forward, here are some of the challenges with, as I said, 700 days to go. We probably will not realize the sanitation goal. We will probably have some difficulty here with maternal health and child survival. Again, the question of funds is a large one. This is now becoming a key issue – gender equality. It was so back in 2000, it was true in 2008 and it is even truer now, and that is one of the things that we are going to have to be focusing on as we go forward. It turns out that 50% of the world’s population is women, and that 50% gave birth to

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The Post-2015 Development Agenda: Setting the Stage! ASHE, John W.

ASHE, John W. at the Luncheon talk organized by the China Energy Fund Committee

the other half, so you can see why the question of gender equality becomes an important one going forward. This picture is frightening. We have over a billion people living in extreme poverty today. Almost a billion people do not have clean water. And here we have again the question of sanitation, it is a major problem. So these are some of the challenges we face going forward. What have we done? Last September, again, heads of state and government met at the UN General Assembly and agreed to take some steps to move the process forward. Here is what they agreed on: They decided that they will recommit themselves to try and accelerate progress on the MDGs in the remaining period. Now, will they get there by December of next year? Probably not, but at least a commitment was made to do something about it. Realizing the minimum time frame that is left, they started to think ahead – what do we need to do? And here is where we came up with this phrase ‘Post-2015’, for obvious reasons. We want to

know what is going to happen come January 1st, 2016. We know what we have to do between now and December of next year. But as I said, being realistic, we know we probably won’t get there. And so, we have to start planning for what follows, hence the term ‘Post-2015 Development Agenda’. The agenda that we are currently working on, or what we hope to have in place by September of next year, is going to be focused on development, because as it turns out, two thirds of the membership of the United Nations is comprised of developing countries. But it will not be, going forward, development willy-nilly. You have to plan for it. We live on a planet which has a finite set of resources, and we are faced with the sober realization that the population would probably increase. And so given those two competing factors, that is, an increasing population and finite resources, you simply cannot develop the way that we used to, otherwise, something will have to give.

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The Post-2015 Development Agenda: Setting the Stage! ASHE, John W.

So we are planning for a development agenda that will build on the existing MDGs. As I said, there have been some successes and you simply cannot just jump them, but we will have to move to something that is far more sustainable than what we currently have. Back in 2012, there was a conference in Rio called Rio+20. Why 20? Because twenty years before, in 1992, there was a very first conference in Rio which gave rise to a document known as Agenda 21. I’m sure you have heard about it. We had this conference and we agreed that we will try and put in place, at an international level, a sustainable development agenda. That agenda will have to build on the MDGs, and central to that agenda is the eradication of poverty – but not just poverty per se – the eradication of extreme poverty. That is the overarching goal of any agenda that is going to be put in place. We are going to look at a similar time frame, something between fifteen to twenty years, but the approach would probably be different. All the goals, of course, will be aspirational, and will be universally applicable. But because conditions at the local level or national level in countries are different, we will have to see how they will be applied at the national level. Therefore, we are looking for a single framework where we have these goals that are universally applicable, but will take into account that countries are common and economic systems are different, and so that has to be built into any approach. * The article is excerpted from the author’s speech at a Luncheon talk held by the China Energy Fund Committee in April 14, 2014, at the Hong Kong Jockey club Happy Valley Clubhouse.

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The Age of the Anthropocene SACHS, Jeffrey

The Age of the Anthropocene (“人類世”的時代) SACHS, Jeffrey Director of the Earth Institute, Quetelet Professor of Sustainable Development Professor of Health Policy and Management at Columbia University, U.S.A.

’m going to try to defend a big statement, which is that humanity has entered a new era. That the conditions in the 21st Century, for reasons that I will elaborate, introduce challenges for human kind at a global scale, of a kind that we have not seen before. And the most notable of those new challenges is the global scale environmental crisis that the world will be experiencing for many decades to come. Of course, humanity has grappled with environmental crises for all of human history. Will the crops yield an adequate output? Will the rains come? But never before has humanity faced a global environmental crisis, and never before has humanity been the source of that crisis, because in the past humans were the recipients of climate, now humanity is the creator of climate change. This is not a pleasant reality and it is not one that we have in our consciousness, or that political leaders around the world really understand. We are living behind reality, but reality is coming very fast and we better understand it better. I very much like a statement that President John F. Kennedy made in his inaugural address. He made it for a different purpose, but it applies equally for us today. He said: “For man holds in his mortal hands the power to abolish all forms of human poverty and all forms of human life”. He was talking about the paradox of the modern age. That because of our wonderful technology, we can solve great problems, but also because of our wonderful technology, we could end up destroying everything. In President Kennedy’s time, he was thinking mostly of the threat of nuclear war, especially between the two superpowers of the

day – the United States and the Soviet Union. But I believe that it is not an exaggeration to say that we also have at risk abolishing much of human life and much of the planet, not through war, but through an incorrect way of managing the global economy. This is unprecedented, and we are not yet prepared psychologically, politically, institutionally or technologically for that reality. The goal that I think all societies share, and the one that the United Nations member states have adopted formally as the guiding principle, is a phrase that in English we say sustainable development. It’s quite like the concept introduced in China in recent years of harmonious society as well. Respect for others, respect for oneself, respect for nature. It means a holistic vision of life, and this is very hard for Americans. We think about money all the time – business, GNP. But we need a broader vision – economy, society and environment. The concept of sustainable development is a holistic approach to life, one that still prizes economic progress and especially ending poverty, but also combines it with a healthy community life, a healthy society, fairness, justice, as well as with new attention to the environmental reality that is unprecedented for our generation. Unprecedented because, as I keep emphasizing, the environmental crisis is now a global crisis, it is not a local crisis, and therefore we have to approach this globally. Now, there is wonderful news that makes it possible to do wonderful things. I believe President Kennedy was literally correct when he said we hold in our mortal hands the ability to abolish all forms of human poverty. And

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The Age of the Anthropocene SACHS, Jeffrey

SACHS, Jeffrey at the “Sino-US Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation”

indeed, China is doing this before our eyes in a single generation. Never in human history has there been so much progress in reducing poverty. China’s economic progress has set every record of scale and time in history. One of the great underpinnings of that is, of course, technological advance. And we are living through another remarkable technological revolution, especially in our age – the revolution of information technology, made possible by Moore’s law, by the idea that every two years the capacity of integrated circuits has been doubling since 1957. This is an astounding reality for us. Integrated circuits now are a billion times cheaper, faster, more able to store, process and transmit data than 60 years ago, and this is what the great engine of progress is for us.

We are all lucky to be part of this technological revolution. One of the results taken from a ‘hooray’ page in the Economist magazine recently is that the global poverty rate has declined from about half of the world’s population in developing countries, down to around 20% today, and it’s on a trajectory to fall to near zero by 2030. So, we literally are

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The Age of the Anthropocene SACHS, Jeffrey

in the age when humanity could abolish all forms of human poverty. It won’t happen by itself. We have to work at it. We have to target some of the challenges of the poor such as the control of disease, such as the access to basic infrastructure, but it’s possible to get down to near zero.

But we face two kinds of challenges that we have not been successful in meeting, even as the technology has soared. The first is the challenge of inequality in our societies. Just about every society in the world – the United States, China, many parts of Europe, many parts of the world, have experienced rising inequality of income. I’m showing you a curve for the United States in what is called the Gini Coefficient, which is a measure of inequality. What you can see here is that the inequality has continued to rise for decades now in the United States. We’ve become a society of rich and poor when we used to be famous as a middle class society. But America has become much more

divided in recent decades, partly because of the technological changes. These have helped those with skills and with higher education make huge advances, but they have actually left behind millions of people that don’t have the skills, because the traditional jobs disappeared to automation or to globalization. And so, even the technology that propels us can create widening inequalities. We have to address this through collective action, through public choice, through social morals. And that’s why it’s important that we direct attention not only at making money but also at also making sure that society remains fair.

One of the implications of this unfairness has been that young people in many parts of the world have had rising unemployment in recent years. I won’t elaborate on this graph except to say that in the recent great recession, as it’s been called, since 2008 young people have suffered the most increase of unemployment, and the result all over the world is unrest. There is turmoil in the cities around the world, young people out on the streets, and one of the reasons for this is that they are unemployed. And so unless we address the social equality opportunity, we will see more of this. It’s not only the Arab Spring, so-called. Look at Tunis, Cairo, Athens, Tel Aviv, Chile, New York City, Madrid, Istanbul, Rio de Jeneiro, and many more. Young people facing police out in the streets because of large unemployment and a sense of insecurity.

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The Age of the Anthropocene SACHS, Jeffrey

But there is an even more complicated problem. The scientists have given it a name that is an important new word in the language, one that we haven’t heard before. The new word is called “Anthropocene”. It is a word that comes from Greek. “Anthropos” in Greek means human, and “scene” is the term used by geologists to mean an age of the planet earth. So when the geologists coined the term “Anthropocene”, they mean a new era of the planet earth, in which humanity is causing the largest changes to the physical planet. Technically the geologists say that we have left what is called the “Holocene” – the period since the last ice age – and entered a new epoch, which they are now calling the “Anthropocene”, the human-made era. What is the Anthropocene? We have seen it just this past week all over the world. This is a tennis player at the Australian Open this week who fainted on the court because it was 45 degrees centigrade, five days in a row – the biggest heat wave in Melbourne’s modern history – very unusual. But those heat waves are coming everyplace with increasing frequency, what used to happen only one in a thousand times is now happening fifty to a hundred times. This is the increase of extreme events. In Beijing you could barely breathe the air, it was dangerous to go outside. This is becoming a frequent reality of Beijing because of the extreme air pollution. In northern Sulawesi, Indonesia, many people have died from extreme flooding. California is in its worst drought in modern history and the governor of California just declared a drought emergency. Well, these come and go now, every week you can catalogue around the world extreme events. But humanity is a little bit like the frog that you put in the warm water and gradually heat it. We know that the frog just sits in the water until it’s boiled alive. We’re not sure yet whether human beings are smarter than frogs, because we are also warming the planet, but so far we don’t jump. We just say: Oh, how interesting! There was a heat wave at the Australian Open. Oh, how interesting! There was a drought. Oh, how interesting! We can’t breathe the air in

Beijing. Oh, how interesting! Another flood. This is not satisfactory for us, for humanity. We should understand that the conditions of life are changing on the planet dramatically fast. I say this to you because I also have a psychological problem accepting this. But I head an institute of 900 scientists. Every day, one of the scientists comes to me and says: you know, it’s worse than we thought, the change is going faster than we thought, the damage is occurring faster than we knew, the loss of species is taking place faster than we realized. It’s quite frightening when you head a scientific institute these days, the scientists do not come with good news. They are telling you that the age of the Anthropocene is a dangerous period. Let me show you what is especially frightening. This is a graph that shows the last eight hundred thousand years of carbon dioxide concentrations in the atmosphere. The scientists are very clever, they have learned to read the ancient earth record. They drill down into the ice core, and then using isotopic measurements are able to determine with great precision the level of atmospheric CO2 hundreds of thousands of years ago. This picture shows that CO2 went up and down for eight hundred thousand years. Those changes were not due to human beings. Those changes were due to the natural changes of the earth’s orbital cycle, which has phases of twenty-one thousand, forty thousand and a hundred ten thousand years – the so-called ‘Milankovitch cycles’.

That is what drives the ice ages and the retreat of the ice. But if you can see all the way to the edge of the graph where I put the arrow, something very strange and important has happened. And that is that the CO2 concentration – the carbon

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The Age of the Anthropocene SACHS, Jeffrey

dioxide in the atmosphere – has gone straight up like a rocket in the last one hundred years. That is not because of the change of the Earth’s orbit. That is because humanity is putting the carbon dioxide into the air, because we are burning so much coal, oil and natural gas that the emissions of carbon dioxide are changing the earth’s atmosphere. Before the industrial revolution there were two hundred and eighty molecules of carbon dioxide for each million molecules in the atmosphere. This spring, we reached four hundred molecules per million. Now let me explain why that’s so significant. First, we have now reached a level of carbon dioxide that is the highest level on earth in the last three million years – well before there was anything like the human beings as a species. We have changed the planet in a way that has not been true for the last three million years. The second reason it’s important is that the last time the concentration of CO2 was this high, the ocean levels were five to ten meters higher than they are today. But if the sea level were five to ten meters higher, that city would not be viable. Maybe I would have to crawl out of my office on the fifth floor of Manhattan, but New York City could not survive with the sea level five to ten meters higher than it is today. And yet we have set in motion a process of losing the water trapped in the ice sheets of Greenland and West Antarctica, of the socalled thermal or heat expansion of the ocean and a several degree centigrade rise in average temperatures. This will mean even more temperature increase for mid-latitude countries like China or the United States, because the more towards the North and South Pole, the larger is the change of temperature when the earth warms. We’ve set in motion extraordinarily dangerous processes, because carbon dioxide is changing the earth’s climate. It is a greenhouse gas, meaning that it is trapping the heat of the earth and warming the climate. The fact is that scientists have identified around ten distinct ways that humanity is threatening the survival of other species, the functioning of the earth, and, therefore, our own well-being and survival. Climate change is one of them. Acidification of the ocean is

a second one, also related to the high carbon dioxide. The ocean is already 30% more acidic now than it was a hundred years ago. That means 30% more hydrogen protons in the ocean, because the carbon dioxide dissolves in the ocean water and it creates carbonic acid, which gives off proton into the water. We have nitrogen and phosphorus runoff from the fertilizer use leading to those algal blooms. We have a depletion of fresh water. We have the destruction of habitat of other species, so that humanity is now causing the sixth great extinction of species on the planet in Earth’s history. The other five came because of natural causes and asteroid strike or major volcanic activity, but this round of species extinction is human caused, because we are taking so much territory from other species, so much habitat, that they can’t survive. Now I want to focus on the future of the energy supply, because we can’t go on simply burning more oil, coal and gas the way we’re doing it right now. This is not an accepted fact of our political leaders in the world, because political leaders everywhere want cheap energy, so they want to drill for oil and gas, they want to burn coal, and they want to not hear about climate change. But if we continue this way we are on a trajectory that will threaten our children in a perilous manner. In fact, the “business as usual” scenario has the temperatures rising on average, on the planet, by almost four degrees centigrade by the end of this century. This, every scientist will tell you, would be a devastating shock to the food supply in the world, to the ocean levels, to the extreme storms, and to the survival of other species. Yet that is exactly the trajectory that we are on right now, and that’s why the world needs a new set of goals and a new direction. When it comes to energy, the key concept is decarbonization. That means to have an energy system that does not emit carbon dioxide. There are two ways to do that. One is to use energy sources that are not carbon based energy, such as wind or solar or nuclear power. The second way is to capture the carbon dioxide before it goes into the atmosphere when you burn the carbon dioxide at a power plant. That’s

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The Age of the Anthropocene SACHS, Jeffrey

called carbon capture and sequestration. It is a potential technology but it is unproven at the global scale. I want to give you a few numbers to give you a sense of our reality, because it is the most important but also the hardest public policy problem of peacetime that we face. I don’t want to compare the national security from war, which is very complex, but for a global peacetime problem there is no problem more complicated than the global energy system. We need energy, it must be plentiful, but it also must be decarbonized, and it has to be decarbonized just in a few decades – much faster than would happen normally. It has to be the intention of governments to do this. But they don’t have the intention to do it now, because it is complicated, because it is long-term, because politicians worry about the short-term, and because it would add extra costs in the shortterm even if it would save the planet in the longterm. The amount of decarbonization that we need is staggeringly large and complicated. It is a central challenge for China, for the United States, for the European Union, for the powers of the Middle-East, for South Asia, for Russia. It is a staggeringly complex problem.

This is where we are. In 2011, the world emitted 31.3 billion tons of carbon dioxide into the atmosphere. As of 2013, it’s closer to 35 billion tons. That is enough to raise the concentration of carbon dioxide in the atmosphere by two and a half parts per million, in other words, from 400 this year to 402.5 next year. If you do that for another 25 years you reach 450 parts per million, which is considered a devastating threat to the planet. We have just a short time left before we reach thresholds which are extraordinarily dangerous. Now, the carbon dioxide stays in the atmosphere for centuries unless we figure out someday how to pull it out more effectively. As the scientists

say, the “residence time” of carbon dioxide is measured in millennia – in thousands of years, not in individual years. So we are creating not totally irreversible, but nearly irreversible threats to the planet, and not in the course of centuries but in a course of a couple of decades. If we were to continue as business as usual, we would reach 50 billion tons of carbon dioxide, roughly, by the year 2050. That’s the forecast of the International Energy Agency. If we were to do that, our children will face a devastatingly dangerous planet. And yet that is the course that we’re on right now, and no leading politician has taken the lead to get off that course anywhere in the world. Where do we need to be for safety? We can’t allow the rate even to continue at the current level, it’s too dangerous. We have to cut the emissions by more than half. The best guess is that we need between ten and fifteen billion tons emission by 2050, rather than fifty billion tons. That means the following problem. We want to have the world economy grow, today’s developing countries want to get richer and it’s understandable. The population which today is 7.2 billion people will be more than 9 billion people by the middle of the century if we rule out disaster. The population will grow by 2 billion more, and each person, we hope, will be richer than today. So, we have an expanding world economy but we need a shrinking emission of carbon dioxide. The amount of CO2 emitted per dollar of GNP has to go down by roughly a factor of 6 times. This means that China, the United States, Russia, the European Union, India, Pakistan, and the Middle East need a new energy system by the middle of this century. And since when you build a power plant today it’s going to last for forty years, you better get started on changing the direction now, not wait ten or twenty years. We are already building the energy system of 2050 every time a new power plant is completed today. And the automobile fleet which uses petroleum lasts twenty years, so we are already determining the cars that will be on the road in the year 2030, today. This is why we need to take decisions and new strategies now. Not that we can change the energy system in one year,

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The Age of the Anthropocene SACHS, Jeffrey

five years or ten years, but because if we need to change the energy system in forty years, we have to start now, and we haven’t started now significantly, in truth.

The BAU line shows how the emissions are tending to rise, and the DDP line is how the emissions need to decline. How can this happen? One big way is to change the mix of energy resources by the middle of the century. So, if we don’t use the carbon capture and sequestration then we have to decarbonize the energy source. Here is one scenario that shows what it means: It means that coal has to be left under the ground; it means that oil has to be used less because automobiles will go from internal combustion to electric and fuel cell technology; natural gas, which is the cleanest of the three fossil fuels, will increase in share; nuclear power will increase – it emits no CO2; and renewable energy like solar, wind and hydropower will also increase. Let us consider the shares of primary energy in the deep decarbonization scenario. The key is one of two things: either we leave the coal under the ground, or we adopt the technology of carbon capture and sequestration comprehensively. That is the technology that is potential but unproven, and it may not be feasible. We have to reduce the amount of carbon dioxide per megawatt hour by roughly a factor of six times in order to deeply decarbonize the energy system. So instead of emitting 600 kilograms per megawatt hour (kg/MWh) as the power plants do today on average, we would have to emit only 100 kilograms per megawatt hour. In other words, a factor of 6 reduction.

Can it be done? The technologies exist potentially. China has led the world in reducing the cost of photovoltaics. They have come down in cost by 100 fold from 1977 when it was 70 dollars per watt of solar panel, and now it is 70 cents per watt, largely thanks to China’s extremely efficient production of solar PV. There is also what’s called concentrated solar thermal technology. For instance, in the Taklimakan Desert or the Gobi Desert, where massive desert collection of solar irradiance, of solar radiation, could be used to generate electricity and then carry it by direct current high voltage lines from the west of China to the high population coastal centers in the east of China. Of course, wind power, again, especially in western China, is vast resource potential that could be carried to the high population centers. China has demonstrated its latest technology for carbon capture at power plants. When the CO2 is captured from the effluent stream, it is pumped underground. But that technology, as I keep emphasizing, though potentially important for China, is not yet a proved technology. I do believe that the world’s future is still undetermined. And I am not a forecaster, I find forecasting uninteresting. We are not spectators that are guessing: will we destroy the planet or not? That is not much of an interesting activity. We are participants. We have to choose, we have to decide. As an old line in English – probably taken from a Chinese proverb I would guess – put it, if you want to predict the future, invent the future. We can’t just sit here and allow this kind of mindless energy competition and mindless economic competition to wreck all of us. Nobody will be the winner in this. And yet if you listen to most governments in the world, all they really want to do is drill more, pump more, extract more, go for more offshore extraction… They’re not talking about climate. They’re talking about fracking, they’re talking about more deep sea oil, but they’re not talking about saving the planet, and the time is running out. On the plus side, it’s feasible to do. We have major technological advances built around information technology, smart grids,

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The Age of the Anthropocene SACHS, Jeffrey

renewable energy, and carbon capture and sequestration. There are many political and corporate leaders who know the truth, we have global common interests and soon we will have global sustainable development goals. But there is the down side. We have growing population pressures; we have growing environmental threats which actually distract us because they disrupt our economies; we have energy system inertia, which means do tomorrow what you did yesterday, don’t change direction; and of course all over the world we have lawlessness and corruption, which means that the time horizon for decision making is months or weeks or days, not decades. We need long-term decision making, not short-term decision making. This is one of the reasons why we’re depending on China’s tradition of long-term thinking, because in the United States we don’t think long-term anymore. We have a two year election cycle, and it’s completely corrupt in my opinion. Billions of dollars are being paid by special interests, including big oil companies, to make sure we don’t change direction, and this will not serve humanity. We need to change direction. I started with a line of President Kennedy and I’m going to end with a line of President Kennedy. Of course, we noted the 50th anniversary of his assassination just two months ago, but also fifty years ago, was an accomplishment of a phenomenal global achievement, and that was the Partial Nuclear Test Ban Treaty, signed between the United States and the Soviet Union. I take that as an exemplar of true leadership, because President Kennedy and Nikita Khrushchev, even though they had almost destroyed the world in confrontation in the Cuban Missile Crisis, understood in 1963 that they had to find a way to peace, because unless there was cooperation the world was not going to survive. Both leaders operated brilliantly in 1963 to exercise statesmanship for the sake of humanity. I very much appreciate President Kennedy’s leadership that year, because he told the American people that to make peace with the Soviet Union we have to change our own American attitudes. He said the problem wasn’t the soviet attitudes, the problem was American

attitudes, that we believed that peace was not possible. He said peace is possible because the Soviet Union has the same interest in peace as the American people. It was very brave what he did, remarkably brave. Some people think he got killed for being so brave in his quest for peace in 1963. But he said something which I believe is the most beautiful statement by an American President in modern history and I just want to close with it, because it’s about cooperation. He said: “So let us not be blind to our differences, but let us also direct attention to our common interests and the means by which those differences can be resolved. And if we cannot end now our differences, at least we can help make the world safe for diversity. For in the final analysis, our most basic common link is that we all inhabit this small planet. We all breathe the same air. We all cherish our children’s futures. And we are all mortal.” In the spirit of all inhabiting this small planet, let’s take the decision to save the planet for our children by moving to a true sustainable development trajectory. * The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

CHINA EYE‧Issue 6

New Type Urbanization and Sustainable Cities in China: Critical Issues and Policy Choices ZHU Dajian (諸大建)

New Type Urbanization and Sustainable Cities in China: Critical Issues and Policy Choices (中國新型城鎮化的關鍵問題與政策選擇) ZHU Dajian (諸大建) Director of the Institute of Governance for Sustainable Development, Tongji University, Shanghai, China

here are three questions related to China’s new type urbanization and sustainable development: 1. Why should China shift from the old model of urbanization to the new one? 2. What does the “new-type urbanization” really mean in the perspective of sustainable development? 3. How is policy-making helpful to reach this new-type urbanization? The urbanization rate of China has reached 50%. How should we understand this number? Normally, we divide the urbanization process into 3 stages. The early stage is under 30%, which occurred in China in the year 2000. The second stage is from 30% to 70%. This is a period of rapid urbanization, which China is in right now. Then we will enter into the third stage. Most of the western countries have completed the process of urbanization, like the U.S. and Germany, and are stable in the process of urbanization. There are two major issues as far as China’s urbanization is concerned. First, at least 15% of the urbanized people are not registered and do not have enough access to public services. In this regard, only 35% of the people in China can be considered urbanized, not 50%. Second, the rate of land consumption is much higher than the rate of people entering the urban areas. Thus, we can call the old model of urbanization land-incentive, but not people-friendly. We should aim move from the old model to the new

model, and the new model should be peoplecentered, people-oriented, but land-saving. In order to understand China’s situation by 2030, we may consider the simple formula I=PAT. (I) means impact in terms of resources, land and environmental pollution and other issues. (P) is population. (A) is affluence, which is in terms of GDP per capita. (T) means technology, which is a measure of how big an impact is caused as a result of an increase in GDP. This is equivalent to material intensity or environmental intensity. Given this formula, by 2030, what would the impact be? Firstly, with regard to population, by 2030, there will be 1 billion people living in urban areas in China. This represents 70% of the entire population of China. Let’s take Cambridge in Massachusetts for comparison. The population of Cambridge, where Harvard University is located, is just one hundred thousand. Following that scale, China would need over 3,000 cities like Cambridge for the additional 300 million people entering into its urban areas. In Boston, in the year 2000, there were six hundred thousand people. This means that China would need 500 more cities like Boston. If we consider the greater Boston area, with 3 million people, China would need 80 to 100 more metropolitan areas of an equivalent scale.

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New Type Urbanization and Sustainable Cities in China: Critical Issues and Policy Choices ZHU Dajian (諸大建)

ZHU Dajian at the “A China Story II – New Pathways to Urbanization”

As for GDP per capita, in 2010, China’s figure was USD 4,000; but by 2020, it will rise to almost USD 10,000; by 2030, it will further rise to over USD 15,000 – this is nearly double the number in 2010. Then we have to look at China’s technology factor. China has used more land to hold less population, and this is a challenge for China. If China follows this old model, it will face terrible challenges. What are those challenges? Applying the earlier mentioned formula and taking the year 2010 as the base year, by 2020, if technology does not change, which means China does not shift to a new model, China will face 2.1 times the environment impact in terms of land consumption, resource consumption and pollution, comparing with 2010. If the material intensity is reduced by 1.7, which means technology efficiency is raised by 30%, China will still face 1.5 times the impacts of 2010 in 2020. Then by 2030, the impacts will be 2.5 times of that in 2010. That is why we have to shift from the present model to the new

one. I mentioned two critical issues. One is that we should pull a bigger population into the urban areas, and the other is to control resource consumption, pollution and emissions. These are the two key elements which the new urbanization model should address. What does new-type urbanization really mean? It refers to the desire and need to decouple urbanization from land and resource consumption and pollution.

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New Type Urbanization and Sustainable Cities in China: Critical Issues and Policy Choices ZHU Dajian (諸大建)

As the chart above shows, there are two lines illustrating the situation. The upper line is the benefit from urbanization, while the lower one is the cost in terms of resource consumption and pollution. We should decouple these two lines. In the old model, these two lines moved together in tandem, and are not decoupled. Below is an example to illustrate how to decouple urbanization from resources: although China is the world’s third largest country in terms of area and space, only half of its land is inhabitable and suitable for economic growth and social development. At the moment, just under 10% of China’s population are living in the western part of China, while 90% are packed into the East. The question, therefore, is how to organize the urbanization process so that large-scale population can move into those less inhabited areas. For the sake of comparison, the U.S. is just behind China in terms of area and is the fourth largest country, but it utilizes a lot of its land. There are three levels to decouple urbanization from excessive resource consumption. The first is at the national level. In future, the population will still be concentrated in the eastern part of the country. Yet under the new urbanization plan, land in China is divided into four areas. Most of the area does not permit development or urbanization, such as the western regions (though certain areas in this region have a limited capacity for people to build cities). As for the eastern coastal areas, they would be urged to focus on improving the quality of cities, not just quantity, as these areas have gone beyond their limit of eco-capacity. The northeastern areas and the areas between the eastern coastal and western regions are priority areas for the new urbanization plan. These four functional areas are identified in recent polices. As for the regional level, we have three major city clusters. For the past 20 years, China has developed a huge, mega city region or city cluster every ten years. In the 1980s, we saw the Pearl River Delta Area around Hong

Kong, Shenzhen and Guangdong. This was the first city cluster. In the 1990s, we saw the development of the Pudong New Area around Shanghai and the greater Yangtze River Delta Area. In the last decade, the Beijing-Tianjin and Binhai New Area was developed as the third mega city region. Currently, the fourth and fifth city regions are emerging in Central China around Wuhan, and around Chongqing and Chengdu. These five city regions are positioned in a diamond formation. In the North, there is the Beijing-Tianjin-Hebei city region; In the East, there is the Yangtze River Delta Area; In the South, there is the Pearl River Delta Area; In the middle, there is a new city region around Wuhan, which is also along the Yangtze River; And, in the West, there will also be another big city region. All in all, over the next 20 years, you will be able to find seven such city regions in China. In that case, China will be able to use a small portion of land, under 10%, to hold over 50% or even 60% of the population, generating over 70% of the GDP. The three big city regions currently account for just 2.8% of China’s land, supporting 18% of the population and generating 36% of the GDP. This demonstrates the importance of decoupling, which means using less land to hold more people in urban areas. China should in a very short period of time, develop a high speed railway network to connect these mega city regions. In the next decade, there will be high speed railways connecting different mega city regions from the North to the South and from the East to the West. As for the city level, during the industrial era, cities were used to deliver four functions. One is for living; the second is for working; the third is for leisure – including commercial activities, entertainment and education etc. Then the fourth one, namely, transportation, is to connect the first three functions. In the industrial times, cities have become bigger and bigger. We may call this phenomenon “city sprawl” or “urban sprawl” because the four functions are separated from each other. Now,

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New Type Urbanization and Sustainable Cities in China: Critical Issues and Policy Choices ZHU Dajian (諸大建)

China wants to combine these functions into a single group. Therefore, when building new cities, all these functions will be put into the same place, and then faster transportation will be used to connect the different groups. This is called a mixed-function city model. Finally, it is necessary to take a good look at three critical policy issues. The first is strategy. What is the difference between China’s urbanization model and the western model? As mentioned above, western countries have almost finished the process of urbanization. The urbanization rates in western countries are about 70%, while China’s is much lower. What is the difference? The diagram below explains:

The upper boundary is the limit of ecocapacity. Most of the western countries are beyond the limit already, which means they should change their lifestyle and move back to the limit. This is the sustainable model for their transition. However, China is still below the lower social boundary, and is facing social issues of how to raise quality of life, how to reduce poverty and how to provide basic public services. China is still mired in the inner circle, and should move into the second circle, while western countries should move back to the second circle. China’s new urbanization plan is a leapfrog strategy. It should reshape its urbanization style, and should not copy the western countries. However, there is a trap that developing countries tend to follow the steps of western

countries. If western countries do not change their lifestyle, and China follows their footsteps, it will be very difficult for China to enter into the new model of urbanization. In this regard, there are certain indicators for reference. Developed countries have high Human Development Indices (HDI) but also very high eco-footprints. Therefore, their model is not sustainable. China has low HDI, below 8%, but its eco-footprint is increasing. Neither China nor the world should follow the western model. The ideal scenario for sustainable development is one where HDI is high but the eco-footprint is low. How to design this orientation into the world’s sustainable development pathway is a critical issue. The western countries should maintain their high HDI, but should reduce their eco-footprint; whereas China should increase its HDI but also limit its eco-footprint. As for the second issue, a lot of people think that technology is crucial for sustainable development. This is not entirely the case. Technology is really important, but it is purely efficiency-oriented. For example, we can manufacture low emission vehicles which consume less oil and emit less CO2. Yet they are still cars, even if efficiency is drastically improved, there will still be traffic congestion. Therefore, apart from addressing technical issues, we should also promote social innovation. Social innovation means behavioral change. For example, we can build car-sharing system; we can use public transportation; we can build less transportation-needed cities. These are different development models and will be opportunities for China. The third critical issue is governance. China always takes a top-down approach, while western countries emphasize democratic, participatory and bottom-up approaches towards sustainability. But China needs to complete the task of urbanization in a very short time, so it should combine the top-down approach with that of bottom-up. For sustainability, if we adopt a top-down approach but also have some good bottom-up approaches, then we will be

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New Type Urbanization and Sustainable Cities in China: Critical Issues and Policy Choices ZHU Dajian (諸大建)

able to meet our sustainable development goals in the future. * The article is excerpted from the author’s speech at “A China Story II – New Pathways to Urbanization” held by the China Energy Fund Committee on July 7, 2014, at the United Nations Headquarters in New York.

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Transformative Urbanization in China: Inclusiveness, Livability and Sustainability PAN Jiahua (潘家華)

Transformative Urbanization in China: Inclusiveness, Livability and Sustainability (中國的城鎮化轉型：包容、宜居、可持續) PAN Jiahua (潘家華) Director-General of the Institute for Urban and Environmental Studies Chinese Academy of Social Sciences (CASS), Beijing, China

he gap in terms of infrastructure is usually huge between the urban and rural areas. That is why there has been an intrinsic drive for people to move from rural to urban areas. Urbanization will also help extend social services to rural areas. Through industrial development, agriculture can be modernized, so that some of the labor can be saved and productivity can be increased. Through this process, we will be able to eradicate the urbanrural duality. This is the internal drive, and that is why we have such a dream to be urbanized. It has been quite a long time to let the dream come true, and we can now look back at how far we have come with regard to urbanization in China. In 1949, the rate of urbanization in China was about 11%. China was a purely agrarian society then. It is from 1978, when China started the Opening Up and Reform Policy, that the rate of urbanization started to accelerate. From 1978 to 2013, the rate of urbanization – and this is the statistical number, not the real measure of urbanization such as the household registration or hukou system – the nominal number has grown from 17.9% in 1978 to 53.7% in 2013. This increase is huge in terms of the rate of urbanization. But if one looks at the actual numbers added to the urban sector, the number is even more impressive, that is, from 170 million urban dwellers in 1978 to 730

million in 2013. The rate of urbanization each year over the past 35 years has been 1.02%. This rate, which has continued for such a long period of time, and at such a huge scale, is very high indeed. At the beginning of the Opening Up and Reform, some 65% of Chinese urban population lived in small cities, and only 25% lived in large cities. Then, big cities grew much faster, and the increase of population in small cities has been falling behind. By 2011 and 2012, there were more people living in big cities than in small cities. The big cities have been dominating the process of receiving people in the urban areas. If one looks at the spatial and scale distribution of the Chinese cities, one can see some cities are concentrated in the coastal regions or city clusters. The Beijing-Tianjin-Hebei urban cluster, the Yangtze River Delta cluster and the Pearl River Delta city cluster. In 1978, there was not a city in China which exceeded 10 million people. Then by 2012, we already had 6 cities of that size. This number indicates that huge, mega cities grew much faster. Although small cities grew as well, the rate of growth and the intake seems to be lower than the big cities. Let us now look at the regional variations. In coastal areas, urbanization rate has been over 60% already. In the central and the western part of China, the rate is still well below 50%. So,

CHINA EYE‧Issue 6

Transformative Urbanization in China: Inclusiveness, Livability and Sustainability PAN Jiahua (潘家華)

PAN Jiahua at the “Sino-US Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation”

we have a regional disparity among the eastern, central and western parts of China. The reason is that when China starts to function as the world’s factory, and when the industrial facilities start to concentrate in the coastal areas, the demand for labor, both skilled and rural migrant, is high in those areas, and that is why they have a higher rate of urbanization. The central and western provinces are net exporters of migrants. For instance, in Guizhou Province which lies in the western part of China, the population with household registration is around 41 million, but the actual population living there is only 34 million. In other words, 8 million people have migrated from that province alone. In my home province, Hubei Province, the household registration number is 61 million, but the actual number of people living and working in the province is only 58 million. That is, 3 million people have left Hubei and migrated to work in the coastal areas. Therefore, the coastal provinces have a high intake of rural migrants,

whereas the central and western provinces export people to the coastal provinces. As for the new type of urbanization, China does face a lot of challenges. The first one is scale, which is huge. And the process is expected to be a long and lengthy one. Let us assume that the rate of urbanization will be stabilized at 70%. This means that an additional 300 million people will be added to the urban sector. If you look at the rate of increase, a 1% increase in urbanization would mean 14 million people added to the urban sector. We also talk about urban-rural integration. The rural areas should not be neglected and should be developed as well. They must be provided with similar social services and infrastructure. Given urbanization rate is stabilized at 70%, there will still be 30% or 400 million people living in rural areas. Another challenge is the population dynamics – the aging problem. In China, people are getting old. This is the reality. It is expected that by 2030, nearly 20% of Chinese

CHINA EYE‧Issue 6

Transformative Urbanization in China: Inclusiveness, Livability and Sustainability PAN Jiahua (潘家華)

people will be 65 years old or above. This is a huge challenge. Then we have inclusiveness. We have an urban-rural duality, and this duality has been extended to urban areas. We have the rural migrants who live and work in urban areas but do not have the same entitlement to urban social services and social security. They work with unrecognized identity and are somewhat marginalized. If they were provided with the same urban services as entitled, it would be a very long process to complete. The official household registration rate of urbanization is at present only 35.2%. According to another statistical number, which counts a person staying in the urban area for over half a year as urban citizen, the number is 53.7% in 2013. This huge discrepancy implies that there are some 236 million people that are in urban areas without the same entitlements to urban social services. Another inclusive challenge is the income gap we have to close or narrow among regions. The coastal areas are much richer. Shanghai and Beijing for example, have higher levels of income in terms of GDP per capita, comparable to that of high-income countries. But if you look at the lesser developed western regions, like Guizhou Province, it has only a small fraction of the income level of the coastal areas. There is, therefore, an income gap among the eastern, central and western parts of China. The second gap is the rural-urban disparity, which cannot be narrowed easily, but is something we have to look at and have to deal with. The third is the rich-poor gap. The Gini Coefficient, a measurement of inequality, has been over 0.47 in China over the past 20 years. This indicates a very high level of inequality and is something we have to deal with as well. Then there is the “livability” challenge, that is, urban vulnerability. There are traffic problems and all kinds of pollution. All these indicate that dense urban areas are built on a very vulnerable system, and we have to address the problem. Many people have asked me about the

air quality and climate change in Beijing. Fortunately, in summer, because of wind direction, the sky in Beijing is as clear as that in New York. But in winter, because of burning of coal, especially for heating, the air quality becomes very bad. As reported by the Ministry of Environmental Protection, only 3 among 74 cities monitored can meet the new standards which include particulate matter (PM2.5) requirements. These 3 cities are respectively located near the East China Sea, the South China Sea, and the Himalayas. None of the cities in the industrialized and urbanized areas could meet the new standards. Another urban accessibility challenge is, of course, energy and climate change. In rural areas, people can resort to bio fuels, traditional fuels and also solar energy. But in urban areas, people have to use commercial energy, which is fossil fuel, and this poses a huge challenge to energy security and water shortage. These are some long-term, strategic environmental challenges for the process of urbanization in the future. If one looks at the UNDP measurement of human development and the relationship between HDI and the urbanization level, one can see that China, in terms of HDI, is ranked at 101, and the urbanization rate in 2011 was 52%. If one looks at the countries with very high income levels, their urbanization rates are well over 80%; and the high HDI group of countries has an urbanization rate of 74%. China’s current nominal urbanization rate is 53.7%, but the actual number should be roughly 37%. If this is an indicator for the future direction of urbanization, then there is a long way to go. As for the new-type urbanization plan for 2014-2020, the targets have already been set by the government. These targets cover three areas: Firstly, inclusiveness – every person should have the same entitlements. This requires an increase in the so-called “urban citizenization” level. Many people living in urban areas have not been given their entitlement to social services. As such, the percentage of people living in cities and enjoying the same entitlements has

CHINA EYE‧Issue 6

Transformative Urbanization in China: Inclusiveness, Livability and Sustainability PAN Jiahua (潘家華)

to increase from the current level of 35.3% to 45%. The target of urbanization by 2020 is set to be 60%, comparing to 53.7% in 2013. Even by 2020, there will still be a huge gap between “real” urban citizens and the nominal urban population. The second is livability. Urban services and infrastructure are targeted to provide a better life to urban people. The third target is sustainability, with respect to natural resources and the environment. Considering above, we can see that urbanization must incorporate inclusiveness, livability and sustainability. Going forward, we need to tackle population dynamics and the total fertility rate. According to the latest population census, the total fertility rate is only 1.17, whereas the replacement should be 2.2. Therefore, in the near future, China will be depopulating. As for the fertility rate, in the 1960s and 70s, it was 2.2%. In the 1990s, it was about 1%. And now, in the first decade of this century, it was only 0.57%. Last year, it even dropped to 0.49%. Fortunately, we have now changed our policy, and the stringency of the one-child policy will be relaxed so that many young couples can have a second child. Regarding the growth of economy and employment, slowing down is very natural and acceptable. The current government has set a target for economic growth at 7.5%. This is probably a bit too high and 6% would be reasonable. Also, the structure of the economy will become more service-oriented. Hence, the growth of employment will not be centered in the manufacturing sector but in the service sector instead. As for industrialization, according to the latest assessment, China has now moved from a middle-stage to a late or even post-industrialization stage. Take Beijing or Shanghai for example, China has probably reached the peak in the process of industrialization, and in the near future, the country as a whole will enter the stage of postindustrialization. In terms of urbanization, it will change from skill expansion to upgrading of living standard.

In terms of environmental sustainability, we have to learn to respect nature. Development has to be resource-saving, efficient and low or zero-carbon emission. All for the sake of energy security and climate security. If you look at the Chinese map, its topography and climate patterns, some two-thirds of China’s land is not too inhabitable; one-third of the land, mostly in Tibet, Inner Mongolia and Xinjiang, has a population density of only 2 or 3 per square kilometer. Whereas in the coastal areas, in Beijing and Shanghai, the population density is nearly 2,000 per square kilometer. This is simply due to the climate pattern. In the eastern coastal areas, precipitation is 400 mm and above; whereas in the western part, many places have only 100 mm or below 50mm, or even none at all. This distribution gives us a good indication of China’s urban spatial location. As for future planning, in this regard we have to look at the urban clusters, the core cities and the city systems, as well as inclusiveness and the removal of barriers, so that rural migrants can have similar entitlements. Let us look at some of the details of the policy change. In small cities, there is no restriction of household identity registration at all, and migrants can be automatically given a hukou. But in big cities like Beijing, restrictions will continue as these cities have been so huge that there must be boundaries for urban sprawl. Urban governance will be improved. This means that residents will be part of the system. Traditionally, Chinese culture has been a topdown culture, and the grassroots are not given much say. Now, the government is calling for a change, that is, the ruled will have a say and will be participating in the governance. Social services will be equalized, and housing will be made available and affordable to the mass. The supply of housing in China is already huge, but the government has changed its policy so that the lower and middle income people can have their share. Green and cultural features of a city have to be emphasized as well. Libraries, museums, theatres and gymnasiums are only found in

CHINA EYE‧Issue 6

Transformative Urbanization in China: Inclusiveness, Livability and Sustainability PAN Jiahua (潘家華)

cities, but not in rural areas. Reshaping the lifestyle of urban dwellers is very much important. If they were to follow the degree of luxury and wasteful scale of consumption as the West, China would have no future. In terms of car ownership, China is ranked only 115 in the world. This is a fraction of car ownership in developed countries, but the current automobile fleet still creates serious traffic congestion and many other problems. We have to reshape our lifestyle. And, of course, the rural areas should not be neglected. They must be a part of the process of urbanization and urban services have to be extended to the rural areas. In addition, there are policies to promote other transformative process, like progressive pricing of natural resources consumption. Another creative policy is the carbon market arrangement, “cap-and-trade”, in China. We have ecological compensation arrangements and also liability arrangements as well. All these policies are to ensure that resources are made sustainable. Below is an example of the progressive pricing of water consumption. If a household, on average, consumes less than 180 mm, the fee is normal. Incrementally, if they consume more, up to 260 mm, they will have to pay a bit more. If they consume over 260 mm per household, they have to pay the highest price which is RMB ￥4 per ton higher than the normal one. These arrangements are to discourage the wasteful use of water resources. This also has some equality implications. The rich have to pay more, while the poor do not have to pay that much. In addition, the environmental implication is clear – Natural resources have to be saved. To conclude, the process of this transformative urbanization is for a better life and a better future. We have a slogan at the Shanghai Expo, “Better city, better life”. People go to cities for a better life, because in cities, there are better services and infrastructure. Cities will become more inclusive and livable, and, of course, governance will become participatory. All the stakeholders will be contributing to this

inclusive, livable and sustainable process of urbanization. The other conclusion is “Better city, better future”. In urban areas, we can use natural resources more efficiently. Also, we will be able to achieve, in particular, a paradigm shift from an industrial to an ecological civilization. Some people may find the term “ecological civilization” bizarre, but this is a term in contrast to “industrial civilization”. Under industrial civilization, institutions are utilitarian. It is a frontier economy for profit-maximization, at the cost of environmental pollution and ecological deterioration. Ecological civilization is different. It calls for a respect for nature, working together with nature. It calls for valuemaximization instead of profit-maximization. The natural environment has its value, and this should not be ignored. This inclusive, livable and sustainable urbanization will be a huge contribution to world economic development and global sustainability. In the developing world, the urbanization process has been accelerating; in the developed world, the urbanization rate is stable, but the current scale of consumption is not sustainable. Therefore, China’s experiences would have a very positive impact on global sustainability. * The article is excerpted from the author’s speech at “A China Story II – New Pathways to Urbanization” held by the China Energy Fund Committee on July 7, 2014, at the United Nations Headquarters in New York.

CHINA EYE‧Issue 6

Possible Changes in International Energy Relations and Their Effects in the Next Decade WANG HaiYun (王海運)

Energy Diplomacy Possible Changes in International Energy Relations and Their Effects in the Next Decade (未來十年國際能源關係的可能變化及其影) WANG Haiyun (王海運)

The Increasing Influence of Japan’s Energy Policy on its Foreign Policy (日本能源政策對外交政策的影響代) HAMADA Takujiro (濱田卓二郎)

Energy Partnership among China, the United States, and Japan (中美日三國的能源合作伙伴關係) TOYODA Masakazu (豐田正和)

Changing World Order and Energy Security in the 21st century (轉化中的世界秩序與二十一世紀能源安全)

JEREMIC, Vuk CUYAUBE, Miguel Angel Moratinos BENAISSA, Mohammad WANG Yiwei (王義桅)

Energy Cooperation and Nuclear Security in the Age of Sustainable Development (可持續發展時代中的能源合作與核能安全)

JEREMIC, Vuk AL-SABAH, Sheikh Muhammad Sabah Al-Salem WIRAJUDA, Nur Hassan 46

CHINA EYE‧Issue 6

Possible Changes in International Energy Relations and Their Effects in the Next Decade WANG HaiYun (王海運)

Possible Changes in International Energy Relations and Their Effects in the Next Decade (未來十年國際能源關係的可能變化及其影響) WANG HaiYun (王海運) Senior Fellow at the China Foundation for International Studies (CFIS) Major General of the People’s Liberation Army (Retired)

n the coming decade, the world will be going through a post-financial crisis era. It will be a “quasi multipolar era” as we transition from a unipolar to a multipolar world. The effects of the financial crisis on international energy relations will continue to be felt, as paradigm shifts in international order bring forward major changes in the international energy order. Cooperation and competition among the world’s major economies in low-carbon development and new energy revolution will, in effect, redraw the world energy map and energy structure. Various other geopolitical events will also bear significance on international energy relations. The combined effects of the above suggest that international energy development and security may undergo a series of important changes over the next decade. 1. Possible changes to the Global Energy Scene The world economy has entered into a phase of growth and recovery, and energy demand will gradually pick up. Global economic growth will be slow at the beginning of the coming decade but the demand for energy and investment in the energy sector will increase. At the same time, the global population is expected to rise well above 7.2 billion. This economic and population growth will boost energy consumption and drive energy development. Over the next decade, major energy

consuming countries and energy-rich countries will make adjustments to their energy strategies based on world energy supply and demand changes, and their respective rates of economic recovery and development. This will, either directly or indirectly, cause certain changes in international energy relations. There are some countries that will experience two to three administration changes in the foreseeable future, which may add uncertainty with regard to their energy strategy and policy. Terrorism, piracy, political crises, armed conflict and regional wars will be frequent, and consequent risks to energy development and pipeline security are likely to further increase. A certain level of consensus will have to be reached within the international community in order to safeguard energy resources, sea routes security, as well as developing new and comprehensive safety measures. Climate change and the low-carbon revolution will largely affect the direction of global energy development. The use of fossil fuels will be increasingly constrained, leading the international community to pay more attention to the development and utilization of new and clean energy sources, as well as technological innovation with respect to conventional sources of energy. Over the next decade, the abovementioned factors are likely to effect changes in the development model and strategic orientation of the global energy sector, instigating important

CHINA EYE‧Issue 6

Possible Changes in International Energy Relations and Their Effects in the Next Decade WANG HaiYun (王海運)

changes in the international energy scene. 2. Possible Changes to the International Energy Landscape International energy landscape will possibly undergo significant changes as follows: The center of gravity for energy supply will partially shift from fossil fuels to new energy. Clean and renewable energy will gradually dominate future energy development. The fourth energy revolution will see competition focused on theoretical innovation, technological innovation and human resources innovation. The United States, with technological and human resource advantages, is likely to play a strategic and leading role in the revolution, with other major developed and emerging countries following closely behind. The center of gravity for energy markets will shift from the U.S. and Europe to the AsiaPacific region. While energy demand is peaking in western, developed countries, it is on the rise in developing countries and emerging markets such as China and India. The growth in energy demand in the Asia-Pacific region will have a significant impact on the international energy landscape. Moreover, the importance of SouthSouth cooperation in energy is likely to exceed that of North-South cooperation. The focus of global energy supply will shift from the Middle East to Africa. Nevertheless, oil and gas reserves from the Middle East still account for 61% of total global reserves and the region will continue to be a primary producer of oil and gas in the coming decade. However, given complex geopolitical issues and a deteriorating security environment, more energy user countries may increasingly turn to Africa, Central Asia, Latin America and other regions for secured supply. The statuses of dominant powers within the international energy landscape are likely to change. The dominance of the United States will be maintained, but its influence on global energy development and security will decrease relatively, whilst the positions of emerging powers are likely to gradually

improve. Countries that are able to achieve breakthroughs in the new energy revolution stand to gain a strategic advantage as a result. Furthermore, energy cooperation and competition amongst the world’s major economies will also increase. Energy competition between major countries will remain complex, but disputes will remain under control. Cooperation will dominate major country energy relations in the future, and South-South relations will be further developed. Among the emerging countries, relationships between consuming countries, between resource-rich countries as well as those between consuming and resourcerich countries will increasingly shape the international energy landscape. 3. Key Areas for Global Energy Development In the next decade, international energy development will be focused primarily on four major areas:Low-carbon energy development, predominantly in the form of conventional and unconventional natural gas – Shale gas, coal bed methane and methane hydrate are approaching mass development and are set to become the focus of competitive investment. Shale gas supply will be the crux of energy development in the U.S., whereas natural gas will be the focus in the energy strategies of Russia and major EU countries. The prospect of natural gas development in emerging countries should not be underestimated either. New and renewable energy, specifically, solar, nuclear and wind power, will be crucial in the energy technology revolution. Geothermal energy, tidal energy, biomass and other new energy sources will also attract more attention in the future. The development of conventional energy sources will focus on the aspects of energy saving, emissions reduction and clean utilization. It will be difficult for new energy to achieve large-scale development and utilization in the coming decade and traditional fossil fuels are expected to continue to dominate energy

CHINA EYE‧Issue 6

Possible Changes in International Energy Relations and Their Effects in the Next Decade WANG HaiYun (王海運)

consumption. As such, technological innovation with respect to the clean and efficient use of traditional energy sources will be a major area of development worldwide. The development of technologies will also aim at safeguarding the ecological environment. The oil spill in the Gulf of Mexico had raised serious global concern on the environmental security of oil and gas development and transportation safety. In order to prevent disastrous oil leaks and oil tanker accidents, environmental safety standards for offshore oil and gas production will be dramatically enhanced in countries around the world. 4. China’s Energy Security: Challenges and Opportunities In the next decade, China’s energy security will face serious challenges, but will embrace remarkable opportunities as well. The possible challenges facing China’s energy security are:Energy demand driven by rapid economic growth will continue to increase, as will the disparity between energy supply and demand. Over the next decade, dependence on foreign oil will be well over 60%. Given the national strategy of “investing overseas”, China’s interests in major foreign oil and gas producing regions may be increasingly threatened by the U.S. and other powers. In the Gulf region, China needs to deal with the direct control exercised by the U.S. and Europe; In Central Asia and the Caspian Sea Region, China must deal with the influence of Russia on neighboring oil producing countries and distribution networks; In Africa, China is faced with strong resistance by the U.S and major European powers. Given China’s dramatic increase in oil and gas imports, it is natural for her to raise concern on transportation safety. Ensuring the safety of land and sea routes for oil and gas transportation has become an urgent task of China’s energy diplomacy. In this regard, China will face possible challenges by major powers including the United States. There might also

be possible provocation from countries such as Vietnam and the Philippines. Inside the country, there is mounting pressure to mitigate climate change. China is increasingly faced with the need to address issues related to climate change such as energy conservation, emissions reduction and clean energy development. Furthermore, the divergence between ensuring rapid economic development and achieving clean energy development will increase in the future. Other than challenges, there will also be many possible opportunities for China’s energy development:China is the first country to emerge from the financial crisis, and the momentum of its rapid economic growth will likely continue. This will provide strong pulling force and lay a solid foundation for energy development. As a result of sharp rise in international status and increase in international influence, China’s ability to manage international energy relations will be noticeably effective. This will provide for a more conducive environment for energy diplomacy. In recent years, thanks to the combined efforts of government and energy enterprises, including proactive measures taken during the financial crisis, China’s foreign energy relations have improved significantly. This will provide important help for future energy diplomacy. 5. Pathways to Strengthening China’s Energy Security Based on an assessment of the possible changes to international energy relations in the next decade, and in light of the challenges and opportunities to be encountered by China on energy security, I strongly hold that there is a need for formulating a new national energy security strategy. Particular focus should be given to the following aspects: Further streamlining China’s energy strategy – China should issue a national energy strategy as soon as possible, along with supporting energy diplomacy strategies,

CHINA EYE‧Issue 6

Possible Changes in International Energy Relations and Their Effects in the Next Decade WANG HaiYun (王海運)

energy development strategies and new energy development strategies. It should also develop appropriate policies and regulations in conjunction with the above. Greater efforts in developing international energy cooperation – The key here is to develop relations with Russia and countries in resourcerich regions such as Central Asia, Africa and the Gulf, as well as neighboring oil- and gastransit countries. Relations with western powers should be strengthened and stabilization of international energy markets has to be ensured. Finally, relations with international energy organizations should be fostered for reshaping a new international energy and financial order. All in all, the country should endeavor to create a broadly inclusive and mutually beneficial environment for cooperation. At the same time, the country should, through technological innovation, drastically improve efficiencies in utilizing oil, coal and other traditional sources of energy. Breakthroughs have to be achieved in the clean use of these energy sources, with a particular focus on clean coal utilization. China should also, through technological innovation, vastly develop new and renewable energies. China should, on behalf of mankind, strive to make contributions to the global technological revolution on a scale that is befitting for a nation of its size and status. In order to better respond to possible future energy crises and to ensure the sustainable development of the economy, there is a need to further increase strategic oil reserves as well as commercial oil reserves. In this regard, greater initiative is needed on the part of central and local governments, state-owned and private enterprises. This includes the diversification of energy supply channels, energy transport routes, energy consumption structure and energy cooperation. * This article is translated from an extract of the author’s speech at a seminar in China.

CHINA EYE‧Issue 6

The Increasing Influence of Japan’s Energy Policy on its Foreign Policy HAMADA Takujiro (濱田卓二郎)

The Increasing Influence of Japan’s Energy Policy on its Foreign Policy (日本能源政策對外交政策的影響) HAMADA Takujiro (濱田卓二郎) Former Parliamentary Vice-Minister for Foreign Affairs, Japan

am honored to be able to participate in the fifth annual Sino-US Energy Conference again (as I did last year). This year’s conference with its main theme of “Changing World Order and Energy Cooperation” is a most meaningful one as the world today is faced with these significant global challenges. In line with the theme of this conference, we have invited our experts representing respective professional fields from Japan. We are all here with great expectations. Please let me offer our sincere gratitude to, The China Energy Fund Committee, the conference sponsor, for inviting us all to this important event. THE DIPLOMATIC AND NATIONAL SECURITY POLICY OF JAPAN First, I would like to touch upon the diplomatic and national security policy of Japan. It has been a consistent diplomatic policy of Japan to do the following: One is to promote and expand democracy throughout the world and the other is to mobilize our technologies and economic power to share economic prosperity with as many nations as possible, which we believe will eventually lead to national security and economic prosperity for our country. Ever since Prime Minister Abe took office, there were two significant events that attracted the world’s attention. (1) Firstly, there is more active discussion among Japanese people regarding the

confirmation of the right of collective selfdefense and lifting, what we call, the three doctrines regarding embargo on arms. (2) The second is the establishment of the National Security Council (NSC) and the passing of the Special Secrecy Law at the National Diet. There are some people who criticize these political initiatives as a sign of Japan becoming more right wing and reverting to a militant prewar form of society. But I think this criticism is totally off the mark. Both the acceptance of the right of collective self-defense and the three doctrines with regard to embargo on arms are perpetual challenges for postwar Japan, which has held the JapanUS Security Treaty as a basis for its national independence and its self-defense. These moves taken by Japan in recent years are not intended to increase threats on other nations or attempt to settle international issues by military force. The establishment of the NSC is intended to centralize information that is critical to our national security by overriding the vertically separated bureaucratic structure of our government system. The Special Secrecy Law is a part of our country’s efforts to become a reliable nation to be able to protect its secrets that it has made with our partner nations as well. This is indeed our specific action to free ourselves from criticism that Japan doesn’t have any anti espionage laws.

CHINA EYE‧Issue 6

The Increasing Influence of Japan’s Energy Policy on its Foreign Policy HAMADA Takujiro (濱田卓二郎)

HAMADA Takujiro (濱田卓二郎) at the “Sino-US Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation”

The two points mentioned above are an integral part of our national independence and how our self-defense should be positioned as a nation. These recent events are part of our consistent efforts to reform and restore Japan to our vision of how “an independent sovereign nation” or “an ordinary and responsible sovereign nation” should be in the international community. Either way, our basic diplomatic policy that we have consistently maintained remains unchanged. Moreover, our basic national policy to promote economic prosperity around the globe through the use of technology and economic power has gained more importance than ever before. I am convinced our objectives as a nation should be to transform the world order for the better. I must say, Japan’s energy policy will increasingly influence our foreign policy. HIGHLIGHTS OF JAPAN’S ENERGY POLICY

Now, I am going to give you some highlights of Japan’s energy policy with an emphasis on the importance of clear and universal nuclear safety standards and the immediate need for decreasing the LNG purchase price. First I would like to speak about the importance of establishing clear and universal nuclear safety standards. We have learnt many lessons from the nuclear accident at Tokyo Electric Power Company‘s Fukushima Daiichi Nuclear Power Station (hereinafter referred to as Fukushima Daiichi NPS) which was triggered by the Tsunami in 2011. Among them the nuclear safety standard is the most noteworthy. Because the standard was unclear, the nuclear accident at Fukushima Daiichi NPS created excessive fear for NPS, fear which has reached an almost hysterical level against the re-opening of all the NPS in Japan. As a result, we do not have a single NPS currently in operation in Japan. I have been personally involved in the

CHINA EYE‧Issue 6

The Increasing Influence of Japan’s Energy Policy on its Foreign Policy HAMADA Takujiro (濱田卓二郎)

negotiation with the Ministry of the Environment in Japan with regard to the disposal of rubble caused by the Great Tohoku Earthquake. In that process I realized how unclear is the safety standards that were set by the government. For example, the Commission of Inquiry on Radioactivity approved new permissible radioactive Cesium limits that were drastically reduced from the previous ones. The new permissible limits are as follows: ・ Vegetables, crops, meat, eggs and fish: the limit has been reduced from below 500 Becquerel to below 100 Becquerel, by almost one fifth of the previous limit. ・ Dairy products: the limit has been reduced to below 50 Becquerel from 200 Becquerel. ・ Drinking Water: the limit has been reduced to below10 Becquerel from 200 Becquerel. As you can see, the previous limits have been suddenly replaced by more stringent ones by a factor of 4 to 20 times. These new changes were introduced without adequate explanation. The Radioactivity Commission which usually has been expected to state “reasonable” when giving approval, actually stated that it has “no objection” instead. Therefore there were some members of the Commission of Inquiry who even stated that the new limits are too stringent. This is only one such example where nuclear safety standards are not clear – when they introduced the new regulatory guidelines in dealing with radioactive materials. We have seen people all over Japan, overreacting to what is required to be an acceptable level for nuclear safety standards. We expect many difficulties in dealing with used nuclear fuel rods or the socalled disposal of nuclear contaminated waste. We have seen a new opinion leader – Prof. Shoichi Watanabe, eminent scholar on English literature and commentator on civilization who advocates for promoting nuclear power stations in Japan in his newly published book

entitled ‘A Bright Road Ahead with Nuclear Power Stations in Japan”. The essence of his argument is that we have to recognize Nuclear Safety Standards based on scientific evidence and with such an attitude we should be able to control nuclear power to be more useful for human beings. Exactly when all the NPS in Japan will become operative is not yet certain, but it is true that we expect many specific NPS construction projects under planning in China, Korea, and many other countries including Turkey, to start specific NPS projects in future. With these new initiatives taking place to construct more nuclear power stations in many other countries, I think it is all the more important for us to come up with a universally acceptable nuclear safety standards system based on scientific evidence. I am firmly convinced that this convention dedicated to discussion on safety of nuclear power is most timely for us to meet one of the most difficult global challenges of today. Now I would like to turn your attention to LNG thermal power stations in Japan. Actual electricity produced with its breakdown of energy sources as of the end of Oct. 2013 are as follows:

Hydroelectric power station Coal / oil thermal power station LNG thermal power station Nuclear power station

6.5% 41% 44.2% 0%

The energy sources breakdown in 2010 just before the Tsunami hit nuclear power stations and caused all the nuclear power stations in Japan to be shut down completely, indicate that 27.5% of electricity produced was by nuclear power and 20% by LNG. It is obvious that LNG thermal power stations have significantly gained importance in Japan. In addition to the abovementioned event, the use of LNG for thermal power stations has increased its market share because it is environmentally friendly, emitting only limited amounts of CO2 when it is burnt.

CHINA EYE‧Issue 6

The Increasing Influence of Japan’s Energy Policy on its Foreign Policy HAMADA Takujiro (濱田卓二郎)

Japan imports almost all LNG from abroad, since it lacks natural energy resources. Our country imports 53 million tons of LNG per year in total, 18% from Malaysia, 17% from Qatar and 16% from Australia. This increased share of LNG thermal power stations has caused a major issue. Not only because 70%-80% of its costs of generating electricity is fuel costs, but also because its purchase price of $16-18 / mmBtu is comparatively very high by international standards. The reason for such a high LNG price is that it is linked to the price of crude oil. As a result we cannot enjoy the benefit of declining natural gas prices as they do in the US and Europe when this happens. It is said that the LNG purchase price in the US is currently around $4/mmBtu. You can easily imagine that to decrease the LNG purchase price is the most critical issue for Japan’s energy policy. I believe it is particularly important now, not only from the perspective of Japan’s energy policy but also from an international security policy point of view, that we are able to engage in constructive dialogue on how to decrease the LNG purchase price in the international market by, on the one hand, cooperating with China which is also forced to buy LNG at a very high price, and on the other, collaborate with the US, which has initiated the Shale Gas Revolution while enjoying a low LNG purchase price. * The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

CHINA EYE‧Issue 6

Energy Partnership among China, the Unites States, and Japan TOYODA Masakazu (豐田正和)

Energy Partnership among China, the Unites States, and Japan (中美日三國的能源合作伙伴關係) TOYODA Masakazu (豐田正和) Chairman & CEO, The Institute of Energy Economics, Japan (IEEJ)

irst of all, I would like to note here that Asia has now become a center of world economy. This is particularly evident in the rapid economic growth of emerging economies of this region. In fact, GDP growth of the world in the last decade was 3.9%; but the GDP growth rate of developing Asia was 8.7%, far exceeding the world growth rate. ASIA AS A CENTER OF THE WORLD ECONOMY AND ENERGY CONSUMPTION As a speaker from a research institute of energy studies, I would like to emphasize that economic growth means energy demand growth. All economic activities more or less need energy. IEEJ predicts that, while the annual average growth rate of the world energy demand is 1.6% from 2011 to 2040, Asia’s energy demand growth rate is 2.5% during the same period, which means that Asia’s energy demand in total will grow by 1.8 times during this period. I also have to point out that energy demand growth means energy import growth, which is perceived as vulnerability for a country’s energy security. The IEEJ forecasts that net oil imports in Asia will more than double from 16 million b/d in 2010 to 33 million b/d in 2040. In particular, we expect that Chinese oil imports will grow from 5 million b/d to 12.9 million b/d in 2040. During this period, Asia’s oil production will marginally grow, not keeping pace with the steady increase in oil demand. Therefore, the net oil import percentage of Asia in total will reach 80% compared with 67% in

2010. In addition to such increasing energy needs, it is likely that we will have to bear the burden of high oil prices. Although some advanced vehicles such as electric vehicles or fuel cell vehicles are currently being developed, oil will continue to be the dominant fuel for transportation. It is inevitable that the motorization process continues as the world economy grows, and so does oil consumption. Furthermore, increasing fiscal expenditures by some Gulf oil producers to calm down anti-government civil movement within their countries may become another factor to sustain the current high oil prices. As for natural gas, although the US shale revolution will greatly help to ease the market balance of natural gas, the depletion of shale fields is very fast and its development will continue to put upward pressure on costs. GROWING UNCERTAINTIES IN ENERGY SUPPLY Looking at the supply side, we note that several significant events have occurred in the last three years. A wave of anti-government movements, the so-called Arab Spring or Arab Awakening, broke out and spread in Arab countries in the beginning of 2011. It has so far failed to bring their envisioned peaceful and democratic societies. Instead, in several countries such as Syria and Libya, civil conflicts still continue and have even worsened the political and economic situations. Civil war in Syria in particular is feared to spread its sectarian

CHINA EYE‧Issue 6

Energy Partnership among China, the Unites States, and Japan TOYODA Masakazu (豐田正和)

strife and extremists’ activities to neighboring countries. The Middle East will continue to pose serious geopolitical risks to international energy supply. In Japan, the great earthquake on March 2011 caused a serious accident at Fukushima Daiichi nuclear power plant. While Japan has 50 nuclear units, no unit is under operation as of today because all of these units are now required to pass the safety review by the newly founded Nuclear Regulatory Authority. This sudden loss of nuclear power capacities resulted in a large increase in LNG imports by Japan, costing around an additional 3.6 trillion yen (or 36 billion US dollars) annually to the Japanese trade balance. Good news on the supply side is the shale revolution. Thanks to this newly available resource, it seems that we no longer have to worry about “peak oil” or “peak gas.” If we can expect an export of shale gas or shale oil from the US, it will undoubtedly contribute to the stability of international oil and gas markets. I expect that the US Government will continue to commit to the Middle East even though its net oil imports are declining. But, if the general public in the US lose their interest in the security of the region and do not support the position of the Government to interfere, it may cause a serious supply risk for the international energy markets. DEEPENING THE TRILATERAL ENERGY COOPERATION Based on these on-going developments in the international energy arena, there are three areas where we can deepen our trilateral energy cooperation besides nuclear safety. The three areas are elimination of the Asian premium, energy conservation, and free trade of energy resources. Nothing is more a common and acute energy issue for both Japan and China than the Asian premium problem in LNG trade. LNG in Asian markets is far more expensive than natural gas in the US. The latest spot assessment price in Northeast Asian LNG is $19/mmBtu while US domestic natural gas prices are just above

$4/mmBtu. This premium is caused by an oil price–linked LNG pricing formula as well as rigid contractual provisions, particularly restrictions on shipping destinations. It is only reasonable that a commodity’s price is determined by the commodity’s market balance, not by the balance of another commodity. Japan and China can work together to address this premium issue. As I will address later, US can play a very important role by exporting its LNG to Asian markets. A rational pricing scheme will make the international LNG market a more sustainable one. The three countries should take joint actions in this regard for the sound development of the future LNG market. Energy conservation is another important area for trilateral cooperation. Energy conservation always brings multiple benefits such as improving economic competitiveness through energy cost reduction, enhancing energy security through reducing domestic energy demand, and addressing environmental protection as well as climate change through carbon emissions reduction. As for China, improvement of air quality through energy conservation is becoming an imminent health issue. IEEJ analyzes, through adoption of advanced technologies, that Asia can reduce CO2 emissions by 36% (or 7.6Gt), almost half(48%) of which comes from energy saving, followed by fuel switching (34%) and Carbon Capture & Storage (18%). Advanced energy efficient technologies of Japan and the US have a number of opportunities to be adopted in China. Japan and China in fact have already set up held a bilateral energy conservation cooperation framework as late as 2012. As the need and benefits for energy conservation cooperation is growing, it is desirable that we can restart the forum this year. Japan, the US, and China can also work together to build a realistic and effective carbon emissions reduction framework as all of us are major CO2 emitters in the world. The third area for cooperation is freer oil and gas trade across the Pacific Ocean, in particular from US to Japan and China. Although exports of crude oil and natural gas are basically prohibited in the US, five projects

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Energy Partnership among China, the Unites States, and Japan TOYODA Masakazu (豐田正和)

have already obtained export permission by the US Department of Energy, as such exports are assessed to bring net benefits for the US macro economy. If this LNG export is based on the natural market price in the US, it will greatly help to rationalize the pricing formula of LNG in the Asian market, as I mentioned already. I also expect that the US will relax its export restriction for crude oil, and will also start exporting it to Asian markets in the near future. We have already observed oil products and LPG imports from the US to Asian markets; but import in the form of crude oil is more economical and preferred in Asian refiners as it gives them more operational flexibilities. CONCLUSIONS To conclude, I would like to highlight again that Asia will be the center of world economic growth as well as the center of world energy consumption. How to manage this demand challenge amid the growing uncertainties in supply side will shape the future of a prosperous Asia. As major powers in the Pacific region, Japan, the US and China, must make cooperative efforts by sharing forces and wisdom to overcome this challenge. Since Japan, the US, and China share a number of common interests in energy market rationalization, energy conservation, and energy market stability, energy can become a strong glue to bond together the three countries. Energy therefore has to be one of the most prioritized topics to be discussed among top leaders of the three countries, and potential cooperation items need to be further explored. * The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre. Speech delivered by Mr. YOSHIKAZU Kobayashi (小林良和), a Senior economist of IEEJ.

CHINA EYE‧Issue 6

Changing World Order and Energy Security in the 21st century JEREMIC, Vuk, CUYAUBE, Miguel Angel Moratinos, BENAISSA, Mohammad and WANG Yiwei (王義桅)

Changing World Order and Energy Security in the 21st century (轉化中的世界秩序與二十一世紀能源安全) JEREMIC, Vuk

President of the Center for International Relations and Sustainable Development (CIRSD) The President of the 67th Session of the UN General Assembly

CUYAUBE, Miguel Angel Moratinos Former Foreign Minister of Spain

BENAISSA, Mohamed

Former Foreign Minister of Morocco

WANG Yiwei (王義桅)

Director, Institute of International Affairs, Renmin University, China

EREMIC, Vuk (Moderator): We do live in a world that is changing very rapidly and probably at a faster pace than in any moment in history. I’ve had the privilege of seeing it from close distance in a way, having served for one year as the President of the United Nations General Assembly, for its 67th session, and having to deal with a number of international – I’m not going to say crises but – developments that were multi-dimensional, multilateral and very complex in their nature. One could very well feel that there is a sense, an atmosphere, of change – An atmosphere of vibrant and pulsating change in international affairs. 2013 was an exciting year. The year 2014 is going to be a year of significant challenges, I’d say, and I’d be cautiously optimistic about world peace and stability. 2014 is going to be the centenary of the beginning of the First World War. We were discussing books and statements at the time by distinguished scholars, and as a matter of fact, the best-selling book of 1914 was a book by an author called Norman Angell, who wrote a fantastic assessment of global

affairs at that time, and then made a very, very strong and convincing argument that a world conflict was absolutely unimaginable given the state of world affairs and the economy. That happened in early 1914. Now, obviously this book was taken off shelves, and during the second half of the year, the world was brought into a maelstrom of global conflict. It has been a fascinating study, the actual diplomatic dance from a total peace to total war, that actually led key world capitals at the time through a series of ruptures, which at some point could no longer be contained. I’m not trying to sound pessimistic, but I think that there are a number of lessons that one can learn from the diplomatic developments from a hundred years ago. We must make sure, through cooperation, that there is enough understanding, that there is enough exchange of both frequency and quality between the world’s vibrating centers. Europe is a place that has gone through some challenges in the last few years, and Miguel comes from Spain, which has its own share of

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Changing World Order and Energy Security in the 21st century JEREMIC, Vuk, CUYAUBE, Miguel Angel Moratinos, BENAISSA, Mohammad and WANG Yiwei (王義桅)

challenges. But as one of the arch Europeans, one of the founders in many ways, of the modern European Union, I’d like to give you the floor first, and perhaps ask you to start with how you see 2014 and the current challenges from a European perspective. CUYAUBE, Miguel Ángel Moratinos: I have to congratulate the previous Chinese and Japanese speakers, and I have to say that I was shocked. When they referred to Europe, they talked about Westphalia in the 17th Century, then the First World War that President Vuk Jeremic was referring to, and then the Second World War. So Europe was mentioned like some reference to history, as if Europe is not an important actor anymore. Of course, we understand we are in South-East Asia, we have Japan and then we have the US. We are looking to the new G2, the G7, and the G20. Because I come from Spain, from Europe, and I am a member of the European Union, I want to give you the new sense of Europe, and remind you not to forget about the new role of Europe! In order to be very brief, I would say take some lessons from us. We are in 2014. One hundred years have passed since the First World War. Looking back at the hotspots, crises, recoveries and disputes, don’t make the mistake we Europeans made when entering the First World War; don’t make the mistake we made when entering the Second World War, even though our Chinese speaker suggested that perhaps world order comes after the world of chaos. Does this mean we will need a third world war to establish a new world order? I don’t think so. I think we will mature ourselves enough to learn from the lessons of the Europeans. Therefore, my first message is: look to the European model, because the First and Second World War created a very successful story that is called the European Union – 60 years of peace, stability, growth and prosperity. You will say, well, Europe is decadent. Well, I would like every region in the world to be decadent as well. I would like to challenge everybody

to see if in Europe we do not have economic development, democracy, rule of law, defense of human rights, concern about climate change and a good mix with energy. We are trying to have a good balance for future dependency, not only dependence on gas and oil, but investing in renewable energy, like my country, in solar and wind. So look to the European model in the past to avoid mistakes we have made, and take into account that today’s Europe could be a central model. My second recommendation is to observe that in this new multi-polar world – and we all agree we have a multi-polar world – the problem will not be any nation or state. We don’t know how we are going to engage with the rulers of the world, we don’t know who rules the world. Is it Washington D.C.? I don’t know; Is it Beijing? I don’t know. Is it the UN? Not sure. Who is ruling the world? The corporations, national corporations? To a certain extent. Totally? No. Who rules the world? In the new world of the 21st century, the European Union should be taken into account. We are going through a financial crisis that is very difficult, and we have to strike a very difficult equilibrium between achieving a productive, competitive economy and maintaining what we call a welfare state. So we are making tough decisions to adapt to the economy, to adapt to our own budget, and to adapt to social policies. But we are looking to the future, investing in universities, investing in research and development, and trying to be at the forefront of this new challenge. Europe has developed a concept. Compared with our American friends, we are more inclined towards soft policy, soft power. Yes, perhaps soft power in the 21st Century will be more important than hard power. Maybe it’s not the time to use military weaponry in the 21st Century. But you need some power, you need dialogue, you need cooperative security and you need a different way to address the problem. Europeans are modest, but with pride. And pride is something we are looking for. So my recommendation is don’t forget

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Changing World Order and Energy Security in the 21st century JEREMIC, Vuk, CUYAUBE, Miguel Angel Moratinos, BENAISSA, Mohammad and WANG Yiwei (王義桅)

Europe. Europe is far away geographically, but in today’s world we are very close, and we are not out of the scope. After the Second World War everybody thought that Europeans were going to disappear! Then we started with the European Union, and now we have Europe, and new technologies. So don’t think Europe is out! JEREMIC, Vuk (Moderator): The UN is definitely not ruling the world. I am going to be able to confirm this from a very near distance. I was the president of the United Nations General Assembly for one year. It is an important institution but it is definitely not ruling the world. Now I’m going to give the floor to Mohammad Benaissa. He comes from Morocco, a part of the world that is very near Europe, from the Middle East in the broader sense. It is perhaps difficult to discuss the Middle East and its current developments holistically or integrally, but maybe we can start from the Mediterranean part of the Middle East, from the shores that have been, for many centuries, key to the economic and security stability of Europe, and, by extension, the whole world. There are definitely developments in, let’s say, the Afro-Arab part of the Middle East, and things are brewing and things are changing. Now, after a couple of years, perhaps you can enlighten us in this regard. BENAISSA, Mohamed: This morning, frankly, the discussions or debates that took place were so comprehensive, but also so global, that each item debated by the speakers would need, per se, a conference. Whether it was, for instance, the discussions relating to energy security, or like our friend Mr. Hamada from Japan put it, nuclear safety, they all addressed the strategic dimension of cohabitation and coexistence in South-East Asia, the United States, China and others. But I believe that in all our discussions, there is one part of the world which is not nearly forgotten, but which is emerging, and becoming a major issue in the world today, and

that is the South at large, the South in which China is playing a major role of leadership. There are new concepts and new practices of governance, democracy, and of development at large in the South, which, although does not constitute a challenge as such immediately, is a future challenge in every way. Take Africa, in 2050 there will be two billion people – two billion human beings in Africa. This is just an example in terms of population. Of course, we all know the wealth, the resources and the overall importance of this part of the world, as a culture and as a civilization, to the peace and security of the world. We live today, in my part of the world, that is, the so called Middle East, in particular North Africa and the Mediterranean, a very crucial period of development and history. Very briefly, for the first time I believe, the security of Europe, of which my dear friend Miguel Angel Moratinos was talking about, frankly, depends largely on the security, the stability and the development of the south of the North-African region and the sub-Saharan region, particularly the Saharan zone. This is the region extending from the Atlantic to the Red Sea – the great Sahara, with its South and its North. This is the part of the world which is now undergoing a tremendously unstable situation of war. The Mali situation, what’s going on in Chad, in the Central African Republic, in Nigeria, in Northern Cameroon; what has happened in the Ivory Coast, in Sierra Leone, in Liberia etc. AlQaeda, which everybody thinks of as being a very active destabilizing factor in the Middle East, is today developing its own network in North Africa, in the Sahara. We are very much aware of this, but in the meantime, we are also confronted with international issues – what has happened in Tunisia, in Libia, in Egypt and what’s happening now in Syria and so forth and so on. We would benefit from European understanding, European help and assistance, as well as assistance from the Americans, and I would say, the Chinese, because China today, for our part of the world, is a model. My

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Changing World Order and Energy Security in the 21st century JEREMIC, Vuk, CUYAUBE, Miguel Angel Moratinos, BENAISSA, Mohammad and WANG Yiwei (王義桅)

generation grew up seeing what China used to be. I came to China myself in 1981, to Beijing. We were received then by Zhao Ziyang (趙紫陽). We had dinner at the People’s Palace, a big dinner. I was in a delegation sent by His Majesty the King, and I saw China then. There was only one hotel in Beijing in 1981, the French Hotel, and we were hosted in palaces – summer housing of the old dynasties etc. And I have seen China thereafter. I came as Minister of Culture, as Foreign Minister, many, many times. For us, our part of the world, this is a perfect model of development. At the time, the Chinese used to tell us: “we are a developing nation, we are a poor nation, and we are trying to make it”. This was in the 80’s. It’s not ages ago, it’s not centuries ago. It was yesterday, in my lifetime. This is why I say China should also pay attention to our part of the world, in the concepts and the practices I have just mentioned, together with Europe and the United States. JEREMIC, Vuk (Moderator): Thank you very much Mohammed and that is definitely the case. I believe that we’ve witnessed over the past 30 years, probably the fastest and the most dynamic growth in human history. We’re talking about China’s development, and last year was very crucial in terms of change and in terms of reforms that were decided. As a part of this reform and opening up, China now has an increased economic presence in many parts of the world, including Europe. Today, with us, we have Wang Yiwei, Deputy Director of the Centre for European Union Studies of Renmin University. Now, how do you see the recent increase in cooperation, particularly economic cooperation, between the European Union and China? and do you think that the EU and China, by strengthening and making this relationship closer, can perhaps play a more enhanced joint role in some theaters like the Middle East, where we are seeing the phenomenon of repositioning and the decline in the interest of the traditional players in that part of the world. In the United

States, for example, for a number of reasons and for the reason that we’ve heard – the Shale gas revolution, there has been a decrease in public opinion interest in the Middle-East. Perhaps you could start with the EU-China relationship, and the potential extensions to other parts of the world. WANG Yiwei（王義桅）: I think, alike experts on the European Union, we first have to compare today’s world with that of 100 years ago, during the First World War – many people are making this comparison. Of course, we should learn many lessons from history. But simply comparing history or worrying about whether the tragedy of history will repeat itself will also create trouble. There are three major differences between today’s world and the time of the First World War. The First World War was not actually a real world war, it was a civil war in Europe. This is what an Indian diplomat discovered. Today’s world is an open, globalized world, not just a European-centric order. I think this is a major difference, especially when talking about the US. With the First World War, we know that mutual inter-dependence between Germany, the UK and France was very high, similar to China-Japan and China-US relations today. But we are also dependent on the US. For example, for energy, we are not just mutually dependent on each other but also dependent on the US. How? Through the US dollar. Behind energy is the currency order. This is in contrast with the European era. Therefore, the US is still the dominant power, and probably the last world hegemony. No country can replace the US. China? I don’t think China can. It has neither the intention nor the capacity to do so, for three major reasons. Firstly, China is traditionally an agricultural society. The traditional mentality of the Chinese is still agricultural. Secondly, China is a continental power. Today we are taking to the seas and going abroad, but we still have a long way to go for the mentality transformation and civilization transformation. Certainly, China

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Changing World Order and Energy Security in the 21st century JEREMIC, Vuk, CUYAUBE, Miguel Angel Moratinos, BENAISSA, Mohammad and WANG Yiwei (王義桅)

is a regional power, but this is limited to East Asia, not even including Japan as a competing system. Today, China is a global China, this is different. These three great transformations mean that China cannot be a world power, a global power. It is just learning how to do this and has to learn from the Europeans and from the US. Japan has for a long time been a teacher to China, acting as a bridge between the western and eastern civilizations. I think that Japan is also a bridge between maritime civilizations and continental civilizations, and it is a challenge for China to do this. Today’s international order, therefore, is not simply a repetition of the First World War order and most importantly, I think that culture matters. As with the European Union, if there is to be integration then it will begin with culture first, not from economic, energy or political integration. This reminds us that culture matters, but cultural differences between East Asia and the west lie, I believe, in their different religions. Take the French scholar, Dominique Moïsi, and his famous book that was translated into Chinese, the so-called “geopolitics of emotion”. With Christianity, they are more concerned with sin – original sin. That means that if you do bad things, like Germany did, but pray in front of God, then you will be accepted by God. This is not the case in East Asian culture. So, this new culture can help avoid a repeat of the tragedy. I think we are more optimistic about the future of China-Japan relations and the East Asian order. There are major differences between East Asia and Europe, so I am sure that we will not repeat their tragedy of a civil war. But of course, we have many lessons to learn from history, including European history. This is what I want to emphasize. Energy is a driving force for cooperation or may be a force for introducing conflicts or confrontation. It is a big question. Recently I read a very famous book, called “Cooperation”. Chinese leaders are also reading this. We are learning that cooperation is not a choice, it’s a necessity. Without cooperation you cannot solve the problem. Even the United States

cannot solve their problems unilaterally. In that sense, this is a different world. Before the First World War, the major powers in Europe thought they could tolerate the costs of war, and could even solve the problem quickly. Today, with China and Japan, no one wants to be involved in a war. War is something we cannot tolerate. The war would not be a fast-solving war, and may even be a world war. These are the lessons we learnt from history, including energy conflicts. Energy should be the basis for cooperation, not only mutual cooperation, but all kinds of cooperation among China, Japan and the US, as well as the European Union, because it too is a stakeholder in East Asian security and order. In response to the speakers, allow me to talk about the Air Defense Identification Zone (ADIZ). The ADIZ was criticized as unnecessary and unilateral. I don’t think so, for a couple of reasons. First of all, China has always, for joint development, put aside some of the territorial disputes. But Japan does not even think that there is a dispute. I’m sorry to say that Japan has territorial disputes with nearly all its neighbors. You have a dispute with Russia in the North, with South Korea and with China. But all the lands are in other’s hands, in Russia’s and in South Korea’s, while only the Diaoyu islands (釣魚島) are in Japan’s hands. You deny that there is a dispute, so the Chinese people said, let the dispute be a reality, and Japan will recognize that there is a dispute. Without the ADIZ, you would virtually deny that there is a dispute with China. This dispute dates back to before the First World War, to the First Sino-Japanese War (甲午戰爭), and I think this is very important. The ADIZ was not unilateral, we informed the US and Russia and the Japanese side, negotiating in the process. It is defensive, not necessarily offensive. But because of China’s rise, every measure China takes you think is offensive. The ADIZ, I think, is defensive, to set up a red line to avoid confrontation with Japan and the United States. I think this is a good way to do so, and not an offensive measure.

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Changing World Order and Energy Security in the 21st century JEREMIC, Vuk, CUYAUBE, Miguel Angel Moratinos, BENAISSA, Mohammad and WANG Yiwei (王義桅)

JEREMIC, Vuk (Moderator): It’s a very interesting idea, this viewing of the First World War as a civil war in Europe. I must admit that this is the first time I’m hearing this, it’s an interesting way of looking at it. I can imagine how difficult a civil war conflict would be between Japan and China. It would probably be very devastating. But one thing that I cannot help but notice is that we haven’t spent too much time trying to address the issues between Europe and China, and I think that this does indicate to a certain extent the world developments, whether or not this is going to be to my and Miguel’s liking. In any case, this is truly one of the most significant theatres and I’m very glad that I’ve heard from all the speakers the need for enhanced cooperation and understanding between various cultures and various philosophies.

* The article is excerpted from the authors’ remarks at a panel discussion at the “SinoUS Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

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Energy Cooperation and Nuclear Security in the Age of Sustainable Development JEREMIC, Vuk, AL-SABAH, Sheikh Muhammad Sabah Al-Salem and WIRAJUDA Nur Hassan

Energy Cooperation and Nuclear Security in the Age of Sustainable Development (可持續發展時代中的能源合作與核能安全) JEREMIC, Vuk

President of the Center for International Relations and Sustainable Development (CIRSD) The President of the 67th Session of the UN General Assembly

AL-SABAH, Sheikh Muhammad Sabah Al-Salem Visiting fellow at Oxford University and former Deputy Prime Minister Foreign Minister of Kuwait

WIRAJUDA, Nur Hassan

Professor at the Indonesia School of Government and Public Policy Former Foreign Minister of Indonesia

EREMIC,Vuk(Moderator):This afternoon I have two distinguished guests, both are members of the board of the Centre for International Relations and Sustainable Development. We’ll start with Dr. Muhammad. He used to serve as the Deputy Prime Minister and the foreign minister of the State of Kuwait. He is teaching at Oxford. He used to be, like me, one of Prof. Jeffrey Sachs’ students at Harvard some time ago. Nur Hassan Wirajuda is former foreign minister of Indonesia. He and I met in 2007 for the first time when we both served as foreign ministers in our respective cabinets. Going to the issue of energy cooperation and perhaps trying to look at it from a geopolitical and strategic perspective, we had excellent academic presentations, but perhaps we can try and look at it more from the lens of diplomacy and politics because that’s where we come from. We come from a part of the world that has traditionally been a place of interest, and it’s been increasingly so in the last couple of

decades. Now we’re in a paradoxical situation. A lot of people are speaking about the decrease of interest of, for example, the United States of America in the region, and a lot of people are taking about ‘pivoting’ (perhaps not as much recently, now the word that is most frequently used is ‘rebalancing’). But things are going on in your part of the world, and a lot of them do circle around energy cooperation. Energy cooperation that extends to all kinds of cooperation. There is an issue of nuclear cooperation that is pretty pertinent in your part of the world, so I guess we may start there. AL-SABAH, Sheikh Muhammad Sabah AlSalem: Some years ago our colleague Hilary Clinton wrote a book called ‘It takes a village’. She was talking about raising a child – it takes a village to raise a child. Interestingly the geopolitics of international energy security is very similar to that book, ‘it takes a village’, but it takes a global village to provide energy security to everybody. It has to be cooperation

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Energy Cooperation and Nuclear Security in the Age of Sustainable Development JEREMIC, Vuk, AL-SABAH, Sheikh Muhammad Sabah Al-Salem and WIRAJUDA Nur Hassan

JEREMIC, Vuk, AL-SABAH, Sheikh Muhammad Sabah Al-Salem and WIRAJUDA, Nur Hassan at the “Sino-US Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation”

between the producers and consumers. Yes, we’ve heard quite a bit about the “shale gale” as they call it in the United States, but the statistics that were presented just a minute ago about the global energy demand shows that in about 20 years there is going to be an extra 20 million barrels a day of increased demand for oil. Currently, the world demand for oil is about 90 million barrels a day. In 2035 it will be about 110 million barrels a day, that’s 20 million barrels of extra oil needed. Where are those extra 20 million barrels going to come from? Even if we discover a new Saudi Arabia, Kuwait and United Arab Emirates, combined they would not satisfy that new demand. Even if Iran, Iraq, Venezuela and Nigeria sort out their political problems, they will not be able to achieve that target goal. It is only in the Gulf Cooperation Council (GCC), in Saudi Arabia, Kuwait and the Emirates that we have extensive oil reserves that can supply the market. This is where the cooperation becomes quite important, and this

is where Kuwait is playing its part in trying to organize conferences between producers and consumers. If I may just say a few words on what we are doing in this part of the world – Kuwait, that is – on the upstream and downstream operations. With respect to the upstream, the Kuwait Petroleum Corporation is active in fourteen different countries around the world. We are the second largest gas producers in Pakistan. We have two Liquefied Natural Gas (LNG) projects in Australia. We have offices in Perth, Jakarta, Islamabad, Cairo, Tunis and Norway, so we are quite busy globally. On the downstream business, Kuwait Petroleum International has two refineries in Europe, we have more than 5,000 gas stations and the Q8 brand that you see in Europe. We have an operation in more than 72 airports around the world and we are building a refinery not very far from here in Vietnam. Currently we are in negotiations to build two new refineries in China and possibly

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Energy Cooperation and Nuclear Security in the Age of Sustainable Development JEREMIC, Vuk, AL-SABAH, Sheikh Muhammad Sabah Al-Salem and WIRAJUDA Nur Hassan

one in India or in Indonesia. So this strategic cooperation that we have between consumers and producers means that no matter what ‘rebalancing’ or ‘re-pivoting’ means, the world will still be in a serious need for energy – low-cost energy, and the Gulf region would be the one that provides this extra supply. JEREMIC, Vuk (Moderator): Thank you Muhammad. Thanks for your introductory remarks. Now I’m going to ask Hassan, who’s coming from a pretty centrally located and a very big Asian country that’s more or less half way between the Far East and the part of the world where Muhammad comes from. Perhaps we can try and address the issue of nuclear stability and nuclear safety for this part of the world, but from a geopolitical point of view. You are in between two countries that are having their difficulties with respect to the existence – the correct existence – of their nuclear program. One is of course Iran to the west, and the other is North Korea to the east. So, being a wellseasoned man of foreign affairs, and having a very wide picture of Asian cooperation, how do you see these two particular nuclear programs affecting peace, stability and potential for cooperation in Asia? WIRAJUDA, Nur Hassan: Thank you, Vuc, for your kind introduction. Let me at the outset convey my thanks and appreciation to Patrick Ho, Deputy Chairman and Secretary General of the China Energy Fund Committee for kindly inviting me, and to commend him for organizing this conference. I wish to focus my comments in this session on Asian nuclear energy development, with a particular focus on Southeast Asia and the greater East Asian regions, and the need to develop a nuclear energy company. First, on Southeast Asia, I wish to quote what Professor Taniguchi has just said, that energy and electricity developments are expanding very rapidly in Asia, and Southeast Asia is not an exception. In fact, the Southeast Asian

energy demand is rising in tandem with the economic development and is posing a challenge to energy security in the region. Indonesia, Malaysia, Singapore, the Philippines, Vietnam and Thailand account for 95% of the region’s energy consumption, and they are projected to account for 80% of Southeast Asia energy growth by 2013. Available national supply is not sufficient to meet the demand, that’s why one major source of energy security in the region is its dependence on fossil fuel, which meets 70% of the region’s energy consumption. That’s why there is the need to diversify our energy resources and look for energy products that are from an attractive source. It is no surprise, therefore, that those countries – six out of ten Association of Southeast Asian Nations (ASEAN) members, have begun to explore nuclear energy options. As of now none of us, none of the ten ASEAN countries have developed nuclear energy options. The Fukushima Incidents have compelled some ASEAN countries to reevaluate their plans. But as Japan has pledged to phase out nuclear energy, two years on, the momentum has changed as Japan is now taking a more pro-nuclear stance and reconsidering to reopen its nuclear power plant. So the countries of Southeast Asia have revived their nuclear plans. And for that matter, despite safety and security concerns, economic and strategic interests remain primary drivers for civil nuclear energy use in Southeast Asia. In fact, the meeting of ASEAN ministers of energy in 2012 in Phnom Penh practically endorsed ASEAN countries to develop nuclear energy, as well as in greater East and South Asia. This is in contrast with North America and most of Western Europe where growth of electricity generating capacity, particularly nuclear power, levelled out for many years. A number of countries in East Asia and South Asia are planning and building new power reactors to meet the increasing demands for electricity. Much of this growth – some 30% of the world’s new capacity – will be in China, Japan, India and Korea. Consider the following statistics: 119 power reactors operable and/or

CHINA EYE‧Issue 6

Energy Cooperation and Nuclear Security in the Age of Sustainable Development JEREMIC, Vuk, AL-SABAH, Sheikh Muhammad Sabah Al-Salem and WIRAJUDA Nur Hassan

in operation in six ASEAN countries – China, India, Japan, South Korea and Pakistan; 49 new or additional power reactors are under construction; 100 power reactors are firmly planned, including a small number, between six to seventeen, in Indonesia, Malaysia and Vietnam; Indonesia’s 59 research reactors are in operation in thirteen countries in East and Southeast Asia. Professor Taniguchi has mentioned the contribution of nuclear energy in terms of the energy mix in our region. So, in East and Southeast Asia, electricity generating capacity and specifically nuclear power is growing significantly. I wish to contribute in this discussion on the need for regional nuclear energy governance. Understanding that some fourteen countries in the East Asian region have established or firmly plan to construct nuclear power plants, there is a need for the region to consider this aspect of nuclear energy governance. In this connection, the Asia Pacific Leaders Network (APLN) on nuclear disarmament and nonproliferation, which has some 30 former senior politicians, diplomats and military leaders from fourteen countries, including leaders form nuclear weapon states, such as China, India and Pakistan (I am also a member of this group), last year called for governments of the Asia Pacific region to consider the establishment of a regional nuclear energy community. A relevant question, therefore, is where do we start? A group suggested that ASEAN should initiate the establishment of an ASEAN nuclear energy community and then gradually expand to the wider East Asian region. The reasons are, ASEAN has developed a good habit of dialogue among its members, but is also an active promoter of dialogues with its partners through ASEAN+1, including with China, with Japan, with Korea and with India. We have an ASEAN+3 mechanism, as well as the East Asia Summit. And ASEAN has some degree of cooperation and peaceful uses of nuclear energy such as ASEAN Atom, to promote cooperation such as on safety and supply. But when we talk about

energy community we have to cover beyond traditional areas of technical cooperation such as safety, safeguards, emergency preparedness and response, and consider also the security dimensions of nuclear technology, including trust building, transparency and accountability. The spread of sensitive nuclear technology because of its dual use, or even multiple use, in particular the spread of sensitive nuclear reactors and plutonium fuels, represents a serious challenge or challenges to the Asia Pacific Region. Please keep in mind that while the track of proliferation of nuclear weapons in other regions such as Europe, Latin America and Africa is subsiding or has subsided, in the Asia Pacific regions, unfortunately, this is not the case. * The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

CHINA EYE‧Issue 6

The Real Nuclear Threat AZIZ, Shaukat

Nuclear Energy The Real Nuclear Threat (真正的核子威脅)

AZIZ, Shaukat Global Governance and International Regimes for Nuclear Energy (全球治理和國際核能機制)

TANIGUCHI Tomihiro (谷口富裕) Recent Advances in China’s Nuclear Energy Development (中國的核能發展新進展)

WANG Biao (王彪)

CHINA EYE‧Issue 6

The Real Nuclear Threat AZIZ, Shaukat

The Real Nuclear Threat (真正的核子威脅) AZIZ, Shaukat Former Prime Minister of Pakistan

xploiting the world’s vast resources is vital for development. But for that to happen, governments, industry and other stakeholders must work together to address legitimate concerns about the associated environmental and social impacts. The growing use of fossil fuels: coal, oil and gas, was central to the industrial revolution and the exponential economic growth of industrialized countries. The story has been repeated in the emerging markets as well. However, two thirds of the world’s people living in developing countries with incomes below a thousand dollars a year have yet to benefit from intensive energy use. To double their income in a decade, these countries need economic growth of about 8% per annum. To reach such growth, their use of energy would have to grow by 10 to 12 percent a year. Therein lies the challenge. Unfortunately, carbon emissions from fossil fuels have increased significantly, especially during the last century. According to the United Nations panel on climate change, the globe’s temperature is already one to two degrees centigrade higher than prior to the industrial revolution, and it has also changed the weather patterns. They estimate that unless growth in carbon emissions is halted and reversed, the world’s temperature will increase by another two degrees centigrade within the next two to three decades, and this is likely to have catastrophic effects on the world’s environment, weather and ecosystems. Some predict an existential threat to humanity’s very survival. Alternatives to fossil fuels offer partial solutions to meet the world’s growing energy needs. Hydropower is the cheapest energy source as far as I know, but its use is

geographically limited, because you need the water flows, the rivers, the storages etc., and at times, the environmental impact can be very significant. Wind and solar power have become cheaper but they still require generous subsidies to be competitive. Problems relating to their sustainability and environmental and aesthetic impacts also need to be addressed. Headway has been made in recent years in developing solar energy and, crucially, lowering the costs. Swanson’s Law shows the steep drop in the cost of solar cells. Still, there are challenges in terms of economics that do not yet make them totally viable. Thus, exclusive promotion of these alternative sources implies dependence on fossil fuels will remain high, and may even increase for most countries, especially in the developing world. One other option is to focus on the development of carbon capture, and use these technologies to see if we can improve the situation. These could theoretically enable utilization of the expanded potential of oil and gas production. However, carbon capture processes have not been fully mastered yet. They offer a future option but not an option for today. Energy cooperation is a crucial means of creating interdependencies and linkages between countries, which is vital for peace, and the best way for even historical rivals, in our case India and Pakistan, to coexist. I presented this concept at a conference at New Delhi when I was in office, and it brought a lot of resonance. Let’s create interdependencies and linkages, and you will see that the temperature will drop in terms of relations between the two countries.

CHINA EYE‧Issue 6

The Real Nuclear Threat AZIZ, Shaukat

AZIZ, Shaukat at the “Sino-US Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation”

Having common approaches on these global issues, like energy, cements relationships between countries and can lead to sustainable peace. An example which we went through was the Iran-Pakistan-India gas pipeline. We had intense negotiations, we had a lot of discussions, we had also enough availability of finances from around the world to fund these, but this project has not become a reality. Things since then have changed in Iran, and they are subject to sanctions. On the Indian side too they had other access to energy, so their interest is still there, but not as much as we have. The other option is electricity through regional grids. One part of one country can supply electricity to the other. We have already done this and we are getting increasing amounts of electricity in our border areas with Iran, into Pakistan, and this has more or less filled the gap where there was no electricity available. So, pipeline diplomacy is a great drive to peace, and just to talk about this, lowered the temperature on both sides in our case.

Other cooperation examples include: emission reduction – the cleaner the fuel the better it is in the long run of course, carbon caps or credits, sharing research in alternate energy and much more. International guidelines can help develop energy in a sustainable and safe way. The International Energy Agency (IEA) has published a set of golden rules for developing the world’s gas resources, which if followed, could have some positive results. These rules stress the importance of full transparency, measuring and monitoring of environmental impact and engagement with local communities; careful choice of drilling sites and measures to prevent any leaks from the wells into nearby aquifers, thus polluting the water supply; rigorous assessment and monitoring of water requirements and of waste water; measures to target zero venting and minimal flaring of gas; and improved project planning and regulatory control. So there is a lot of development in terms of how to manage emissions better, but the challenge remains.

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The Real Nuclear Threat AZIZ, Shaukat

International nuclear treaties can also play a part in controlling nuclear weapons build-up and preventing the spiral of nuclear races between rivals. For example, in my view, omitting Pakistan from the US-India nuclear treaty was a great missed opportunity to promote peace and nuclear security in South Asia. Sometimes short sightedness and geopolitical concerns result in such decisions, the impact of which will be felt in the medium to long term. Arguably, there have been some moves away from energy cooperation with the focus on self-sufficiency - this is another area which people are talking about, most notably in the United States, which is working to become self-sufficient in oil and gas, aiming to avoid economic shocks such as those caused by the oil embargoes of the seventies. In the next five years, the United States, the world’s largest oil importer will account for a third of new oil supplies, again, according to the IEA. Some have argued that this self-sufficiency may lead to the United States being less engaged with other regions, particularly the Middle East and the Gulf. It could also lead to a drop in investment in renewable energy in the United States - a world leader in this field at the moment, and a fall in the renewable energy technology being shared with other countries. In my personal view, the United States will do what it has to do to protect its own national interests, and we should respect that. The rest of the world will also have to do the same, meaning, do what makes sense for them, and not do it because one country is changing their strategy. So, in my view, there is no need for alarm. Each country, each sovereign nation has the right to choose their policy framework and do what is best for them. Obviously the countries affected by a change in behavior or policy will have to gear up and change as well. Let me now turn to energy cooperation in the nuclear field. Energy cooperation is more vital than ever before when it comes to nuclear energy, both for global development and for global security. Nuclear energy is a viable and proven alternative to, or supplement to, fossil fuels. Its potential was restrained during the last three decades in the United States due to

environmental concerns, and in some major developing countries due to proliferation concerns. Nevertheless, nuclear energy meets 70% of France’s electricity needs today, and met over 30% of Japan’s energy needs before the Fukushima accident. This event has reversed plans for nuclear energy expansion in Japan at the moment, as well as Germany and the United States. But China, India, Saudi Arabia, the United Arab Emirates, Pakistan and many other emerging market countries are proceeding with their plans for nuclear power installation, to diversify their energy mix and to improve their own efforts to improve the environment and de-carbonize. Two major questions hang over nuclear energy expansion. One is the danger of accidents like Fukushima, and the second is the threat of nuclear weapons proliferation and acquisition of nuclear weapons material by extremists and terrorists. Let me discuss each of these very briefly. Fukushima and other Japanese nuclear reactors were built to the highest safety standards, especially against damage by earthquakes. The enormity of the tsunami was a once in a lifetime event, and human error may have also played some minor part. However, future nuclear power plants can certainly be designed against Fukushima-type events. Notably, the decisions taken by Germany and Japan to step away from nuclear power were not based on technical factors. These were based on political decisions responsive to the public mood and public feeling in these countries. These decisions are not sufficient grounds to halt plans in other countries, especially developing countries, where the need for and tolerance of nuclear power generation is much greater. Let me now share my thoughts on proliferation. State behavior on proliferation is now clearly proscribed and fairly well regulated, through the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), the International Atomic Energy Agency (IAEA)’s treaties of nuclear safety and security, the Nuclear Suppliers Group (NSG) and the Security Council resolution 1540. There are of course special situations which need to be addressed, related to North Korea, Iran and India-Pakistan

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The Real Nuclear Threat AZIZ, Shaukat

and the Middle East. All these regional challenges are political in nature, and they have little relationship with the installation and use of nuclear power. In fact, recent independent reports from the so-called nuclear safety index indicate a general improvement in nuclear safety standards. Today only 25 countries, instead of 32 a few years ago, are considered as possibly sources of nuclear safety threats. Such cooperative efforts to enhance nuclear safety can be intensified if political solutions can be found for the abovementioned regional issues. The interim agreement on Iran is encouraging, although significant challenges lie ahead. North Korea remains an enigmatic and challenging situation. The danger in South Asia also cannot be ignored. The biggest question for nuclear safety is the threat of coercive capture of nuclear weapons or fissile materials by extremists and terrorists. This threat must be evaluated objectively but not emotionally. Objectively speaking, no existing or future non-state actor or non-state group, in our view, is capable of seizing, deploying, arming and delivering nuclear weapons. Nuclear weapons use is difficult enough for all except a few countries at the moment. Even state actors find it challenging, so non-state actors really cannot put it in a briefcase and walk away. So, to the extent we are influenced by Hollywood, you may want to adjust your thinking. However, the seizure of fissile materials is possible, but the most a terrorist group could do is to explore a dirty bomb. This is a very serious matter, and such a development would create tremendous security challenges and concerns for the world at large. In no way should any non-state actor get access to, or be able to use fissile material to create any type of explosive device. This has to be dealt with firmly and seriously by the whole world. The countries having such materials have to provide and must have the responsibility to provide enough security to secure and protect such material. The real nuclear danger arises not from expanded nuclear power generation, but from continued possession and deployment of nuclear weapons by a handful of countries and their possible use by mistake or by miscalculation.

This is the real nuclear security threat as I see it that needs to be urgently and seriously addressed. In conclusion, let me say that serious threats exist but adequate means are available to prevent nuclear material falling into the wrong hands. Ultimately, peace and harmony and cooperation will be our best bet going forward. This will be a wise path for all of us as citizens of the world to take. We owe this to our future generations. * The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

CHINA EYE‧Issue 6

Global Governance and International Regimes for Nuclear Energy TANIGUCHI Tomihiro (谷口富裕)

Global Governance and International Regimes for Nuclear Energy (全球治理和國際核能機制) TANIGUCHI Tomihiro (谷口富裕) Former Deputy Director General of the International Atomic Energy Agency (IAEA), Vienna

he title “International Regimes” has a somewhat overlapping meaning with “international order”. “Regimes” in international relations refer more to institutional frameworks or legal frameworks, and I think that this is very important in promoting future cooperation among these three countries (China, the United States and Japan), as well as internationally. I feel that this is the best approach and an important first step in that direction. The main characteristic of nuclear energy technology is, in my opinion, its duality and multiplicity of use, and also, the extremely high intensity required both in terms of energy and technology. I should emphasize also that nuclear energy is typically a very low carbon dioxide emitter. There is a big argument among the so-called environmental psychologists as to whether nuclear energy is carbon free or a clean form of energy. But anyway, as a technological fact it is very clear that nuclear power is a very low carbon emitter, even after taking into account all the carbon dioxide emitted during the fuel cycle, manufacturing and construction of the plant, as well as operation. The second point, technical and energy intensity implies that nuclear energy has a highly explosive power as a weapon as well as an energy source, and this creates complex problems. Furthermore, on an industrial and academic basis, it is a very important and advanced area, and a complex, systemic issue. The socio-political aspects are also very important in promoting and developing nuclear technology.

Globalization of technology, energy and the economy – I would emphasize that this globalization of technology, energy and economy has important and strong implications when we think about or plan future actions and cooperation. The third point is world population growth, energy resource requirements and global environment issues. The world population will be reaching nine billion by 2050, and there will be large migration to urban areas. Two billion people remain under a $2 per day income, without good access to electricity. However, there are some promising prospects for improvement in this context, but this also implies higher demand for energy and electricity. Oil and gas reserves are peaking out in the 21st Century. There is a new exploration and production technique emerging, this may be rather prolonged, but either way, given the current rate of population growth and energy consumption growth, this “peaking out” will take place by the turn of the next century. Global warming and sea level rise is continuing irreversibly, but unfortunately, the progress of mitigation is very limited. Therefore, the major focus is now on the enormous needs and effort required for adapting to this disastrous situation. In that sense, there are many emerging global issues for human kind, and the examples of course are energy and water, deforestation, natural disasters, crimes and terrorism. The power shifts and changing geopolitical and energy maps are also very important. Europe, at the moment, and the Americans,

CHINA EYE‧Issue 6

Global Governance and International Regimes for Nuclear Energy TANIGUCHI Tomihiro (谷口富裕)

TANIGUCHI Tomihiro at the “Sino-US Colloquium (V) - International Dialogue on Changing World Order and Energy Cooperation”

remain influential on the global scene. But still, it is very clear that the global center of gravity of politico-economic power is shifting towards the east (closer to China, India and ASEAN countries), and from the Atlantic to the Pacific regions. Another important point is that the center is not only changing but is becoming diversified and decentralized from G2 to G20, or the socalled BRICS (Brazil, Russia, India, China, and South Africa) and other emerging countries. Also very important from the perspective of security or terrorism is that now the center is moving from central governments to non-state governments. In the past, non-proliferation and security issues were basically the regimes and frameworks among sovereign states, but that is no longer the case. Another important point is the huge volume of oil and gas from the Middle East and Former Soviet Union to Asia, which are developing as “New Silk Roads”. Former Pakistani Prime Minister Aziz mentioned the

new pipeline diplomacy in South Asia, and I am aware that not only the northern land-based Silk Road, but also the southern sea-based silk road of oil and gas and other technologies may improve as well, and in some way promote cooperation and business in an already dynamically changing Asia. In that sense, energy and electricity demand and utilization is expanding very rapidly in Asia. Global development of nuclear energy – Nuclear power plants are planned and constructed most dynamically in Asia after the Fukushima accident. In Japan and in Europe, and to a lesser extent in the US, nuclear power plant construction plans have either been stopped or postponed. In any case, they are now delayed. Russia, the Middle East and Eastern Europe are also planning and constructing new nuclear power plants. This is, I think, part of the bigger picture of the eastward-moving center of gravity. Many countries operating, constructing and planning nuclear power plants

CHINA EYE‧Issue 6

Global Governance and International Regimes for Nuclear Energy TANIGUCHI Tomihiro (谷口富裕)

are facing difficulties in the management of spent fuel and waste, and are as yet uncertain about their nuclear fuel cycle policy. This has been known as a Chinese policy problem, but in many ways it is common to almost all countries. Another basic challenge is ensuring technical and managerial expertise for safety and security. Development of a non-proliferation regime – Nuclear energy, as I mentioned at the beginning, has a dual character in itself. The regime was started by the American president Eisenhower, called “Atoms for peace”, as well as through the establishment of the IAEA (International Atomic Energy Agency) and other international organizations. This is a reflection of the complex dimensions and multi-faceted character of nuclear energy. Similarly, if you study the process of the NPT (Nuclear NonProliferation Treaty), it reflects a very difficult situation and the different interests of so-called P5 weapon countries (the People’s Republic of China, France, the Russian Federation, the United Kingdom, and the United States) and non-weapon countries, but also, in particular, developing countries who are interested in nuclear technology for the future. There are also some limitations to the NPT regime because of the lack of a sanctions system, unless the United Nations Security Council acts accordingly. International regimes like the Nuclear Suppliers Group and the Geneva Process, as well as bilateral arrangements like Nuclear Cooperation Agreements for Non-Proliferation and Disarmament have been developing and functioning, in many cases, with positive and negative evaluations that differ according to the individual and the country. As to future development, another difficult and important problem is not only the sovereign state, but also the so-called subnational and supranational non-state actors. Therefore, the regime should cover this as well. How to address this though, is a difficult challenge. In the area of safety, the current safety regime is in my view most advanced, particularly after Three Mile Island, then Chernobyl, and then

the Fukushima accident. After Chernobyl, safety conventions, emergency notifications and assistance conventions, together with IAEA safety standards, have clearly developed the rules for improvement. In light of Asia’s dynamic development, there are opportunities and challenges to develop a regional regime or arrangement focusing on the accident or safety aspect of nuclear power. There has been strong leadership on the part of the United States to build a post 9/11 nuclear safety regime, both bilaterally and multilaterally. But because of the characteristics of the security issue, compared with safety which can be addressed in a more open, transparent and scientific manner, this area is more deterministic and sensitive, and in most countries, vertically compartmentalized and very much secretive. As such, it is very difficult to develop and establish an effective regime. In conclusion, let me talk about the integrated global approach to governing the nonproliferation, safety, security and development of nuclear energy. This is necessary, and there are both formal (de jure) regimes and informal (de facto) regimes. Very often de facto regimes develop first and effectively serve more important purposes. Additionally, among the three regimes, complementarity and consistency are very important. A typical example is that in the older nuclear regimes, for security reasons, access was very much controlled. For safety purposes, particularly for emergencies, too much physical access control was creating the problem. Therefore, there is the urgent need for establishing a regional network for emergency preparedness and response, and for a more effective approach through closer coordination and the integration of “3S” (Safeguards, Safety and Security) and development regimes. As to the development regime, we have an oligopolistic structure, but not yet a de jure, formal regime, except for, perhaps, guidelines by the Organization for Economic Co-operation and Development (OECD). My final point is that, for the future, trilateral

CHINA EYE‧Issue 6

Global Governance and International Regimes for Nuclear Energy TANIGUCHI Tomihiro (谷口富裕)

leadership and concerted action for improving global governance of nuclear energy is very important. The US and Japan share extensive experience in safety, security and the reliable construction and operation of a large number of nuclear power plants, but are not expecting any large-scale domestic activities in the short term. On the other hand, China is constructing and planning the largest number of new nuclear power plants and its technological and industrial basis is now improving very rapidly. The safe, secure and reliable construction and operation of nuclear power plants in a dynamically developing Asia is clearly a common interest to the US, China, Japan and the Global Community. New and abundant opportunities and challenges are opening up for trilateral leadership, concerted action and closer cooperation among the three countries in developing safe, secure and reliable nuclear power plants in Asia and the world. * The article is excerpted from the author’s speech at the “Sino-US Colloquium (V) International Dialogue on Changing World Order and Energy Cooperation” held by the China Energy Fund Committee in January 19, 2014, at the Hong Kong Convention and Exhibition Centre.

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Recent Advances in China’s Nuclear Energy Development WANG Biao (王彪)

Recent Advances in China’s Nuclear Energy Development (中國的核能發展新進展) WANG Biao (王彪) Dean, Sino-French Institute of Nuclear Engineering and Technology Sun Yat-sen University (SYSU), China

hina is a leader in nuclear power development. The number of nuclear power plants currently under construction in the country account for 60% of the world’s total. Since 2011, after the incident at the Fukushima Daiichi Nuclear Power Plant run by Tokyo Electric Power Company, China has made certain preparations. In this regard, I’d like to elaborate on the following aspects: Firstly, what lessons have scholars and managers learned from the Fukushima nuclear incident? And furthermore, what measures have been adopted by China to ensure the safety of nuclear power plants currently in operation? Lessons learned from the Fukushima Nuclear Incident In retrospect, even in a natural disaster on the scale of the “3/11 Tōhoku earthquake”, nuclear leaks are avoidable. After the earthquake, the Fukushima Nuclear Power Plant in Japan was in emergency shutdown, which normally would not have caused further problems. An hour later, however, the tsunami destroyed emergency measures, leading to a series of hydrogen explosions. This had not only completely destroyed the reactors but led to a large-scale radiation leak, causing severe environmental pollution. Radioactive material was actually detected in the early stages of the incident, confirming that the core of the reactor had suffered from a meltdown. In light of subsequent developments, Tokyo Electric Power Company (TEPCO)

chose to deploy measures to protect the nuclear power plant, instead of taking drastic steps such as injecting seawater to cool the reactor, eventually resulting in disaster. From a technical point of view, accidents are always beyond imagination. A disaster on the scale of the “3/11 earthquake” would have been inconceivable even to Japanese scholars. There is therefore a need for improving the safety capacity of nuclear power plants and deepening layers of defense. In addition, post-incident response measures, namely “baseline designs”, are very important – Intensive efforts must be made at all costs to avoid such leaks, even if the nuclear power plant has to be destroyed. The lessons learned and experience gained from the Fukushima incident has led China to strengthen precautions against external events. From a management perspective, China’s State Council has set forth numerous requirements, including putting safety first and improving emergency response mechanisms. China’s two major nuclear emergency response centers (one in the North and one in the South), as well as special teams dedicated to enhancing the inherent safety of power plants, are substantially different from those in Japan. As the State Council document revealed, greater emphasis has been placed on the independence and importance of regulatory authorities, and detailed requirements have been set regarding the disclosure of information. Measures Taken by China

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Recent Advances in China’s Nuclear Energy Development WANG Biao (王彪)

In the days following the Fukushima nuclear disaster, China’s State Council announced the “Four principles for nuclear power development”. All work on nuclear power plants under construction was suspended, while several safety inspection teams were formed to carry out nationwide inspection on all the 41 nuclear power units in operation and under construction, together with the three nuclear power plants where construction was due to commence. Two months after the Fukushima incident, relevant reports were submitted to the State Council, which were then disclosed for public consultation. Soon after, the State Council passed a new nuclear power safety plan and a medium to long-term nuclear power development plan. Construction was resumed at previously approved nuclear power plants, and many new requirements were imposed on power plants under construction or in operation, including new safety standards for protection against tsunami attacks. The first and foremost requirement was to restore the normal pace of construction. At that time, there were many applications for the construction of nuclear power plants, and the new regulations have impeded progress in this regard. Then there is the forbiddance of constructing inland power plants. This has far-reaching consequences. From now on, all China’s nuclear plants will be built along the country’s coast. As stipulated by the rules, the construction of inland power plants will be ceased, no matter how much capital has been invested. Finally, new nuclear power plants must be equipped with Generation III reactors. Prior to the Fukushima nuclear disaster, nuclear power plants under planning were designed with improved second generation reactors only. All in all, new standards have been set for many safety measures. Safety measures must be designed based on the worst case scenario and revised annually. The new regulations have also improved rules on design and layout of critical systems, including cooling systems for the reactor core, containment vessel and spent fuel pools, as well as protection against hydrogen explosions. New

requirements have also been made regarding the location of nuclear power plants with multiple reactors. The Fukushima nuclear disaster was caused by a power outage, which led to hydrogen explosions that resulted in a radiation leak. In one State Council report on nuclear emergency response, detailed response requirements were made with regard to a total blackout. These include the deployment of power supply vehicles, small generators and even helicopters. Many power plants have already performed drills under these new requirements. As for prevention of hydrogen explosions, our institute has also taken part in the design of relevant safety mechanisms. All nuclear power plants currently under construction have to be redesigned in order to cope with hydrogen concentrations under worst case scenario, as do the hydrogen recombiners. Many scholars from other institutes were invited to participate. Efforts have been made to ensure proper cooling of spent fuel, which is of a very high temperature. We have also designed response measures to cope with the scenario of a power shortage happening to the spent fuel pool. These help prevent hydrogen explosions like those at the Fukushima Nuclear Power Plant. In a nutshell, the abovementioned measures can be termed as “baseline designs”. The principle here is that when faced with the worst case scenario, and even when the power plant is destroyed, large-scale leaks will not happen. As proposed by the State Council, the overriding objective is to prevent a major nuclear leak. Nuclear power plants in operation in China, including the China Guangdong Nuclear Power Group, have already begun to act in accordance with the principles “baseline design”. Challenges and Opportunities Facing China’s Nuclear Energy Development Smog pollution in China has become an issue of public concern. From the South to the North, smog affects almost all cities, including Hong Kong. There is no doubt that nuclear power has a positive effect on smog mitigation, which is

CHINA EYE‧Issue 6

Recent Advances in China’s Nuclear Energy Development WANG Biao (王彪)

why, I believe, the State Council is committed to promoting nuclear power. China still relies on coal to generate electricity, which accounts for approximately 70 % of total consumption. There are currently 19 nuclear power units in operation and 29 under construction in mainland China, all of which are situated along the coast. According to 2012 statistics, nuclear power accounts for less than 2% of power generation in mainland China, and, as such, there is a lot of room for growth. At present, there is strong opposition to nuclear energy in mainland China, and most people lack an understanding of the details of the technology. In July 2013, the city of Jiangmen in Guangdong announced plans for a 40 billion RMB uranium processing plant. Thousands of people took to the streets in protest and the project was cancelled. Therefore, there is now a need for higher transparency and better popularization of nuclear safety knowledge. For those who are interested in learning more about nuclear energy, they may visit China Guangdong Nuclear Power Group’s Daya Bay Nuclear Power Plant, where they have a dedicated information center. About the Sino-French Institute of Nuclear Engineering and Technology The theme of this conference is international cooperation on energy. Allow me to take this opportunity to introduce the SinoFrench Institute of Nuclear Engineering and Technology at Sun Yat-sen University (SYSU). Our institute has established an academy which adopts the French methods for training nuclear engineers. The Institute has over 30 teachers from China and more than 20 from France. The Institute is in its fifth year of operation and admits 100 students each year. Students are required to study three languages: Chinese, English and French during the six-year program, with many courses conducted in French. The institute is situated at the Zhuhai Campus of Sun Yat-sen University.

We hope to equip students with a solid foundation and cutting-edge knowledge, and the ability to solve complex engineering problems. This is also in line with the requirements of the French engineering schools. The institute advocates practical learning and innovation, as well as multicultural awareness to enable students to better adapt to international competition. Students are admitted based on their performances in the National Higher Education Entrance Examination, and are conferred both bachelor and master degrees by Sun Yatsen University upon graduation. Graduates will become certified nuclear engineers as accredited by the National Society of Professional Engineers of France. Courses are taught by both Chinese and French teachers. As for the Institute’s management, there is a Chinese Dean and a French Dean, reporting to an executive management committee, which is the Board of Directors. Owing to the exceptionally high standards required for nuclear engineers, the Institute differs from the general Chinese universities. Passing rates are low, with an estimated 30% of students dropping out who will be subsequently transferred to other colleges. Senior managers at the China General Nuclear Power Group (CGNPC), however, do not consider this rate too harsh, remarking that the passing rate when they were studying in France was as low as 50%. Our institute, in collaboration with the CGNPC, has recently established an engineering center for nuclear disaster prevention and relief. We have also set up a joint research center with France, and have signed a Memorandum of Understanding for such purpose.

CHINA EYE‧Issue 6

Recent Advances in China’s Nuclear Energy Development WANG Biao (王彪)

Call for Papers China Eye is an international academic journal on geopolitics, energy security, economy and culture. It is published by China Energy Fund Committee (CEFC) - a non-governmental nonpartisan Chinese think-tank registered in Hong Kong. This English publication aims to facilitate a better understanding of China by providing a forum for diverse views, carrying Chinese as well as non-Chinese perspectives. Would-be contributors should forward their proposed original contributions with a synopsis, to include:

(1) title; (2) author’s affiliation, and (3) e-mail address, phone and fax numbers.

Our contact details are: E-mail: com@chinaenergyfund.org Phone number: (852)-2655 1666 Fax number: (852)-2655 1616 Address: Room 3401-08, 34/F, Convention Plaza Office Tower, 1 Harbour Road, Wanchai, Hong Kong

CHINA EYE‧Issue 6