Report from China: Robert Ayres
In December I travelled to the city of Kunming, in Yunnan province, China. The occasion of the trip was to attend a conference on planning and give a talk on economics at that conference. The host was the newly appointed provincial Governor, who is also the Communist Party Chairman for Yunnan. The organizer was the former chief planner for Singapore, and the attendees were academics and civil servants in the urban planning departments from all of the major cities of organizer was the former chief planner for Singapore, and the Yunnan province. I was invited on short notice (only two weeks) and I was asked to provide a copy of my talk in advance, without much detailed information about the actual situation. What I did know about China was more applicable to Beijing and Shanghai than to Kunming. So, I had to “punt”, as they say.
Two lasting impressions from my previous visit a year earlier were (1) the large number of unfinished high-rise structures, and (2) the massive vehicular congestion. I wanted to advise the planners to plan less for more highways and petrol-powered cars to fill them (which is what they were doing) and more for pedestrians, bicycles, and public transport (especially by electrified rail). I needed a way to offer this advice without just focusing on negatives like climate change. The argument I presented is summarized below.
In the early part of the 20th century the growth of the automobile industry in the US, led by Henry Ford, was a huge “win-win”. Automobiles and buses rapidly replaced horses for urban transportation, thus eliminating a huge source of pollution (horse-manure) that had to be cleaned up and removed every day. Moreover, the elimination of horses eliminated the need for grain to feed the horses, which required around 25% of all the farm-land at the time. The land not needed to grow feed for horses could then be used to grow wheat and other crops for export – another benefit. And, as the city motorized, so did the farms. The automobiles burned gasoline, from petroleum, but huge petroleum discoveries occurred in Texas, in 1930. This drove the price of oil down to $0.10 cents a barrel – well below cost – until the government (it was called the Texas Railroad Commission) stepped in to limit production and to drive prices back up.
The mechanization of farms in the 1920s released labor. The workers no longer needed on farms moved to the cities, like Chicago and Detroit, where they worked in the factories making cars – and earning much more money than they earned doing farm labor. (Henry Ford shocked the business community by raising wages at his factories from $5 to $10 per day, so that his workers would be able to afford to buy the cars they were producing.) Or they got jobs in the construction industry, building highways. There was no shortage of land. This combination of factors helped the American economy to grow very rapidly in the 1920s. Cars did not reveal their negative side (“smog”) until the 1950s after WW II in a few cities with special conditions, like Los Angeles. But
But there were no horses (or horse manure) in Chinese cities in 1950. The building of roads did bring transportation costs down – helping the factories – but new roads became clogged with cars and trucks almost from the beginning.
Why? Because China is densely populated, and building new roads, or widening existing ones, required demolishing lots of existing houses. This was a slow process, so new highway capacity could never catch up with demand. Hence even the newest highways were always congested. Congested roads are less efficient – traffic moves slower — than uncongested roads. As a result, the vehicle engines are always operating inefficiently, in stop-start- conditions. This causes air pollution and smog. Moreover, building new multi-lane highways involved paving over valuable farmland that had formerly provided food. Of course, new high-rise housing for the displaced people was built, but usually outside the central city, so the workers had to take long bus rides on congested roads to their jobs, sometimes 3 or more hours per day.
Unlike the situation in the US a hundred years ago, petroleum is not flowing out of the ground. China is not self-sufficient in petroleum, and never will be. The South China Sea has some oil under it, but not enough for a rapidly increasing car population. Petroleum must be imported from the Middle East, or from Mian Mar, at considerable cost. Russian oil is also located far away, and transport for long distances by rail or by pipeline is expensive. (The US, by contrast, imports oil from Canada, Mexico or Venezuela, all of which are nearby).
Adding more cars in a country with congested highways will increase the congestion, increase the air pollution, and increase the demand for petroleum from far away. Not only that, it hastens the buildup of carbon dioxide in the atmosphere. That buildup is the direct cause of climate change. Unlike President Trump, the Chinese leadership has recognized this fact and has started decommissioning coal-burning power plants and shutting down coal mines. But, up to now, the Chinese leadership regards the automobile industry as a powerful industrializing force. Of course, every person in China – like every American — would like to own a car and wants to drive it on uncongested roads.
But the government, and the planners, have unfortunately encouraged this impossible dream. It is a bad mistake. The future needs plenty of infrastructure investment, but not more cars.
I will discuss the alternative future in another post.
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About the author:
Robert U. Ayres is a physicist and economist, currently Novartis professor emeritus of economics, political science and technology management at INSEAD.. He is also Institute Scholar at the International Institute for Applied Systems Analysis (IIASA) in Austria, and a King’s Professor in Sweden. He has previously taught at Carnegie-Mellon University, and as a visiting Professor at Chalmers Institute of Technology. He is noted for his work on technological forecasting, life cycle assessment, mass-balance accounting, energy efficiency and the role of thermodynamics in economic growth. He originated the concept of “industrial metabolism”, known today as “industrial ecology” with its own journal. He has conducted pioneering studies of materials/energy flows in the global economy. Ayres is author or co-author of 21 books and more than 200 journal articles and book chapters. The most recent books are Energy, Complexity and Wealth Maximization (Springer, 2016), The Bubble Economy (MIT Press, 2014) “Crossing the Energy Divide” with Edward Ayres (Wharton Press, 2010) and The Economic Growth Engine with Benjamin Warr (Edward Elgar, 2009).