Every now and then we see a skirmish for power here in the US between the one or more of the States and the Feds back in D.C. The classic “federalism” debate and battle. But the following Wall Street Journal article and China Law Blog post gives new meaning to the term “street fight” for power between a provincial government and a central government, here Beijing — Illegal Power Plants, Coal Mines in China Pose Challenge for Beijing [subscription may be required].

For those who know a little about Chinese history, this is nothing new … for centuries regional provinces and Mandarins in China undercut and/or outright disobeyed the Emperor and his orders from Beijing, Xian, Nanjing, Hangzhou (where ever the capital happened to be located at the time).

What I like about this article is how it illustrates, why, in a country of 1.3 billion people, the central government in Beijing can’t just snap it’s fingers and click its ruby red heels to make the rest of China follow its wishes. Politics, and reality, just don’t work that way. Rational choice theory and agency theory from economics would also predict this rift. [Prof. Carr January 12 addendum: see today's Walls Street Journal related article on this topic: "China Cracks Down on Power Companies in Tough Antipollution Campaign"].

Another facet of this article I liked is how it highlights just how big the environmental issues are that China will have to grapple with over the coming decades. As several examples per the article. One-fifth of the power plants in China are illegal! China consumes 1/3 of the world’s coal! And here’s the coup de grace — the typical American consumes about eight metric tons of oil a year, or its equivalent in coal and other fuels. In China, per capita energy consumption stands at 1.2 metric tons! China also uses roughly 50 percent of the world’s concrete as part of its current building boom.

My eyes nearly popped out of my head when I read and thought about these figures for a few minutes. Can you imagine what will happen once/if China pulls even a full third of its 1.3 billion people out of poverty and their incomes rise and they develop America’s addition to coke, er, I mean energy/oil?

Truly, pause for a moment and think about this. This will be a HUGE issue in our lifetimes. It seems to me that if we want to make and leave the world a better place, America and the West have two options: (1) continue to lecture the Chinese (and India) on their bad environmental habits (while our own per capita energy consumption remains at 8 metric tons and let’s say theirs rises to 4 metric tons — still half of ours — this argument will understandably enrage the Chinese government and its citizens); or (2) roll up our sleeves and look for openings and business opportunities by those with an MBA skill set with a passion for issues of sustainability and the environment to assist China (and India) get their hands around this problem. For a great example of this second option in action, read the following article: Innovators: Master of Plastic So Long, Landfill, Recycling Goes High Tech and Big Time, about an American firm with a facility in Guangzhou, one of the cities we will visit. This is a major part of what your Commercialization of Innovative Technologies with Dr. Olsen course this past August was all about. See also my earlier post on sustainabiility in China. Also check out the Bank of China’s web site which has established China’s first SRI fund, the Sustainable Growth Equity Fund.

If China and India don’t get this right, we/the rest of the world (and our kids) are all in deep, deep, deep, deep doo-doo.