The Chinese eco-dumping as a double-edged sword

China is facing serious and increasing ecological problems. The country has succeeded in making in 30 years a super industrial revolution, that took the rest of the world 200-300 years. Based on modern technologies and extracting the global markets China is ruining its environment, using its sacrifice as one of the many competitive advantages to attract building new and new factories.

This is beneficial for corporations that can reduce many costs in addition to the ones saved from using the cheaper labor. China is making an eco-dumping that means that under common market rules, to compete with China, we have to sacrifice our environment too.

But let’s ask a question what is the ecology needed about? Let’s forget about the health and the human happiness. Let’s look only from economical point of view.

The clean nature in needed because it is a decisive factor in supporting the human capital. The man needs some minimum conditions to live and reproduce. Just like a machine needs electricity, oil and support, the same needs the economic factor, called “a worker”. So just like we invest in support of the machines, we must make the same with labor force.

That is the philosophy of eco-cause. Of course there are many other factors, but from clear economic point of view that is the main arguing for the eco factor. So when there are no good conditions, the quality of working force if going down, and the competitiveness along with it.

If China is to continue with current destruction of the environment, the territory of the country will become not suitable for living. The people will start step by step to run out and at the end there will be no one to work there…

But most important is that at the same time if we want to survive, we will have to sacrifice our own environment. Otherwise we will be less competitive and will lose jobs and factories. Even if only $1 per price of $100 is the eco-advantage of China, corporations will continue to move production there.
There is a simple economic theoretical construction of 2 companies producing an equal product and having 50% of the market each. When one of the companies lowers the price by just 1%, with the other keeps the price, so the first is taking over the whole 100% market.

That is exactly the case with Chinese salaries and eco dumping. We could save our jobs and environment by just paying some higher price of goods (that is the price of our high salaries and a good place to live). But we prefer to lose jobs and worsen the nature, just to acquire some additional price-advantage.

So added to the neo-protectionism, some eco-protectionism is needed. Otherwise, just like China is ruining our jobs, it will ruin also our environment. And added to this – at the end hundreds of millions of Chinese will have to emigrate to find some better place to live. And generally we must not forget that we live on a common planet. So when the air is polluted in China, we will breathe the pollution too…

March 10th 2013

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