Quantum computing refers to the next stage of computer processing where machines can carry out vast and complex calculations at unfathomable speeds.

As the quantum era dawns, the real-world benefits still seem intangible. Who needs quantum computing and, as global leaders in this field, what role do the UK and China have to play?

Quantum mechanics has passed a few milestones recently. In 2019, Google announced it had achieved the long-awaited feat of quantum supremacy – when a quantum computer performs a calculation far beyond the reach of current machines. 

Its 54-qubit Sycamore processor was able to perform a calculation in 200 seconds that would take the world’s then most powerful supercomputer 10,000 years to complete. Though this was challenged by IBM, who countered it would take their machine 2.5 days not thousands of years. Still, Google’s CEO Sundar Pichai declared it “the ‘hello world’ moment we’ve been waiting for.”

Since then, other nations including Germany, the US and India, have expressed their strategic intent in a quantum future with pledges worth billions of dollars.

Despite these era-defining breakthroughs, commercialisation of this computing firepower remains elusive. As Rupesh Srivastava, one of the UK’s leading QC experts interviewed by FOCUS, puts it: “the application of quantum computing is barely in existence.” But that is changing.  A growing number of experts such as Dr Srivastava predict this inflection point could occur as soon as a few years away. 

“We are in the acorn stage and we are fast establishing roots,” says Dr Srivastava. “We want this to be grounded in the UK. And for the UK leadership position to be maintained and accelerated… It is a generational task.” 

What are quantum computers?

Unlike classical computers, whose bits (a binary digit and the smallest increment of data on a computer) are either ones or zeros, quantum computing relies on the behaviour of quantum bits, or qubits, which can be in both states at the same time, creating the potential to perform calculations currently considered intractable

This advanced processing capability allows machines to process data at a mind-boggling pace. The existence of high quality simulations is expected to give rise to new sectors, like personalised medicine tuned to individual DNA; or the creation of drugs without side effects, say scientists at Oxford University. As well as help tackle more familiar problems such as climate change and plastic pollution.

The existence of high quality simulations is expected to give rise to new sectors, like personalised medicine tuned to individual DNA; or the creation of drugs without side effects

Who needs it?

“Everybody,” says Dr Srivastava from the Quantum Computing & Simulation Hub led by Oxford University. “But it’s more complicated than that.” He says that quantum computing will essentially remove the limitations that hold back progress in a plethora of fields, from electric vehicles to logistics. 

Some sectors stand to gain economically more than others: notably finance, energy, and pharmaceuticals. A recent Boston Consulting Group report projected the global quantum industry to reach £4 billion by 2024 in this nascent phase.

Another is the space sector. In the UK, technology company Honeywell has partnered with the aerospace and defence industry to develop new aircraft materials. Quantum mechanics could help solve problems such as how to track and avoid space debris, or navigate constellations of satellites, say experts. 

The financial services industry’s use of quantum computing for portfolio optimisation is one of the earliest proven test cases. In the US, firms are already developing algorithms for pricing derivatives, analysing risk and calculating more accurate default probabilities. 

“The US stock and bond markets alone are capitalised at more than $70 trillion. In markets this large, creating new algorithms… can have a massive and widespread impact on the long-term success of global financial institutions and their customers,” write researchers at IBM. 

The new Space Race?

Countries with a quantum advantage will gain a “super power capability”, says Dr Srivastava leading many to accelerate their investments in the technology, which has led commentators to make comparisons with the 20th-century space race that was also dominated by richer nations 70 years ago. 

Currently, China and the UK are among the nations leading global efforts to scale up the production of quantum software and hardware. But others are piling in. In August, the US government invested $1 billion for research into advanced technologies, including quantum computers and artificial intelligence. Around the same time, German chancellor Angela Merkel announced a 2 billion Euro innovation programme for quantum technology. President Emmanuel Macron in France has pledged 1.8 billion Euros over five years. India and Canada are also stumping up cash.

The UK has shown international leadership by having one of the first national quantum programmes. In 2013, £270 million of funding was announced in the autumn budget. “That took the world completely by surprise,” says Dr Srivastava. He adds that many visitors have since come from America and Europe to learn from the British model: “The programme is much emulated”.

In December, China announced it too had achieved quantum supremacy in the journal Science. A system called Jiuzhang produced results in minutes, calculated to take more than 2 billion years of effort by the world’s third-most-powerful supercomputer. The technology, based at the University of Science and Technology of China, in Hefei, was different from Google’s in that it used particles of light. Chinese tech giant Tencent has also invested heavily and Alibaba Quantum Laboratory, launched in 2015, is already famous. 

But quantum technology also poses a threat to society. Tim Callan, a senior fellow at cybersecurity firm Sectigo, has warned of a so-called “quantum apocalypse”, the chaos created when such colossal computing power falls into the wrong hands. Specifically, this capability would make breaking encryption codes easy. From WhatsApp to online banking transactions, virtually all digital records could be compromised by cybercriminals. 

A fellow at cybersecurity firm Sectigo, has warned of a so-called “quantum apocalypse”, the chaos created when such colossal computing power falls into the wrong hands

How long before we are “quantum ready”?

So when do experts predict its impacts on our everyday lives will begin to be felt? 

“I would be very surprised if we didn’t see some kind of quantum value for business and industry within the next three to five years. Back in 2016, the prevalent view was we wouldn’t have quantum computing for another ten years. Then IBM came out with their quantum experience, a quantum processor, which anyone can use. With an aggressive roadmap for 1000 qubits by 2023,” says Dr Srivastava. 

“We have the know-how, we just need the hardware to scale it. We are waiting for the hardware to come to a certain threshold in terms of the number of qubits, connectivity and error level.”

“If you are watching developments and trying to ascertain are we nearly there yet the message is simple: get in there now.” 

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China surprised the world this week with the announcement that it would decarbonise its economy by 2060. In his address to the United Nations General Assembly, president Xi Jinping pledged to deliver carbon neutrality within the next 40 years. As the world’s biggest carbon emitter, and contributor of around one third of the global carbon dioxide emissions that cause global warming, the significance of the commitment cannot be underestimated.

If achieved, it could pave the way for other nations to set more concrete environmental ambitions, essential to tackling climate change. However, the specifics of how this might be achieved are hazy. Some critics rightly argue the horizon is too distant and point out that coal power in China has rebounded in recent years.

A panel of international Chinese policy experts share their opinions on the feasibility of this goal.

Sean Kidney, CEO, Climate Bonds Initiative

The carbon neutrality pledge could potentially be a watershed moment for China and the world’s actions to avoid a climate catastrophe.  But it is also an enormous challenge for an economy the size of China’s, which is significantly dependent on the high-emitting and hard-to-abate sectors.

This means China only has 30 years to go from its emissions peak to net-zero emissions – a timeline far shorter than any other major economy to achieve this kind of transition. For this ambitious target to be achieved, breakthroughs in environmental governance, technology, economic planning and financial market regulations would be expected.

China’s local governments, large corporations and financial institutions would need to begin to consider taking the lead in planning for carbon neutrality goals. This means that the local governments and large companies will need to progressively reduce exposure to brown assets and practices as they increase capex towards, and adoption of, greener modes of operation.

The pledge will give impetus to international cooperation on climate change and green finance, especially between China and the EU.

Barbara Finamore, senior attorney and Asia senior strategic director at the Natural Resources Defense Council, a US environmental advocacy group

China’s aim of reaching carbon neutrality by 2060, if achieved, would take us a giant step closer to avoiding the most catastrophic impacts of climate change. To get there, the country must begin now to rapidly accelerate its transition away from fossil fuels to a cleaner, more efficient, and more innovative economic development model. It will require massive investments, difficult policy reforms, and strong political will to overcome resistance from powerful vested interests and ensure a just transition for affected workers and communities.

It will require massive investments, difficult policy reforms, and strong political will to overcome resistance from powerful vested interests

But it can be done. Detailed studies by Chinese researchers provide a compelling pathway for China to phase out coal completely by mid-century in a way that balances multiple needs – starting with an immediate halt to new construction of conventional coal plants.

Other studies show how expanding non-fossil energy can reliably meet rising energy demand while saving money. China is already considering a ban on fossil fuel cars and has ambitious long-term plans in place for development of potentially transformative technologies such as hydrogen and offshore wind.

The benefits to China in terms of cleaner air, energy security, and economic sustainability are enormous. So are the opportunities for businesses and investors who can help the country achieve its goals.  China’s welcome announcement should encourage other countries to strengthen their climate ambitions, while its actions can serve as a model for other countries looking to achieve deep decarbonisation.

Jonathan Watts, journalist and author of ‘When a Billion Chinese Jump’

I’m hugely encouraged by the announcement which appears to go considerably further than any previous commitment by China. This is a politically constructive and globally responsible step that breathes new life into the Paris Climate Agreement, keeps the 1.5C goal [to limit the rise of global temperatures to 1.5C above pre-industrial levels] alive (just) and gives COP26 more chance of success. The timing is astute and will hopefully make it easier for other countries to follow. But the devil will be in the detail. How will China achieve this? Will it scale back overseas coal investment and can it go still further? I hope so. Climate stability needs more ambition from everyone. Now the world needs the US to step up and that will depend on November’s election.

The opportunities for businesses and investors who can help the country achieve its goals are enormous

Li Shuo, senior climate and energy policy adviser for Greenpeace East Asia

When it comes to long-term decarbonisation, the most important question is what is necessary, not what is feasible. Climate science tells us that, to stay within safe temperature range, the world must achieve net zero around the middle of this century. So far, few countries in the world dare to even consider bridging the gulf between science and politics. The significance of Mr Xi’s pledge for carbon neutrality should be viewed in this light.

For the first time, a major emitter is willing to embrace the daunting challenges of going completely carbon free. The scale of transformation will be unprecedented. No wonder there is no concrete plan – nothing like this has ever been done in human history. The audacious move should serve as a starting point to seriously plan for the climate imperative.

The most immediate step for China should be to halt its ongoing coal expansion and to phase out its existing coal fleets soon. If the factory of the world is willing to consider zero emissions, there is no reason other countries, large or small, cannot do it.

Jennifer Turner, director of the Woodrow Wilson Center’s China Environment Forum think-tank

Despite lacking details, President Xi’s 2060 carbon neutral declaration is encouraging, especially in a year when scientists say climate disruption is becoming locked in. If Mr Xi’s moonshot target is backed by concrete and aggressive action it could spark renewed global action on climate, similar to how a US-China bilateral agreement united the world behind the Paris climate talks.

In recent years, China has reached most of the low-hanging, low-carbon fruit, thus, it is critical for its 14th Five-Year-Plan to develop clean energy infrastructure and technology investments in ways that fast track deeper decarbonisation. Mr Xi’s administration has used coercive environmentalism to mandate new clean technologies and investment, such as the goal to phase out internal combustion engine vehicles by 2050. With rules requiring electric vehicle production and purchases, China is driving up clean energy vehicle markets domestically and around the world.

Instead of locking in decades of high-carbon energy overseas, China as a carbon neutral leader could export its own clean energy model, perhaps even challenging other countries to also go low carbon in their overseas investments.

With contributions from Ruyi Li, research assistant at the China Environment Forum

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For a while it seemed like China’s grip on the 21st-century’s electric vehicle market was unshakeable. For decades Beijing has led the world in terms of investment in the new energy vehicles needed to tackle climate change and create a low-carbon economy.

With liberal financing and strategic purpose, China has cemented its sectoral dominance. Ambitious EV targets have for years been enshrined in the country’s development plans. Today China is home to around 99% of the world’s electric buses. Nine of the world’s top ten electric automakers are Chinese, according to research institute Bloomberg NEF.  

But in the wake of the coronavirus pandemic, and with a ‘new cold war’ between the US and China brewing, that outlook is changing. The outlook will have a bearing on the integration of the world’s two biggest economies, as well as how (as a planet) we travel and use fuel.   

Amid mounting supply-chain vulnerability, climate change and growing enmity between the US and China, the EV innovation race has become a key frontier. But quite who will “win” it, or how, is not yet clear.

What is certain is that the EV sector has faced a reckoning this year. As the coronavirus hit in January and national governments imposed their lockdowns, the international manufacture and sale of EVs ground to a halt. Now that restrictions are being lifted and parts of the economy reopening, green shoots are appearing. 

But China has undergone a double shock. The chill in US-China relations has made competition for consumers all the fiercer, particularly in technology. The arrival of Tesla, the US auto giant, in Shanghai in February was an invitation for local manufacturers to throw down the gauntlet. 

Since then EV production in Shanghai in the first half of 2020 exceeded 70,000 vehicles – around a 130% year-on-year increase.

The response of Chinese EV makers has been bullish – at least among the ones that have survived. At the same time, the government has swiftly realigned its policy sending a clear message that Beijing is backing EV makers and will do what it takes to keep the sector afloat.

EV production in Shanghai in the first half of 2020 exceeded 70,000 vehicles – around a 130% year-on-year increase.

According to Daniel Atzori, a research partner at Cornwall Insight, the most significant decision to affect the EV market in recent months has been China’s extension of direct subsidies for EVs (that were due to be phased out this year) until 2022. 

This was done to “shield the EV market from the adverse economic effects of the crisis”, says Mr Artozi. But overall Chinese policy is gradually moving away from direct subsidies to more indirect forms of financial support.

However, China’s measures taken to support the broader automotive sector could, in fact, have a negative impact on EVs as regular cars become cheaper and easier to attain. 

“The Chinese government seems to have chosen the automotive sector as a key driver of the post-Covid-19 economic recovery,” says Mr Atzori. “To this end, some provincial and municipal measures to promote EV mobility have been eased or paused, to allow revitalisation of the automotive sector as a whole.” For example, caps on car purchases have been lifted in some provinces.

“Though this might be detrimental to NEV sales. They maintain a 5% share [of the auto market] and we have not observed any huge drop. Also these restrictions are only temporary,” says Marine Gorner, energy analyst at the International Energy Agency.

According to IEA data, the market share of EVs began to rebound in April and has held steady following the immediate post-pandemic crash. 

Tesla’s arrival in China has forced domestic manufacturers to raise their game

The second big event has been Tesla’s arrival on the mainland – a symbol of American assertiveness. According to some analysts, this has had a dramatic effect on domestic manufacturers with investors pumping billions of dollars into Chinese EV startups, sending their share price soaring. This month Xpeng Motors’ share price rose by 40%, while Li Auto was up 70% this month, reported the FT. 

“This increase is mostly due to the Tesla Model 3 production in Shanghai,” according to Hyoungmi Kim, senior policy specialist at Natural Resources Defense Council, an American environmental group. “It is true that Tesla’s arrival has been driving competition among Chinese manufacturers, which is a good thing. And more importantly, the policymakers and industry in China can see that it is not the subsidy that attracts customers. If the vehicle is attractive enough, there exists an enormous market for EVs in China.”

Yet there are growing concerns that without the infrastructure needed to support a collective transition to electric power, the EV bubble could simply burst into thin air. 

The US looks at EV strategy as a climate change solution, while China takes it as both a climate change solution and an industrial policy

“You have to look at the whole ecosystem in EVs, including battery recycling, EV grid integration and charging infrastructure,” says Ms Gorner. 

“The fundamental difference between the US and China is the driver of EV strategy. The US looks at EV strategy more like a climate change solution, while China takes it as both a climate change solution and an industrial policy,” says Ms Kim. 

While data indicates some degree of recovery for China’s EVs in the past few months, its 2 million car sales target for 2020 will not be met. The realistic goal is only half that – at around 1 million vehicles by the end of the year, according to Ms Kim. 

A recent report “China Oil Cap Project”, released by the NRDC and think-tank China EV100, highlights the huge potential of rural areas to achieve large-scale transport electrification.

If nothing else, the Tesla rally shows how intertwined Chinese and US interests around trade and energy continue to be – rather than how separate. 

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A young lady in a pink suit points at the Elgin Marbles. “The gods are much bigger than the other figures,” the tour guide says to the camera. A moment later her Chinese counterpart in a grey jacket and neat bob translates into Mandarin for the benefit of those watching live at home.

They are in the British Museum, alone with the exhibits, but with thousands of viewers in China who are watching their smartphones. A flurry of comments and emojis – coffee cups, hearts, thumbs-up – cascade across the screen at high speed. Occasionally, viewers break off to purchase the products that pop-up throughout the two-hour livestream.

This is the face of digital tourism in the post pandemic world, or at least one of them. Launched on July 1 by Alibaba, China’s biggest technology group, in partnership with the British Museum, this “experience” is an experiment in bringing historical tourism, and commerce, to modern immobile audiences.

Since its outbreak in January, the coronavirus has had a catastrophic impact on global travel. With national borders up and global air-fleets grounded, air travel is expected to fall by 55% this year, according to the International Air Transport Association. Many travel companies are struggling to survive, and even as people tentatively contemplate overseas holidays, it is not certain they will come back.

Leveraging existing e-commerce platforms, and the commercial opportunities they provide, will be key to weathering the storm.

At the centre of the global debate around tourism is China. Before the pandemic, Chinese travellers contributed more than a quarter of the world’s tourism expenditure (over £205 billion). In the past five years, the number of air routes connecting China with other countries has more than doubled to 784. As a sector, it has grown faster than the global economy as a whole.

As businesses buffer for the most severe global recession in generations, attention is turned to China for a clue of what the future might look like.

David Lloyd, general manager UK, Netherlands and Nordics at Alibaba, says the best way for companies to rebound from the shock of coronavirus is to connect with e-commerce platforms.

Even at the peak of the pandemic, e-commerce in China was growing by 5.9%, according to official figures. “China was already half of the world’s e-commerce. It has to be part of your strategy if you want to grow today,” he says.

The UK has long been one of the most popular destinations for Chinese tourists, with attractions like Buckingham Palace, the British Museum and Bicester Village drawing 850,000 Chinese visitors each year. Before the crisis, Bookings to the UK were expected to rise by a third every year on average.

Bicester Village draws 850,000 Chinese visitors each year

Britain has been one of the countries worst hit by the pandemic, with some of the highest death tolls, causing would-be visitors to stay away. Lloyd does not expect Chinese tourists to return in significant numbers before Golden Week, the autumn holiday in October, with numbers depending largely on the perception of safety. Leveraging existing e-commerce platforms, and the commercial opportunities they provide will be key to weathering the storm.

But when they do return, he expects two main trends to appear. One is that it will be younger tourists who return first; and two, there will be more independent travel, without tour operators and with more tailored individual experiences.

Digital hybrids, like the British Museum tour, will also increase. “Travel isn’t possible right now but there are these extraordinary locations around the world.  The gardens of Marseille and other locations around Europe – we’ve done 30,000 of these livestreams now,” Lloyd says.

The use of online payments will accelerate too. Many international businesses already accept Alipay (Alibaba’s app-based e-wallet). QR codes – electronic barcodes that allow payments and link to other digital information – are already ubiquitous in Asia, but will become more widespread in the west to smooth the fintech transition.

It will be younger tourists who return first, and there will be more independent travel, without tour operators and with more tailored individual experiences

Finally, live-streaming will converge with virtual tourism. Fliggy, Alibaba’s travel site (a portmanteau of flying pig) is leading in these types of interactive experiences where armchair tourists can comment and shop as they go. “It satisfies that sweet spot for tourists between experience but also commerce,” says Lloyd.

In the serviced apartment sector, forecasts are more muted. “Due to some new cases of Covid-19 in China, the Chinese tourists are focusing on domestic travels at the moment,” says Rosemary Ni Sassi, senior corporate sales and relationship manager at Q Apartments, which caters to the leisure and business traveller market in the UK, Denmark and Brazil.

“Some Chinese clients….are coming to London for essential business trips and relocations. The numbers may increase in the coming months, it depends on the UK government’s policy. Chinese travellers are also watching closely to see if there is a second wave of Covid-19 in the UK or not.”

To adapt, Q has introduced virtual tours of the apartments, assists with online shopping, and advises those with pets to seek out local dog-walking services in advance of travel.

Despite the adjustments, most companies are just waiting for footfall to return. In part, this will depend on air travel. Global passenger traffic has dropped by as much as 90% in the past three months with only a slow rebound expected, according to Euromonitor International, a data consultancy. When it does return it will be domestic and short-haulers, rather than international airlines, that are best served.

Nadejda Popova, a senior analyst at Euromonitor International, is less sanguine about the return of tourism spending, as budgets tighten and high-levels of unemployment continue to affect demand and shake the industry. She expects the biggest declines in Germany, the United Kingdom and India.

“There will likely be a drop of over 23% in world arrivals in 2020; followed by a rebound of 17% the following year, leading to recovery to pre-crisis levels by 2022,” according to Popova. “This is one year longer than it took global travel and tourism to recover after 9/11, and one year longer than after the financial crisis.”

With global travel still in limbo, it seems inevitable that growing numbers of people will look online for a taste of travel. As the British Museum experiment shows, virtual tourism cannot replace the real thing, but it can provide something to do – or buy – in the meantime.

The post The future of Chinese tourism appeared first on Focus - China Britain Business Council.

When four siblings, aged between six and fourteen years old, committed joint suicide by drinking fertiliser in the village of Cizhou, south China, in 2015, the nation was horrified. 

In a note, the eldest boy wrote that he had “dreamed of death,” an end to the years of suffering and neglect they had endured. The children came to symbolise the “left behind generation,” the young who live alone in rural areas abandoned by their parents who have migrated to cities in search of work.

That year, President Xi Jinping pledged to eradicate rural poverty in China by 2020. Five years on and the leadership has successfully lifted more than 70 million out of economic hardship, according to official statistics. However, a great number still remain locked in a struggle to survive.

This month marks the halfway point of the 2020 deadline. It arrives at a crucial moment as the country begins to emerge from the coronavirus and months of economic deep freeze. But even as China looks set to avoid a technical recession, with GDP growth for the year up to 1.8 percent – the gap between rich and poor in society remains one of the highest in the world. 

Last month, Premier Li Keqiang made a statement that shocked many. Speaking at the 13th National People’s Congress, he revealed that 600 million people are living on less than 1,000 yuan (£115) a month, barely enough to afford to rent a room in a medium-sized city. Hardest hit is the countryside, where 40 percent of the population still live.

The World Bank said China has the fastest rate of poverty reduction ever recorded in human history

Internationally, China has been praised for its poverty reforms. The World Bank has lauded the “phenomenal success” in achieving “the fastest rate of poverty reduction ever recorded in human history” over the past 40 years. In 2018, Jim Yong Kim, the bank’s president, said Beijing’s model “offers a new option for other countries and nations who want to speed up their development while preserving their independence; and it offers Chinese wisdom and a Chinese approach to solving the problems facing mankind.” 

Meanwhile, President Xi himself has declared the war “basically done.” However, some experts say declarations of victory could be premature and politically motivated.

“China will most probably meet the target, as it is a political mission set by Xi Jinping and that being the case, everything will be done to make this happen, at least formally anyway,” says professor Steve Tsang, director of the SOAS China Institute in London. 

At the 13th National People’s Congress, Premier Li Keqiang said that 600 million people were still living on less than 1,000 yuan (£115) a month

“Let’s not forget that ‘poverty’ is a relative thing, and the idea of eliminating it is a political thing. Not formally meeting the target will be seen as a failure of Xi Jinping, hence it will not be allowed to happen as long as Xi is in power.  But it does not mean poverty, as is normally understood, will be eliminated. Even the wealthy socialist countries in Europe do not claim to have eliminated poverty,” says Tsang.

The lack of a universal definition of poverty makes assessing progress difficult. China’s targets define poverty as rural and income-based. Since 2011, the line has been 2,300 RMB per person, per year (based on 2010 prices), according to professor Qin Gao, founding director of Columbia University’s China Center for Social Policy.

Each year, the line is adjusted according to the Consumer Price Index. Currently, it stands at around 4,000 RMB (£460). 

Critics of China’s poverty strategy accuse the government of setting an artificially low threshold that is easier to meet. But Professor Gao says this is not true: “The World Bank’s line at  US $1.9 per person per day [set according to 2011 purchasing power parity], once adjusted, is about 2,800RMB – about 200 RMB lower than China’s 3,000RMB (based  on 2018 prices).”

Meanwhile, some scholars argue that China should adopt a “relative” measure as used by most OECD countries, including the UK. This takes the median income level and is better at capturing income inequality. Instead, China, like the US, uses a hard-set income threshold, or “absolute” measure.

Professor Gao says that one of the biggest barriers to sustainable poverty relief is dwindling social mobility. “In rural populations, there is much less upward mobility than in the cities. To address poverty you need to lift people up to higher living standards but, more importantly, to opportunities,” she says.

Wu Alfred Muluan, a scholar of welfare policy in modern China at the National University of Singapore, agrees that building long-term capacity in individual communities is more effective than offering hand-outs. He says that while Beijing has made great strides in poverty alleviation, its distinct top-down approach could present future challenges. 

“Many people who were not poor in the past now face financial difficulties,” says Prof Wu. “In each province, resources are a lot more concentrated. For example, in capital cities and Tier 1 cities, there are increasing resources. The general strategy is to push villagers to urban areas, from third-tier cities to second, from second to first, and so on…But at the same time, first-tier cities are asking low-end people to leave because they feel they cannot house these populations.”

Another controversial top-down method has been to migrate entire communities thousands of miles to richer provinces, for example from Gansu in the northwest, to Zhejiang and Fujian in the east. 

“It will remain a great challenge in the future as it’s not certain they can be integrated,” says Wu. “What is more important is for these communities to cultivate their own capacity, cultivate their own economics, and cultivate their own culture.” 

The post Has China won the war on poverty? appeared first on Focus - China Britain Business Council.

Before new recycling rules came into effect last summer, taking out the trash used to be simple for Ni Yuan, a resident of a leafy middle-class Shanghai neighbourhood. She would sort household waste into only two categories, wet and dry, and deposit it at her convenience.

On July 1, the Shanghai government enforced the Domestic Waste Management Law, making it mandatory for all citizens and businesses to recycle waste into four categories at designated times of the day.

Failure to comply now results in fines of up to RMB 200 (around £22) for individuals, rising to RMB 50,000 (£5,500) for companies. While Shanghai officially adopted a recycling policy fifteen years ago, this seems to be the first with teeth.

The recent crackdown is the latest battle in China’s war on pollution, first declared by Premier Li Keqiang in 2014. If successful, it could become a shining example of how to clean up cities in the modern digital era — and a template for Southeast Asian nations struggling to decouple their economic growth from waste production. Failure could prove the opposite: that a centralised, top-down approach to socio-economic reform has serious limitations.

The municipality of Shanghai has implemented a variety of measures to educate the population to correctly sort their waste. In a bid to win over youngsters, video games have popped up in arcades around town offering players a chance to practise their trash-dunking technique.

Along with them, gaming apps for smartphones help users navigate the new rules. Virtual Reality simulators have also appeared around town, allowing players to accrue points by dropping waste into imaginary bins.

“It’s simple and easy to understand. Residents can practice sorting garbage without actually going through their trash, and it is a more effective method than using paper materials when training volunteers,” Wu Xia, founder and chief executive of VitrellaCore, the company that created the game, told China Daily.

Not only video games, but also songs about recycling set to the tune of revolutionary-era hits have gone viral.  Even Peppa Pig has acted as a guide on the dos and don’ts of kitchen waste – often reused as animal fodder. In residential compounds, wardens go door-to-door educating people on the new protocol.

Smart bins use this technology to weigh the amount of rubbish deposited and assign social credits in the form of gifts or cash rebates.

In Shanghai, any initial resistance to the reforms appears to have acquiesced with many embracing the call for collective action. “At first a lot of people complained that it wasn’t convenient. But this is exactly what garbage sorting means, you have to walk to a certain place at a certain time so the system can work”, says Ni.

“People have just gotten used to it, as is so often the case here,” observes one expat resident.

Ancillary news reports and social media campaigns are also dying down. Ni Yuan noted that in her residential compound wardens no longer need to instruct people on how to sort their trash. “At the beginning, I had doubts at the grassroots level that the government could do things right, but they did. People are taking this seriously”, she says.

Shanghai has invested over US$ 3 billion in the recycling system so far, according to the Ministry of Housing and Urban-Rural Development.

Artificial intelligence projects benefited from these investments. Such projects have become central to the Chinese approach, and make use of facial recognition. For instance, smart bins use this technology to weigh the amount of rubbish deposited and assign social credits in the form of gifts or cash rebates.

Conversely, facial scanning has been used to punish violators. Surveillance cameras identify in real-time people who drop litter in waste-free spaces. Perpetrators will get a fine, and in some instances, have their face humiliatingly projected onto public screens, reports the South China Morning Post.

Environmental groups agree that while it’s too soon to tell how lasting these reforms are, early signs are promising. “It is still too early to say it is successful or not, but it is absolutely a great start. According to the data the Shanghai government released, more than 8,000 tonnes of kitchen waste is being sorted every day. It is beyond the target they set” says Miao Zhang, founder of Rcubic, a Beijing-based social enterprise that tackles waste. She attributes the success to “powerful and efficient community management systems”, rather than tech aids.

“A greater share of waste is being treated according to waste management practices. It is a better situation for the environment,” says Liu Hua, a campaign specialist in waste and resources, collaborating with Greenpeace Beijing.

However, not everyone is so optimistic. Simon Ellin, chief executive of the UK’s Recycling Association, represents the interests of UK businesses which have been adversely affected by China’s ban on foreign waste imports. He believes that ­– despite the big investment – China currently lacks the capacity required to process its domestic waste output.

Chinese imports of foreign waste fibre fell by 80 percent in the past three years. The same has happened to plastic and scrap metal.

Shanghai has invested over $3 billion in the recycling system so far

“This leaves a huge capacity gap”, says Ellin. “Part of the objective is to become self-sufficient to stimulate their own domestic infrastructure, but they are a long way off.” To meet the shortfall, he says domestic manufacturers are importing more virgin fibre which “flies in the face of any environmental ambitions”.

On the other hand, green reforms are also creating new opportunities for business.

Alibaba founder Jack Ma, has promised to formulate a “green logistics standard”. Other e-giants are following suit. Jingdong, an online platform, offers buyers the option of selecting a “green box” for free, a type of packaging that can be reused up to ten times. The company estimates the initiative could save US$ 4.7 million per year if 10 percent of orders switch.

According to a 2018 study by the Ellen MacArthur Foundation, circular economy policies in 2030 could save Chinese businesses and households approximately US$ 5.1 trillion on high-quality products and services.

China is the second-largest producer of urban waste globally after the US, according to research by the World Bank, which estimates that by 2030 China will have twice the volume of municipal solid waste (MWS) than America.

Despite heavy investment into incineration capacity, much pollution still ends up in landfill, waterways or the ocean. China needs better solutions to prevent cities from drowning under the weight of their own rubbish.

Last year, China launched a zero-waste cities pilot programme. The Ministry of Ecology and Environment has chosen 11 cities as model trash-cutters. Amongst them are Shenzhen, Chongqing, Hainan and Beijing’s Xiongan new area. They aim to recycle 35 percent of waste by 2020, up from less than 10 percent today. Shanghai has been the last to join the programme.

Like other rich cities, Shanghai is moving towards a circular economy, where waste is not rubbish but a potentially valuable commodity. Ni is already convinced: “Shanghai will become a study centre for a lot of Chinese cities”. Those who fail to grasp this could end up wasting a golden opportunity.

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When the first case of African Swine Fever (ASF) was reported in China fifteen months ago, its devastating impact on the global meat sector and the ripple effect on trade were unimaginable.

What began as a few cases of a rare and fatal pig virus at the Russian border has become a national emergency, labelled by the World Organisation for Animal Health as “the biggest threat of our generation to commercial livestock.”

The incurable virus, deadly to pigs but harmless to people, has spread to all of China’s 26 provinces resulting in the death of almost half of its pig population, either directly or through mass culls that have been both ordered by the authorities and undertaken voluntarily by desperate and fearful farmers.

In just a short time, ASF has dealt a heavy blow that has left the industry convulsing. China’s pig herd has collapsed by 40 percent while its year on year pork prices had risen by 70 percent in September, according to the National Bureau of Statistics.

For Chinese farmers, the impact has been devastating. Backyard small-holdings with poor bio-security protection and little means to buffer against the shocks have been hit hardest, resulting in a loss of livelihood for thousands of communities. Beijing has tried to alleviate economic suffering by forcing state banks to step in and issue credit to affected farmers but this has been met with resistance. Travel bans, shutting down food markets and other responses have all failed to stop the spread.

The fate of China’s pigs has become a concern for people everywhere. Markets are waking up to the trade and economic implications — before ASF, China supplied half the world’s pig trade. Dwindling pork stocks have squeezed the global supply of meat dramatically. In Europe, soaring meat price inflation is driving up the cost of ham in Spain, Germany and Poland.

This has led to an uptick in beef and chicken supplies as farmers rush to fill the protein gap. But this will not make up for the loss in herd numbers. While production could stabilise by the end of next year it could take more than a decade for the disease to be fully under control, say experts.

Markets are waking up to the trade and economic implications — before African Swine Flu, China supplied half the world’s pig trade

“It’s the worst supply shock that China has ever suffered due to a disease,” says China consumer analyst Ernan Cui at Gavekal Dragonomics. “Supply has been falling faster than many people expected with the trend forecast to worsen. Pork prices are the highest they have ever been.”

Chinese officials calculate the pork shortfall to be 10 million tonnes whilst some independent analysts put the figure closer to 18 million. Meanwhile, pork prices are currently over 50RMB per kg wholesale. Before the outbreak, the average was 20RMB per kg. “Breaking 30 is very rare,” says Cui.  

But not everyone is losing amid the soaring prices. Many provinces have been left with no choice but to import meat. Beijing has imposed a 72 per cent tariff on US pork in retaliation to President Trump’s trade war, allowing Brazil and Europe to make hay while the sun shines. Beijing has doubled the number of beef plants that have permits to sell directly to the mainland with imports expected to rise even further next year, according to Brazilian meat trade groups.

Meanwhile, Spain has increased the value of its sales to China by 90 percent (to £378 million) in the first six months of 2019, according to Interporc. It is also a boon for South American growers of soy and grain, used to making pig feed. But bad news for the planet as Brazil’s right-wing president Jair Bolsonaro ploughs on with controversial plans to open vast tracts of the Amazon to agricultural interests.

ASF is also threatening to become a political hot potato for China’s government. Ahead of the fanfare of the 70th anniversary of the People’s Republic of China on October 1, Hu Chunhua, Chinese Vice Premier and member of the Politburo told top officials that increasing pork production is a “major political task” for the Party. But reports that the government has suppressed information about the spread of the virus have raised questions about the effectiveness of its response.

Steps have been taken to try and rebuild the shattered industry, such as introducing the “green passage policy” – toll-free travel for certain categories of livestock; and generous subsidies for companies to build new infrastructure.

Meanwhile, some environmentalists even see this as an opportunity for China to embrace non-meat alternatives. But without a way of stopping the virus it is hard to see how China can continue to bring home the bacon.

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The ocean is our greatest source of untapped wealth but failure to develop marine industries sustainably will harm life for all, writes Charlotte Middlehurst

Billions of people around the world depend on the seas for nutrition and jobs and the ocean’s potential to generate wealth is vast. According to the Organisation for Economic Cooperation and Development, a group dedicated to advancing world trade, the ocean contributes £1.15 trillion to the global economy each year. Of this, fishing alone produces an estimated £274 billion a year (that’s around 171 millions tons of fish), according to the Food and Agricultural Organisation of the United Nations.

In coming years, the European Commission has identified that the ocean economy will grow faster than the general economy, doubling in size by 2030 when compared to today’s levels. By 2030, it could be worth as much as £2.25 trillion (value added) – or 2.5 percent of the world’s GDP.

All this wealth is being driven by advanced technology and market conditions that support a free trade in commodities. Fishing and farming company operations are scaling up with state-of-the-art industrial trawlers and sophisticated nets that extend miles into the ocean. Climate change is causing Arctic ice to melt, opening new sea lanes from East to West for shipping companies and  tour operators to exploit. Meanwhile deep-sea robots are also forging new frontiers for bio-prospectors and mining companies.

At the same time, the ocean faces unprecedented risks. Around eight million tonnes of plastic waste enters the sea each year, killing sea creatures and birds and entering our food chain. Ninety percent of the world’s fisheries are now either fully fished or overfished according to the UN’s food body, and climate change is disrupting sea currents, killing off coral reefs and causing sea levels to rise.

The challenge of managing the environment, tourism and industry around the coast demands new approaches in policy, technology and measurement

Professor Richard Williams is an expert on the ocean economy and Principal of Heriot-Watt University in Scotland. He says growth will be concentrated in maritime and coastal tourism (by value and employment), offshore wind energy (by value), and aquaculture (by share of human consumption of fish and rising). Additionally, Williams identifies emerging areas with potential for significant future growth as wave and tidal energy, seabed mining, offshore aquaculture and biotechnologies.

Sustainability at the centre

The ‘Blue Economy’ is emerging as an international concept that encourages better stewardship of the ocean and of ‘blue resources’. It underpins the thinking behind the UK-led Commonwealth Blue Charter that highlights the connection between the ocean, climate change and the health of life on land. It also supports the United Nation’s Sustainable Development Goals (SDGs), especially SDG14, ‘life below water,’ and China’s governing principle of ‘ecological civilisation’ (economic growth in harmony with nature, rather than at odds with it).

At its heart is the notion that ambitious international cooperation is needed to sustainably manage and preserve the ocean for the sake of present and future generations. There are clear opportunities for China and the UK to lead on the development of a sustainable Blue Economy, and these are vital if we are to guarantee responsible management of marine resources.

“With its significant coastline and marine territories the Blue Economy will be of prime importance to China. The challenge of managing the environment, tourism and industry around the coast demands new approaches in policy, technology and measurement. [For the UK] the connections with China will draw on our skills in marine robotics, sensors, and environmental technologies,” says Professor Williams.

The ocean contributes £1.15 trillion to the global economy each year

Blue ambition

China has signalled its intention to lead the Blue Economy over the next century. Its Belt and Road Initiative – a trade and infrastructure project spanning 70 countries — has its very own maritime arm. The Maritime Silk Road encompasses ports in Djibouti, polar shipping lanes, and Latin American fishing hubs to name but a few.

In line with this, 2018 has so far seen a slew of ocean policy reforms and pledges of cooperation between China, the UK and the broader international community.

This spring, Prime Minister Theresa May presented President Xi Jinping with a Blue Planet box set and a specially recorded message from Sir David Attenborough when the two met in Beijing. A gift intended to signal both countries’ determination to stop the scourge of ocean plastics.

In April, China restructured its government ministries with huge implications for the management of marine environments. Its key body, the State Oceanic Administration, was dissolved and its roles reallocated in an effort to streamline and reform government oversight. In May, the world’s first Ocean Risk Summit was held in Bermuda, attended by Richard Branson and Prince Albert of Monaco, to discuss how to mitigate ocean risks and channel blue capital. In July, China and the European Union signed, for the first time, an Ocean Partnership that aims to enhance ocean protection and support thriving business and research exchanges.

The seas undoubtedly represent a new frontier for UK-China collaboration. And investing in blue industries could ensure a leadership position for both countries. But failure to adopt a sustainable development mode could result in disaster for all.

Blue growth

Scotland is an example of a country that has pioneered sustainability in its fishing sector over the past two decades, with powerful results. Around half of the fish landed at the country’s biggest market in Peterhead is Marine Stewardship Council accredited; stocks of key fish are rising, and the pressure on those stocks from fishing vessels is declining, according to the Scottish Fishermen’s Federation.

“Those are trends that we are keen to see continuing, not because we want to be seen to be ticking the right boxes, but because it is good for business and fish stocks,” says Bertie Armstrong, Chief Executive of the Federation.

At present the greatest risks would come from a failure on the part of the UK government to secure a creditable deal in the Brexit negotiations on behalf of UK fishermen, he says: “Brexit, and the new fisheries regime that will follow, will present new opportunities for Scottish-Chinese trade links.”

China restructured its government ministries with huge implications for the management of marine environments

So does the current moment of global trade rebalancing (US-China trade wars, Brexit) offer an opportunity to re-examine the blue growth mode and avoid some of the mistakes made on land?

Torsten Thiele, founder of the Global Ocean Trust and a specialist in blue finance believes so.

“A sustainable Blue Economy (where ocean resources are used equitably to build economic growth) depends on resilient and sustainable business models,” says Thiele. “Science suggests we need to strictly protect at least one-third of the global ocean. The solution is to develop blue economic capital assets, and these need investment. China’s role in this new global processes is critical.”

We should remember that these assets are worth more alive than they are dead.

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Swapping souks for solar plants and camel caravans for wind farms, the Silk Road is undergoing a makeover. President Xi Jinping’s plan to revive the old Silk Road through a US$4 trillion programme of trade deals and infrastructure investment has attracted the eye of green enterprises that see a golden opportunity to win contracts and gain valuable experience in overseas markets.

First unveiled in 2013, the Belt and Road Initiative (BRI) is China’s most ambitious overseas investment project yet. Stretching over 60 countries across Asia, Africa, Latin America and Europe, it aims to develop industrial agriculture and core infrastructure such as ports, container terminals, railways, roads, power plants, and factories.

It is key both to China’s “going out” strategy and to “globalization 2.0”, President Xi’s vision to reboot and rebalance international trade relationships with Asia at the helm.

Over 900 BRI deals have been slated so far with projects ranging from lithium mines to hydroelectric dams. But beyond the “win-win” rhetoric there is international concern about a lack of transparency around certain projects and the access granted to foreign companies.

Additionally, there is concern that China will offload its excess industrial assets, as domestic demand slackens and overcapacity in the coal, cement, and steel sectors grows.

However, there is an alternate path available that speaks to a broader global movement towards sustainability – one that is paved with green investment.

China is expected to install around a third of the world’s total wind energy, solar and hydroelectric generation capacity by 2021

China’s push for global leadership of the green tech and energy markets has been aided by US President Trump, whose personal disinterest in renewables and fondness for coal has left the vacancy open. In the current Five-Year Plan, China has made sustainable development and environmental restoration pillar industries and set aggressive targets to reduce pollution and increase the share of electricity derived from renewables (15 percent by 2020).

Focus on efficiency, domestic consumption and green technology has led to big investment in solar and wind power, “smart” grids, electric vehicles and battery storage. Leading companies, with the encouragement of central government, are therefore eager to enter the newly available foreign markets under the umbrella of BRI.

So how can China “green” the new Silk Road?

In three ways. First, by encouraging companies to introduce sustainable design into their projects and adopting sustainability criteria in their decision-making. Second, by focusing on investment in solar, wind and hydropower at a time when most countries are shifting away from coal and oil in accordance with the Paris Climate Agreement. Third, by galvanising the financial sector, upon which it is incumbent to steer investors away from environmentally harmful projects.

Green enterprise on the rise

 China invested a record US$32 billion in overseas renewable energy and related technologies last year, marking a 60 percent year-on-year increase in spending, according to the research group Institute for Energy Economics and Financial Analysis (IEEFA).

For China’s environmental tech companies, the BRI is a chance to secure lucrative contracts and broaden their experience and expertise of working in internationally regulated foreign markets.

“If environmental enterprises don’t venture into the wider international market and work hard to gain experience there, their capabilities will not improve, and they will find it difficult to meet global market requirements,” says Luo Jianhua, secretary general of the China Environment Chamber of Commerce.

With this in mind, Premier Li Keqiang, speaking at last year’s National People’s Congress, reasserted that Chinese environmental enterprises will benefit from new investment contracts made through the BRI.

This was followed up by a comment from Luo Jianhua that Chinese enterprises, in particular mineral and chemical companies, should seek to emulate international best practice, pointing as an example to German chemical giant BASF SE which co-opts water treatment and sustainable design into its projects.

While energy is a key focus, China is pushing into related markets, such as green data monitoring. The country has seen a six-fold increase of sales in monitoring equipment between 2006 and 2015, paving the way for new alliances with Europe.

Renewable energy

China is expected to install around a third of the world’s total wind energy, solar and hydroelectric generation capacity by 2021. A proportion of this will go into decentralised wind, solar and micro grid solutions along the BRI route. In some cases, this will be in countries that are being sidelined by national governments and traditional donors such as the World Bank.

In Myanmar, where only 34 percent of people have access to electricity through the grid, falling to 16 percent in rural areas, China is working on local initiatives to provide solar energy to households. In Thank Bayar Khond, a few kilometres outside of Yangon, the Chinese NGO Global Environment Institute has teamed up with Myanmar NGOs and the Blue Moon Foundation to provide small household solar panels and clean cook stoves to families in the village.

In Mongolia, China’s efforts to fight desertification, or soil loss, has been touted by United Nations deputy secretary-general Erik Solheim as a model for other regions ravaged by sand and dust in Africa, the Middle East and Latin America.

In Pakistan, China has been pursuing green investments opportunities from solar and hydropower projects to vast rail networks.

However, China must go further to repair the reputational damage caused by environmentally and politically harmful projects such as Myanmar’s Myitsone dam, which has since been halted, and its controversial road building in Pakistan’s disputed border region.

To improve this, a group of Chinese and foreign non-governmental organisations have committed to helping China develop guidelines under the umbrella of the China Green Leadership: Belt and Road Green Development project.

Finance gets on board

The BRI is an opportunity to scale-up green finance and coordinate international lending institutions to hasten the uptake of environmental risk into loan decisions.

During the Hangzhou G20 summit in August 2016, China championed green finance and has since demonstrated its commitment as the largest issuer of green bonds in 2016. Meanwhile, the China-led Asia Infrastructure Investment Bank, a key supplier of BRI investment, has stated a commitment to ensuring its projects are “lean, clean and green“.

In the past, China’s overseas investments have courted controversy for their environmental impacts, particularly in the resources sector, such as mining or hydropower. Through the New Silk Road, China has the opportunity, brought about by globalisation, to improve the capabilities of its environmental enterprises. Companies who do this efficiently stand to be big winners.

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