Aurelia Butler

BRUSSELS/BEIJING (Reuters) – Record-breaking heat in China. Wildfires forcing Swiss villages to evacuate. Drought ravaging Spanish crops. As the costs of climate change rack up, a debate is surging among governments: who should pay? The question has been in the spotlight amid this week’s climate talks between the U.S. and China, where the world’s two biggest economies tried to find ways to work together on issues ranging from renewable energy deployment to climate finance ahead of this year’s U.N. climate summit, COP28, in Dubai. Given China’s rapid economic growth and increasing emissions, pressure has grown on Beijing to join the group of countries providing this funding. During the talks in Beijing, U.S. climate envoy John Kerry said the two sides would continue to discuss climate finance over the next four months, before the COP28 conference starting Nov. 30.”It’s difficult to argue that countries like China, Brazil or Saudi Arabia should still be put at the same level as the least developed countries and small island developing states,” a diplomat from one European Union country told Reuters. The EU, today the biggest contributor of climate finance, has lobbied to expand the pool of donor countries that provide it.Climate finance refers to money that wealthy countries pay toward helping poorer nations reduce CO2 emissions and adapt to a hotter, harsher world. So far, the few dozen wealthy countries obliged to make these payments have not delivered cash in the amounts promised. That list of financing nations was decided during U.N. climate talks in 1992, when China’s economy was still smaller than Italy’s.Now, some countries are calling for China to contribute. U.S. officials including Treasury Secretary Janet Yellen have noted that Chinese contributions would boost the efficacy of the U.N. climate fund. Other countries under similar pressure include Qatar, Singapore and the United Arab Emirates, three of the world’s richest nations in terms of GDP per capita. So far, China has resisted calls that could group it alongside wealthy nations.In a meeting with Kerry on Tuesday, Chinese Premier Li Qiang stressed that developed countries should deliver their unfulfilled climate finance commitments and take the lead in cutting emissions, according to Li’s office. He suggested developing countries could make contributions “within their capabilities.” That resistance suggests the effort faces serious challenges. Changing the official U.N. donor list would require international consensus.”There is much too much resistance among countries like China and Saudi Arabia to touch the official definition,” one EU official said on condition of anonymity. Advocates for the change argue that an expansion needs to happen before a new – and, likely, far bigger – U.N. target for climate finance kicks in after 2025. Countries still need to negotiate the size of that target and who will contribute to it.”All countries that are able, must contribute to global climate finance,” said Ambassador Pa’olelei Luteru, who chairs the Alliance of Small Island States.The bigger issue, Luteru said, is which of the poor and most vulnerable countries will be in line to receive it. WHO IS RESPONSIBLE?The U.N. climate financing arrangement is based on the principle that rich countries have a greater responsibility to tackle climate change, because they have contributed the bulk of the CO2 emissions heating the planet since the industrial revolution.The United States’ historical CO2 emissions are bigger than those of any other country, but China today is the world’s biggest CO2 emitter in terms of pollution produced each year.Countries will face the question of historical responsibility at COP28, as they aim to launch a new fund to compensate vulnerable states for costs already being incurred in climate-fuelled natural disasters. The EU dropped its years-long resistance to that fund last year, but on the condition that a larger group of countries pay into it. Countries have not yet decided who will contribute.The United States has been cagey about making payments that could be seen as reparations for climate change. Some countries not obliged to contribute to UN climate funds have done so anyway, including South Korea and Qatar. Others have begun channelling aid through other channels. China launched the South-South Climate Cooperation fund in 2015 to help least developed countries’ tackle climate issues, and so far has delivered about 10% of the $3.1 billion pledged, according to think tank E3G. That’s a fraction of the hundreds of billions that Beijing is spending on its Belt and Road Initiative, backing projects including oil pipelines and ports.Such arrangements allow countries to contribute without obligation, although if done outside of U.N. funds they can face less stringent criteria for public reporting – making it harder to track where the money is going and how much is paid.Byford Tsang, a senior policy advisor at E3G, said a Chinese offer of more climate finance would be a “win-win” for Beijing. “It would earn China diplomatic clout, and pressure Western donors to raise their stakes on climate finance,” he said.Some vulnerable countries, frustrated with the flagging finance to date, are looking to new sources for cash. The Barbados-led Bridgetown Initiative is pushing for a revamp of multilateral development banks so they can offer more support for climate projects. Other nations have rallied behind a global CO2 levy on shipping to raise funds. More

The writer, author of ‘Red Flags: Why Xi’s China is in Jeopardy’, is a research associate at the University of Oxford’s China CentreStrictly speaking, a country that has one of the fastest ageing populations on earth and a slump in fertility should be running into labour shortages, especially among younger age cohorts. Yet China has just reported that youth unemployment reached a record 21.3 per cent in June, with some speculating that inactivity may be far higher. Finding work for the young is of paramount importance — youth unemployment is socially corrosive as well as a blight on the economy.Since 2021, a social phenomenon known as tang ping, or lying flat, has taken root among young Chinese. It is essentially about disillusionment and doing whatever it takes to simply get by in the face of a weak economy, low social mobility and the dearth of good jobs. Now a new term, bai lan, translated as “let it rot”, is popular among the young. It conveys a deeper sense of pessimism, and of not striving at all.With good jobs in short supply and stiff labour market competition in a weak economy, increasing numbers of younger people are reported to have also become full-time children, staying at home to work for and be paid for by their parents.The biggest problem for out of work young people, however, is the risk of what economists call “hysteresis”. This is the danger that the longer they stay out of the formal labour market, the greater the difficulty becomes of ever getting back into it as skills and experience atrophy.Even allowing for the fact that China’s youth unemployment rate would be a bit lower if International Labour Organization definitions applied, a worrisome pattern has emerged in the five years since national data were first published. There is an annual cycle operating in which the unemployment rate rises into the summer when graduates flood the labour market and then ebbs in the second half of the year, but every year has seen a ratcheting up of unemployment rates throughout.The problem in China is acute for three reasons. First, the young are significant consumers, contributing as much as a fifth of spending in urban areas, according to a report by Goldman Sachs. Taken together with their slightly older peers, those under 35 account for over three-fifths of luxury goods spending. Weak consumption in China is certainly more complex than just rising youth unemployment but there is a link.Second, a marked change in the occupational structure of jobs has meant that the proportion of low pay, low skill, informal sector jobs has been rising at the expense of higher paid, high skill jobs in manufacturing and construction. According to Stanford University professor Scott Rozelle, the ratio of informal to formal sector jobs 15 years ago was 40:60, but has now flipped. This is a particular problem for younger workers who are over-represented in low pay sectors and the gig economy.Third comes three sets of mismatches. There is a mismatch of skills between those that many graduates acquire and those that employers, especially in engineering, finance and manufacturing, demand. Job and salary expectations, especially on the part of highly educated graduates, are unrealistic. There is also, importantly, a lack of aggregate demand reflecting the official focus on supply side policies and increasingly apparent shortcomings in China’s economic development model with its emphasis on state enterprises.With another 11-12mn graduates coming on to the market this summer, China watchers will be paying close attention to the unemployment numbers — and to economic decisions expected from the Politburo.Talk of stimulus is in the air, underscored by weak second quarter numbers. But the traditional remedies of credit creation, rural revitalisation and infrastructure programmes have been limited because of severe financing and debt difficulties for the local and provincial governments charged with implementing them. Chinese economists have become more vocal in urging their government to adopt measures to boost consumption.Ultimately, youth unemployment in China may not be resolvable until the national development model gets a makeover: service industries need to be expanded and opened up, and the government needs to embrace enthusiastically income redistribution and social security, education and tax reforms with a switch in strategy priorities back to the private sector. These require a formidable political transformation.Earlier this year, the Communist Youth League urged young Chinese to “take off their suits, roll up their sleeves, and go to the farmland” but the young seem to be hoping for something different. More

Deposits at large U.S. banks fell by $78.7 billion to $17.289 trillion from a week earlier, on a seasonally adjusted basis.Commercial bank lending inched up by $2.10B to a seasonally adjusted $12.093T during the week, the Fed data showed.Residential real estate lending increased $8.2B, commercial real estate loans fell by $2.00B, while consumer loans were down $2.1B from the prior week. Commercial and industrial loans slipped by $2.1B from a week ago on a seasonally adjusted basis. More