Command economics: for China, not all it’s cracked up to be

James Bambino

The drumbeat these days is that command economies, specifically China’s, are tough to beat. Beijing simply formulates and executes a plan of action, absent messy public debate. That is the narrative, for example, on carbon emissions reductions – China, it is said, is on an inexorable Big Green Push as part of a new path of economic development. But is it?

The background is that China instructed local governments to meet emissions reductions of 20 percent by the end of the 11th five-year plan, which corresponds with the close of the 2010 calendar year. As UPI reports, local governments have responded by simply turning off the power. In a series of rolling blackouts, local authorities throughout China have cut off electricity to industries, both profitable and failing.

The glitch is that factories still have the same production quotas, which they have been meeting by turning to diesel generators. One result has been wanton competition for diesel. Chinese diesel demand will rise by 1 million tons over the coming month, according to Stratfor. As the Financial Times’ Leslie Hook notes:

The Chinese government is rationing the electricity supply as it rushes to meet ambitious energy and environmental targets by the year’s end, hence boosting demand for diesel, power generators and even candles as the country scrambles for extra power.

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