Shifts in international trade

Wednesday, 6 December 2017 00:00 - - {{hitsCtrl.values.hits}}

Climate change has become such a powerful element in the world that it is changing the drift of international trade, according to reports, and pushing even cutting-edge economies to move to new types of exports to stay ahead.

Chinese exports of environmental goods and services have surged ahead of Germany and the US, according to a report that shows how the climate change fight is shifting international trade.

China’s share of the global market for protection against climate change more than tripled over the 13 years leading to 2015, according to the report commissioned by the German Government and published by the Federal Environment Office. Germany fell to second place and the US finished third, a Bloomberg report said this week.

The report underscores how global warming is reshaping trade patterns. European executives have already flagged how they expect China’s new Silk Road to spur more deliveries of climate-friendly technologies like batteries and electric cars. The trade route known in Beijing as the Belt and Road Initiative has already exported some $ 8 billion of solar equipment, according to Bloomberg New Energy Research.

Sri Lanka, which is an important point in the Belt and Road project, is well placed to tap into these new climate-friendly value chains as well as benefit from renewable energy projects. Given that Sri Lanka will need to upscale its generation as well as find the right combination of generation sources, it is well placed to find ways to cooperate with China. Finding new exports in environmental goods and services would also provide incentives for Sri Lanka’s private sector, especially given the possibility of a Free Trade Agreement (FTA) between the two countries.

China commanded about 16%, equivalent to about $ 71 billion of exports in 2015. Products ranged from wind turbines and water purifiers to LED bulbs and ancillary services. Exports from Germany and the US, pioneers of clean technology, stagnated at € 59 billion and $ 52 billion respectively.

Scores of advisers from Germany and the European Union are working with officials in China to help transform hundreds of cities into oases of green power. Cleaning up China’s cities has become a test for whether President Xi Jinping’s Government can hit pollution targets in the 2015 Paris agreement while spurring economic growth tied to its new Silk Road. EU states led by Germany, France and Italy drove environmental exports in the last decade as the continent pushed its clean power agenda. German exports of solar panels dried up this decade only to be cushioned in part by wind turbine sales abroad. Siemens AG claims that its environmental business in 2017 generates about half of all its revenue. Global investments in renewable energy dropped 23% last year from a record in 2015. Investors spent $ 241.6 billion on clean power, according to a report of Bloomberg New Energy Finance and the FS-UNEP Frankfurt School on Global Trends in Renewable Energy Investment 2017. Domestic investment in climate protection benefits everyone. As much as $ 93 trillion is needed in investment to support global climate goals over the next 15 years but it also provides incredible opportunities for countries around the world to focus on new types of exports and collaborations both within their countries and outside to spur growth and save the planet at the same time.