The U.S. and China are climate frenemies—and maybe that’s OK

Happy Earth Day!

China’s Foreign Ministry confirmed Wednesday that President Xi Jinping has accepted an invitation from U.S. President Joe Biden to attend a U.S.-led virtual summit on climate change.

The Chinese leader will attend by video link later today, joining leaders from nearly 40 other countries. Chinese foreign ministry spokeswoman Hua Chunying promises Xi will deliver an “important” speech.

This will be the first “meeting” of the two leaders since Biden took office (although they spoke by phone in February). In both countries, media reports have quoted experts opining that climate change may be the one issue on which leaders of the world’s two largest economies can work together—even amid escalating bilateral conflict on matters involving trade, technology, human rights, and nearly everything else.

Stoking that optimism: the apparent success of Biden climate envoy John Kerry’s visit to Shanghai last week. During his three-day stay in the city, Kerry met with his Chinese counterpart, Xie Zhenhua, and conversed by video with China’s vice premier Han Zheng. He emerged Saturday from those discussions with an agreement that the two countries will continue to discuss “concrete actions in the 2020s to reduce [carbon] emissions.”

In a Sunday interview with the New York Times, Kerry stressed the importance of creating separate discussion tracks to prevent disputes in other areas from derailing bilateral progress in reducing carbon emissions. “It’s very important for us to keep those other things away, because climate is a life-or-death issue in so many different parts of the world,” Kerry said. “What we need to do is prove we can actually get together, sit down and work on some things constructively.”

China’s response to Biden’s climate overtures has been positive, but wary. “China maintains an open attitude when it comes to climate cooperation and welcomes dialog,” Zhang Monan, senior fellow at the U.S.-Europe Institute at the China Center for International Economic Exchanges told Bloomberg. “However, if countries continue to pressure China or adopt confrontational and non-cooperative tactics, then China will address this with corresponding actions.”

The state-controlled Global Times hailed Xi’s acceptance of Biden’s invitation to join the summit as a “‘goodwill gesture’ for the U.S.-China relationship.” But the Global Times report also quoted Remin University scholar Wang Yiwei who warned that the U.S. is trying to “coerce” China into accelerating its climate reduction targets—an effort he decried as “pure hegemony.”

At the climate summit, Biden is expected to pledge to cut U.S. greenhouse gas emissions by at least 50% below 2005 levels by 2030—essentially doubling the first goal put forward by President Barack Obama as part of the 2016 Paris climate agreement.

Biden hopes that pledge will help reclaim the moral high ground on the climate issue, which the U.S. all but surrendered under Donald Trump. Biden also hopes to prod other countries to do more to achieve the Paris accord’s goal of limiting planetary warming to 1.5 degrees Celsius above pre-industrial levels.

It’s not clear what, if any, new measures the Chinese leader might promise at today’s climate confab.

Last year, Xi pledged that China would achieve peak carbon emissions before 2030 and carbon neutrality by 2060. He also vowed China would cut its carbon dioxide emissions per unit of GDP by more than 65% from 2005 levels by 2030.

China and the U.S. are the world’s two biggest emitters of greenhouse gases. China overtook the U.S. as the world’s largest carbon polluter in 2004, and today accounts for about 28% of global carbon emissions compared to the U.S.’s 15%.

But Chinese leaders have long argued that both on a per capita basis and a per GDP unit basis, China produces far less carbon than the U.S.—and that developed nations must contribute more than developing countries to the fight against climate change because they have already dumped so much carbon into the atmosphere in the course of getting rich.

China’s economy remains addicted to coal, the dirtiest fossil fuel, and continues to build new coal plants at a breakneck pace; in 2020, China commissioned 76% of all new coal-fired plants in the world.

But at the same time, China is investing aggressively in the development of renewable energy sources. The country now accounts for nearly a third of the world’s total renewable energy capacity and is the world’s largest producer and exporter of solar panels, wind turbines, batteries and electric vehicles. Indeed, so rapid has been the development of China’s “green economy” that U.S. Secretary of State Antony Blinken last week warned that America is “falling behind” China in that strategically crucial sector.

It’s unlikely those arguments will be resolved at today’s climate summit. But it’s encouraging that leaders from two countries who increasingly see each other as rivals in other spheres, also feel the need to compete with each other in ways that might benefit the planet.

More Eastworld news below.

Clay Chandler
clay.chandler@fortune.com

This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com. 

Eastworld news

Two belts, two roads

The European Union and India are in discussions to create a global infrastructure investment plan to rival Beijing’s flagship Belt and Road Initiative (BRI). The European Union and India plan to unveil the initiative on May 8. It will include spending packages in energy, digital, and transport sectors in countries around the world. The two sides say the measure is not meant to directly challenge Beijing, but it will offer more legal safeguards and improved debt terms than those offered by Beijing’s BRI. Financial Times 

Under one roof

Last month, an Indian court ruled in favor of Tata Group, one of India’s largest conglomerates that is led by the powerful Tata family, in its 2016 decision to fire former chair Cyrus Pallonji. Pallonji is a member of the powerful Mistry family that controls an 18% stake in the firm and spent decades helping build the company into one of India’s most powerful firms. Now, the Tata Group is faced with figuring out how to sell off the Mistry’s stake in the firm, while also attempting to move forward into the digital age and away from its underperforming legacy businesses like steel and car making. Financial Times

Feeling the Burns

President Joe Biden is widely expected to announce veteran diplomat Nicholas Burns as U.S. ambassador to China. Biden opted for the less flashy pick after names like Disney chief executive Bob Iger and former Chicago Mayor Rahm Emanuel were floated for the post. In China, Xi Jinping aide and diplomat Qin Gang is expected to replace current ambassador Cui Tiankai. Qin is seen as a more measured voice compared to some of China’s more boisterous and outspoken diplomats. Wall Street Journal 

Fishing for trouble

China boasts the world’s largest fishing fleet and it’s becoming more aggressive about where it chooses to lay anchor. The London-based Overseas Development Institute says it has tracked 17,000 instances of Chinese boats making 'distant-water' trips outside of its own territorial waters. China's closest competitors, Taiwan and South Korea, have combined for a total of 2,500 such trips outside their own waters. In recent years, a growing number of countries including Ecuador, Peru, and Indonesia have accused Chinese boats of illegal fishing. Even with the backlash, China’s fishing fleet may be growing as it plays a key role in China’s development plans and foreign policy initiatives. Wall Street Journal

COVID-19 by country

India

On Wednesday, India recorded over 314,835 new cases on Wednesday, the most cases ever tallied by a single country in one day since the beginning of the pandemic. The new wave of infections is pushing India’s health care system to its brink: hospitals across the country are becoming overwhelmed with the influx of critically ill patients and running out of beds, supplies of oxygen, and treatment drugs like Remdisivir. The record wave of infections is also becoming India’s deadliest. On Wednesday, India recorded over 2,000 COVID-19 deaths in a 24-hour period, its highest single day tally since the beginning of the pandemic. Fortune

Markets and movers

Huarong – The state-owned financial asset firm may offload over $15 billion in assets to the People’s Bank of China in a proposal that would give the central bank control over Huarong’s unprofitable assets. Huarong missed a deadline to report earnings in March, raising concerns that the debt-manager may not be able to manage its own debt obligations. Bloomberg

Tokyo Motor Show – Akio Toyoda, chairman of the Japan Automobile Manufacturers Association, said Thursday that the Tokyo Motor Show scheduled for October 2021 will be cancelled due to ongoing concerns regarding the pandemic. Tokyo's rival car exhibition, the Shanghai Auto Show, is being held this week in Shanghai. Bloomberg

Tesla – On Wednesday, China’s market regulator told Tesla to ensure the quality of its products in the country, as the U.S. electric vehicle giant comes under increasing pressure from Chinese regulators and state media to address a woman’s protest at the Shanghai Auto Show about the quality of the brakes on Tesla vehicles. Reuters

Belt and Road – The Australian government cancelled two deals struck by the state of Victoria and China under China’s flagship Belt and Road Initiative. The deals included infrastructure investments into the Australian state, but were struck down after newly passed laws gave Australia’s national government the power to veto state-led agreements. Fortune

Ant Group – The Chinese fintech giant is buying a 5% stake in Brazilian financial startup Dotz for $146 million with an option to increase its stake to 15% after Dotz goes public in Sao Paolo in May. Deal Street Asia

Greenpeace – Chinese social media giant Tencent is the best performing company when it comes to tackling carbon emissions in its data centers, according to the environmental group Greenpeace. Chinese tech companies Huawei, Baidu, and Alibaba ranked second, third, and fourth, respectively. Reuters 

Dalian Wanda Group – The Chinese conglomerate aims to raise $3 billion for its commercial property management business before listing the break-off unit in Hong Kong later this year. Wanda Light Asset Commercial Management aims to complete fundraising by July before a potential September IPO. Reuters

ASEAN – Stock exchanges in Southeast Asia are losing ground as regional start-ups like Grab have opted to list in the U.S. The ASEAN regional stock exchanges, in places like the Philippines and Singapore, raised $2.4 billion on 23 IPOs in the first quarter of 2021, compared to 32 IPOs that generated $3 billion in the same period last year. Nikkei Asian Review

Final figure

33%

Observers long believed that China’s Xinjiang region accounted for a large portion of Bitcoin mining, a resource-intensive computing process for making new coins of the digital currency. Now, they have evidence. On April 17-18, a coal mine in Xinjiang flooded, which abruptly halted one-third of Bitcoin’s total computing power after computing centers relying on the mine’s coal had to shut down. The blackout underscores Bitcoin’s dependence on China, as well as on dirty energies like coal. Fortune