CHINA CUTS ITS US TREASURY HOLDINGS

Instead, it invests in Gold

China has been cutting down its holdings of U S Treasury securities gradually. But where are the China funds going from the US?

China, the second largest non- U S holder of U S Treasuries after Japan, reduced its holdings to the lowest in February 2023. China's holdings fell to $848.8B in February from $859.4B in January. The figure stood at $1.03 trillion at the same time last year. It was the seventh straight month of decline.

In January, the holding stood at $7.4 Trillion; it was $7.7 Trillion in February 2022, according to US Treasury data released in April 2023.

China ratcheted up its US Treasury bond purchases starting in 2000. Its buying spree peaked in 2014, dropping below the magic US$1 trillion mark in April 2022.

China has already trimmed its holdings by 34.1% over the past 10 years, including a 16.6% cut in 2022.

The reasons

China has three reasons for the move:

• It needs to diversify its foreign reserves, amid “external risks.” The risk is the trade war between the two countries.

• Beijing is wary of the US dollar’s dominance, as it is facing financial sanctions from Washington. 

• US Treasury yields declined following the US Federal Reserve’s progressive interest rate increases last year. The hikes resulted in a fall in the price of US treasury bonds.

De-dollarizing moves

China is trying to internationalize its currency, the yuan. For instance, the proportion of yuan in Brazil’s international reserves has reached 5.7%, while the Euro is 4.7%. Yuan is now Brazil’s second-largest reserve currency.

Yuan found a place in Brazil’s foreign-exchange reserves four years ago, as its US dollar assets fell to 80.24% at the end of 2022 from 89.93% in 2018.

Russia, which has been kicked out of the US dollar system and SWIFT after the Ukraine invasion, has already increased its holdings of the yuan in foreign-exchange reserves and sovereign funds, with more than two-thirds of bilateral trade settled in yuan or rouble.

Hiding in tax havens

Along with the decline in US Treasuries, China’s Treasury holdings in the tax havens, the Cayman Islands jumped by $38.5B and Bermuda by $7B.

China may be hiding some dollar assets in there, to sidestep Western sanctions

Investing in gold

Beijing is replacing some of its US Treasury holdings with gold. China increased its gold reserves for the sixth consecutive month in April to 1893 tons, growing by about 102 tons, in the face of heightened political risks.

The largest single purchase of gold in February was by the People’s Bank of China, which added 25 tons. It added around 18 tons in March alone.

© Ramachandran 

DOLLAR HEGEMONY OVER, A NEW ROAD MAP IN VIEW

 SCO Summit Decides on a New Course of Action

The leaders of the Shanghai Cooperation Organisation (SCO) at the recent summit at Samarkand have decided to conduct bilateral trade and investment and issue bonds in local and national currencies instead of US dollars and UK Pounds or Euros.

The group - which comprises China, India, Russia, Pakistan and Iran alongside four Central Asian states - in a declaration said "interested SCO member states" had agreed on a "roadmap for the gradual increase in the share of national currencies in mutual settlements", and called for an expansion of the practice.

The declaration did not say who the "interested states" were. It is significant that Iran, like Russia, subject to broad international economic and financial sanctions, has also joined the SCO and is an oil-producing country.

Both China and Moscow are the driving force behind the push toward national currencies as it tries to reduce their reliance on the U.S. dollar and other Western currencies for trade following the imposition of sweeping new Western sanctions in response to the Ukraine crisis.

In his speech at the summit, Chinese President Xi Jinping said: "We need to ensure implementation of the roadmap for SCO member states to expand shares of local currency settlement, better develop the system for cross-border payment and settlement in local currencies, work for the establishment of an SCO development bank, and thus speed up regional economic integration".

The Chinese yuan became the most traded currency on the Moscow Exchange for the first time on October 4, 2022, with trading turnover in the yuan-ruble pair reaching 70.3 billion rubles ($1.17 billion), surpassing the 68.2 billion rubles for the dollar-ruble pair. A total of 64,900 transactions were made using the yuan-ruble pair, compared with 29,500 for the dollar-ruble pair on the same day. The yuan also overtook trading in the euro-ruble pair, which recorded a trading volume of 47.5 billion rubles.

In the first eight months of 2022, trade between China and Russia totalled $117.2 billion, up 31.4 percent year on year.

In early September, China and Russia reportedly signed an agreement to switch trade payments for gas supplies to China to the yuan and the ruble based on a 50-50 split, instead of the dollar, paving the way for a more frequent ruble-yuan usage in bilateral trade.

In the first week of September, the Russian gas producer Gazprom said China would pay for half its Russian gas supplies in rubles and half in Chinese yuan. Previous contracts have been denominated in euros or dollars, the dominant reference currency for the global oil trade.

In August, Russia's largest gold miner, PJSC Polyus, completed the issuance of 4.6 billion yuan in bonds, less than one month after Russian aluminium company Rusal issued 4 billion yuan-denominated bonds in the Russian market. The bonds were listed on the Moscow Exchange with a coupon rate of 3.8 percent. The bond underwriter was Gazprombank.

The issuance of foreign-currency bonds means China is a strong economy, has stable financial and monetary policies and a large capital market volume. 

Russian firms and banks were involved in almost 4 percent of international yuan payments by value in July. That was an increase from 1.42 percent the previous month and zero in February when the Russia-Ukraine conflict began.

Yuan-ruble trading volumes have soared 1,067% since the Ukraine crisis, though this is broadly seen as a sign of the allies strengthening ties to help weaken the influence of the US.

Most recently, the People's Bank of China announced it is developing a yuan reserve with the Bank for International Settlements and five other nations, including Singapore and Hong Kong. Each of the members will contribute about 15 billion yuan, or $2.2 billion. 

Also, China will push for the expanded use of the digital yuan from the first four trial cities -- Shenzhen in South China's Guangdong Province, Suzhou in East China's Jiangsu Province, Xiongan New Area in North China's Hebei Province and Chengdu in Southwest China's Sichuan Province -- to province-wide testing, to ramp up the innovation of the digital yuan.

China's Ministry of Finance and the Macao Special Administrative Region (SAR) government have jointly announced a plan to issue yuan-denominated treasury bonds worth 3 billion yuan in Macau on September 7, a move to strengthen financial cooperation between the Chinese mainland and the SAR. And, the Ministry of Finance issued yuan-denominated treasury bonds worth 5 billion yuan in the Hong Kong SAR on August 10.

India is planning to buy Russian oil at discounted prices and even consider the Chinese yuan as a reference currency in an India-Russia payment settlement mechanism. Saudi Arabia is in active talks with Beijing to price some of its oil sales in yuan.

According to bankers, imports from Russia can be paid in yuan via multiple mechanisms. One way is that an India-based bank exchanges US dollars for yuan from its offshore branches in China or Hong Kong.

Another way is for an India-based bank to tie up with a Chinese bank for settlements. It is also possible for an Indian company to directly take a loan in yuan from a China-based bank.

Most state-run banks send dollars to their offshore branches in Singapore, Hong Kong or China.

In June, some 30% of the payments by Indian entities for the commodity were in the Chinese yuan and 28% in the Hong Kong dollar. The euro accounted for under a quarter and the UAE dirham around a sixth.

In July, Russia became India’s third-largest coal supplier with record imports of 2.06 million tonnes.

UltraTech is importing "157,000 tons of coal from Russian producer SUEK that is loaded on the bulk carrier MV Mangas from the Russian Far East port of Vanino," an Indian customs document reviewed by Reuters shows, while the settlement currency is in yuan, with the total cargo valued at 172,652,900 yuan ($25.81 million).

The Road Map

Details and a road map against the US dollar had been finalized and signed at SCO’s Finance Ministers’ meeting in Moscow as early as March 2020, after which the plan was temporarily shelved due to COVID. Representatives from the finance ministries and central banks of China, India, Russia, Pakistan, Kyrgyzstan, Tajikistan and Uzbekistan attended the Moscow conference. In addition, Iran, Afghanistan, Belarus, and Mongolia were also present as observer nations.

During the meeting, Russia’s Foreign Minister Sergey Lavrov suggested that "each SCO member decide whether they want to use the dollar for transactions, but facts are enough that this currency is unreliable".

The currency roadmap was also agreed upon at the  15 July 2022 meeting of the SCO countries’ industry ministers in Tashkent, as well.

The SCO is the largest regional organisation in the world in terms of geographical coverage and population, covering three-fifths of the Eurasian continent and nearly half of the human population. The new measure will contribute to the stability of monetary systems and the security of the financial activities of the SCO  countries.

Retaliation Against the US War

Former US President Donald Trump had deeply weaponised the dollar during COVID and trade with China was labelled a ‘war’. There have been unilateral sanctions placed on perceived threats and ‘enemy' countries. Countries like China, at the receiving end, have been preparing to hit back, and now it has become a reality.

Trump used sanctions and stopped Russian companies like Rusal Aluminium from accessing the dollar-based financial system in 2017 and then on Rosneft Oil in 2020. Since then the US has had over 30 active financial-and trade sanctions that cut access to the Federal Reserve that have severely destabilised and targeted weaker economies like Iran, Iraq and Venezuela. Trump tried to pressurise the IMF not to assist Iran with the COVID relief package.

As a consequence, all these countries established linkages with China and Russia for trade and economic sustainability. Russia is selling Venezuela’s crude oil. China diverted Iranian crude with Yuan payments and initiated the Iran-China silk route agreements. China is now Iran’s largest trade partner. Iran has diversified trade with Afghanistan and oil for gold with India.

China and Russia have several measures already as cross-border inter-bank payment systems parallel to SWIFT. Both have increased gold holdings to back their currencies and initiated national currency swap agreements in several regional and bilateral arrangements where they play a role.

The BRICS’s New Development Bank, proposed disbursements in national currencies in 2015. In the April 2020 annual board of governors meeting with BRICS finance ministers, the president of the bank K.V. Kamath said that in 2019, a quarter of the USD 15 billion of financial assistance was given in local currencies. He said that BRICS had no intention of destabilising the dollar but  “50 per cent (of projects) should be local currency financed”.

China is reducing its share in US treasury bonds and preparing for currency swap facilities as part of the Belt and Road Initiative (BRI) and in the Regional Comprehensive Economic Partnership with South-East Asian countries. Most of the ASEAN countries are ready for this.

Russia, previously a top holder of US sovereign debt, has radically decreased its holdings because of sanctions. Russia’s strategic relations with China deepened after the 2014 partnership and energy-centred agreements. In 2017, Ruble-Yuan's‘ payment versus payment’ started along the BRI. In 2019, the two countries switched to the Yuan RMB and Ruble in exchange for their USD 25 billion trade.

Russia has been pushing for currency swap agreements with various trade partners. The Eurasian Economic Union with Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia comprises the ‘road’ part of the BRI. With a population of 183 million and a GDP of some US$ 5 trillion, 70%  of its trade is in Rubles and local currencies. Several Central and West Asian countries want to join this union and Vietnam already has a full trade agreement with them. This saves the exchange charges of the dollar.

Russia revived trade in national currencies that were earlier used during the Soviet period within the communist bloc and with India. This exchange ended with the disintegration of the Soviet Union. 

In 2019, India switched again to Ruble payments for Russian S-400 defence systems because of US sanctions on Moscow. India worked out local currency trade with the UAE and approved USD 75 billion currency swaps with Japan and USD 400 million currency swaps with South Asian countries. India notified non-dollar-mediated rates of exchange for Turkish and Korean currencies. Turkey is trading in national currencies with China and Russia. Russia proposed trade in Euros with the EU.

China is internationalising the Yuan RMB which is included in the IMF basket, has risen to fifth place as a global currency and represents 15% of global currency holding. Russia has 25% of Chinese RMB international reserves.

The US Debt and Shadow Banks

The problem remains that the Yuan is not presently liquid enough for financial markets. So currency will be diversified with no currency maintaining complete hegemony.

Financial markets are complex and the US dollar is still the preferred currency. But countries have followed the contradictions within US policies – like raising debt ceilings to sustain the dollar as a global currency and even concealing lending to certain foreign banks – and have decided they need to protect themselves from this militarised dollar.

The debt ceiling is the maximum amount of money that the United States can borrow cumulatively by issuing bonds. If U.S. government national debt levels bump up against the ceiling, the Treasury Department must resort to other "extraordinary" measures to pay government obligations and expenditures until the ceiling is raised again.

The debt ceiling has been raised or suspended numerous times over the years to avoid the worst-case scenario, which would be a default by the U.S. government on its debt.

There has been controversy over whether the debt ceiling is constitutional. According to the 14th Amendment of the Constitution, "the validity of the public debt of the US, authorized by law...shall not be questioned." The majority of democratic countries do not have a debt ceiling, making the United States one of the few exceptions. The approximate amount of the current U.S. debt ceiling is $ 31.4 trillion, as set by the Congressional vote on 15 December 2021, and signed into law by President Biden on December 16 of the same year. The sum represents a $2.5 trillion increase in the ceiling.

Hitting the debt limit and failing to pay interest payments to bondholders would have grave economic consequences. The United States government would be in default, lowering its credit rating and increasing the cost of its debt. This would throw the U.S. economy into a tailspin.

Another worry for the US is shadow banking- it symbolizes one of the many failings of the US financial system leading up to the current financial crisis.  It is referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar. They raise  (mostly borrow) short-term funds in the money markets and use those funds to buy assets with longer-term maturities. But because they are not subject to traditional bank regulation, they cannot—as banks can—borrow in an emergency from the Federal Reserve (the US central bank) and do not have traditional depositors whose funds are covered by insurance; they are in the “shadows.”

There are now myriad types of entities in the US, performing these intermediation functions, and they are growing all the time. During the financial crisis, investors became skittish about what those longer-term assets were worth and many withdrew their funds at once. To repay these investors, shadow banks sell assets. These “fire sales” generally reduce the value of those assets. 

But in the US, real banks were caught in the shadows, too. Some shadow banks were controlled by commercial banks and for reputational reasons were salvaged by their stronger bank parent. In other cases, the connections were at arm’s length, but because shadow banks had to withdraw from other markets—including those in which banks sold commercial paper and other short-term debt—these sources of funding to banks were also impaired. And because there was so little transparency, it often was unclear who owed (or would owe later) what to whom.

The share of the US dollar assets in the foreign exchange reserves of global central banks, a sign of the dollar's supremacy, dropped to 59 percent in the fourth quarter of 2020 - a 25-year low, the IMF reported last May. The share further dropped to 58.88 percent in the first quarter of 2022, IMF data showed.

Thus, because of the US crisis, the Chinese aphorism “hide your capability and bide your time” has become popular in much of Eurasia’s national currency transitions. President Biden's absurd declaration that COVID is over, makes it clear that the economy is also sick.

© Ramachandran 

HERDING DEVELOPING NATIONS INTO US-LED ORDER

It is just an illusion

The G7 Summit was concluded last week. It didn't reach a consensus because of the autocratic stance of the US on various policies. The outcome was not very positive, as it is challenged by internal disagreements over trade and climate policies. The G7 discussions focused on reducing Europe's dependence on Russian energy and finding other ways to increase the economic pain for Moscow; the group is considering imposing a price cap on Russian oil. Additionally, the bloc faces a looming global food crisis springing from the Russia-Ukraine tensions, which have resulted in shortages of wheat and other crops. The G7 countries failed to reach a consensus on these issues. External dynamics have also chipped away at the G7's global influence.

India was also invited to participate in the G7 Summit. At the summit, referring to the Ukraine crisis, which has pushed up energy prices across the globe, Indian Prime Minister Narendra Modi said that "energy access should not be the privilege of the rich only - a poor family also has the same rights on energy. And today when energy costs are sky-high due to geopolitical tensions, it is more important to remember this thing."

Obviously, it was a dig at the West, and he was justifying India's decision to buy discounted oil from Russia. India will continue to buy oil. India may buy Russian oil in future with the Chinese yuan as the reference currency, strengthening the BRICS cooperation once again. The G7 countries fear the BRICS' willingness to expand.

Those who attended the G7 summit and the subsequent 2022 NATO summit in Spain tried to present a gait of bonhomie, but they are facing internal squabbles.

China was targeted both by the G7 and NATO summits as a systemic rival. The powers behind both the summits are wary of China's ascendance as a global economic power. They are also worried about China's clout with developing countries. The reason why the G7 Summit has targeted so much China is regarded as an effort to wean away the developing world from China. There is a US lobby that wants India to be a partner of NATO, the so-called Asia-Pacific NATO.

The G7 Summit also devised a $600 billion infrastructure plan as a counter to the China-proposed Belt and Road Initiative (BRI). It is called the Partnership for Global Infrastructure and Investment (PGII) and is a re-launch of an unclear B3W scheme unveiled at last year's G7 meeting. The background of PGII is suspicious. It was mooted in 2021 in uncertain terms, without clarity on funds. Now it has been re-launched saying there will be private participation. But again, the summit has not been transparent on who are the private investors, raising suspicion about the US corporate intervention. In contrast, the BRI emphasizes transparency.

The G7 fund will focus on climate initiatives, among other projects, including a $2 billion solar farm investment in Angola, $320 million for hospital construction in Cote d'Ivoire, a vaccine manufacturing facility in Senegal, a 1,690 kilometres submarine telecommunications cable connecting Singapore to France via Egypt and the Horn of Africa, and $40 million to promote regional energy trade in Southeast Asia.

If the crude US political agenda forces these developing countries to take sides, they will be in a quandary. Herding all developing countries into a US-led global economic order is a weird illusion.

This commentary of mine was published in the Global Times: https://www.globaltimes.cn/page/202207/1269894.shtml

CARBON-NEUTRAL EFFORTS IN INDIA AND CHINA

Paving the Way to a Carbon-Neutral Future

By Rama Chandran

This article of mine was published in the September-October 2021 issue of the China-India Dialogue.

At the recently concluded COP26 (UN Climate Change Conference of the Parties) summit, India pledged to reach net-zero carbon emissions by 2070, a date two decades beyond the target set by COP26 organizers and the host, the U.K. India also vowed to reduce the carbon intensity of its economy by 45%. India had five climate-related pledges, including meeting 50% of its energy needs by renewable means by 2030.

India is the world's third-largest carbon emitter, behind China and the U.S. India represents 17% of the world's population and 5 per cent of the carbon emissions. Russia and Japan share the fourth and fifth places respectively. China emits 10.06 billion metric tons of carbon dioxide a year, while the U.S. follows with 5.41, India 2.65, Russia 1.7, and Japan 1.6 MT. Measured per person, however, India's emissions are ranked 140th globally. The U. S. is 14th, and China, 48th.

The landmark Paris accord was signed by nearly 200 countries in 2015 to limit rising global temperatures to two degrees Celsius above pre-industrial levels and to pursue efforts to cap heating to 1.5 degrees Celsius. But to do so, the world needs to almost halve greenhouse gas emissions in the next eight years and reach net-zero emissions by 2050. This threshold is a crucial global target because so-called tipping points become more likely beyond this level. Tipping points refer to an irreversible change in the climate system, locking further global heating.

As the world confronts a changing climate, it looks for direction at the Asian superpowers, India and China. Their decisions could either doom the efforts to curb greenhouse gas emissions or jump-start them.

Daily emissions globally decreased by as much as 17 per cent during the COVID. According to Carbon Brief, India's carbon dioxide emissions fell by 30 per cent in April 2020, compared with the same month in 2019. But India's emissions are set to rise in the years ahead as economic growth propels the energy demand. Emissions in India grew 1.8 per cent in 2019, at a much slower pace than in 2018.

India is the only major country in the world where actions to combat emissions are compatible with limiting global warming to an average of 2 degrees Celsius, according to Climate Action Tracker. Indian officials say they will meet two significant pledges under the Paris agreement on climate change ahead of schedule. India has promised to ensure that 40 per cent of its electricity-generation capacity comes from non-fossil fuel sources by 2030. It will also reduce its "emissions intensity" — a ratio of total emissions to gross domestic product — by at least one-third compared with 2005 levels. India has increased its solar-energy capacity more than twelvefold since 2014 and launched initiatives to save electricity. Coal will remain a significant part of India's power sector in the coming decades too.

In 2018, India installed almost as much new solar generating capacity as the U. S. did. India would double its target for installed renewable-energy capacity to 450 gigawatts.

The Chinese plan

Like India, China's aim for net-zero is also well beyond the 2050 target.

China has made two significant pledges under the Paris accord, to reduce its emissions intensity by at least 60 per cent by 2030 and to generate 20 per cent of its power from non-fossil fuels. China has promised to become carbon neutral before 2060 and begin cutting its emissions within the next ten years. During the COP26 summit, the Chinese President said that China would vigorously develop renewable energy and build wind and solar power stations. Ahead of the COP26 conference, China released an ambitious action plan to peak carbon dioxide emissions before 2030. According to it, the share of non-fossil energy consumption will be about 25 per cent, and carbon dioxide emissions per unit of GDP will drop by more than 65 per cent compared to 2005 levels. China's State Council has put forward the main objectives for the 14th Five-Year Plan period (2021-2025) and the 15th Five-Year Plan period (2026-2030), which includes increasing the share of non-fossil energy consumption, improving energy efficiency and reducing carbon dioxide emissions.

The action plan outlines vital tasks, including promoting green and low-carbon transportation, advancing a circular economy and supporting technological innovation. China will develop a unified and standardized carbon emissions statistical accounting system, improve laws, regulations and standards, optimize economic policies, and establish sound market mechanisms. For international cooperation, China will be involved in global climate governance, carry out green cooperation in its economy, trade, technology and finance, and advance the construction of the Belt and Road initiative.

On October 12, while addressing the leaders' summit of the 15th meeting of Conference of the Parties to the Convention on Biological Diversity, the Chinese President said that it will implement a "1N" policy framework for carbon peak and carbon neutrality. The country has begun constructing 100-million-kw wind, photovoltaic power projects in desert areas.

How can China reach carbon neutrality before 2060? Planners point out that China must begin to generate most of its electricity from zero-emission sources and then expand the use of this clean power wherever possible, such as switching to electric cars.

By 2030, 40 per cent of vehicles sold in China will be electric. The government has adopted policies to encourage plug-in electric vehicles (EVs). Since buying an EV costs more, in 2009, the government began to provide subsidies for EV purchases. But paying for the contributions became costly, and China's policymakers planned to phase out the donations at the end of 2020 and instead impose a mandate on car manufacturers. The order requires that a certain percentage of all vehicles sold by a manufacturer each year be battery-powered. Every year, manufacturers must earn a stipulated number of points awarded for each EV produced based on a formula that considers range, energy efficiency, and performance.

It will also need technologies to capture CO2 released from burning fossil fuels or biomass and store it underground, known as carbon capture and storage (CCS). China currently has only one large CCS facility. Seven more are being planned.

For China to achieve its target, electricity production would need to more than double, to 15,034 terawatt-hours by 2060. This would be driven by a massive ramp-up of renewable electricity generation over the next 40 years, including a 16-fold increase in solar and a 9-fold increase in wind. Nuclear power would need to increase 6- fold, and hydroelectricity to double to replace coal-fired power generation. Fossil fuels, including coal, oil and gas, would still account for 16 per cent of the energy consumed, so they would need to be paired with CCS or offset by new forest growth and technologies that can suck CO2 directly out of the atmosphere.

Tsinghua University's Institute of Climate Change and Sustainable Development has led a major national project on China's low-carbon future. The work was presented at a meeting attended by environment officials on October 12. Under the plan, emissions would continue to rise, from 9.8 gigatons of CO2 in 2020 to around 10.3 gigatons in 2025. They will then plateau for five to ten years before dropping steeply after 2035 to reach net-zero by 2060. If trends in the cost of renewables technology continue, more than 60 per cent of China's electricity could come from non-fossil fuels by 2030.

The Energy Research Institute of the National Development and Reform Commission (NDRC) in Beijing estimates the emissions to peak in 2022, at around 10 gigatons of CO2, followed by a steep drop to net-zero by 2050. To achieve net-zero, electricity production would double to 14,800 terawatt-hours by 2050. This output would be generated mainly by nuclear power (28%), followed by wind (21%), solar (17%), hydropower (14%) and biomass (8%). Coal and gas would make up 12 per cent of electricity production. This means that China's nuclear capacity — currently 49 gigawatts across some 50 nuclear power plants — would need to increase 5-fold to 554 gigawatts by 2050. This model proposes that some 850 gigawatts of power generated from coal, gas and biofuels could be fitted with technologies that capture and store carbon emissions. 

Coal-fired power accounts for almost 65 per cent of the country's electricity generation, with more than 200 new coal-fired power stations. In making the shift from coal, China needs to consider the economic security of some 3.5 million workers in the coal mining and power industry. The Chinese President has said that the country would phase down coal consumption in its 15th five-year plan, which starts after 2025.

The Somersault by the U.S.

 In 2017, President Trump announced that he was withdrawing the U. S.  from the Paris climate agreement, a move that nullified the country's commitment to cut emissions. But the U.S. is now trying to plunge back into the climate fight. President Biden addressed a virtual climate summit in April 2021, attended by the leaders of three dozen countries. Japan set a goal of reducing emissions by 46 per cent by 2030. South Korea pledged to end public financing for new overseas coal-fired power plants. Among the most substantial pledges was the European Union's 55% reduction, which was codified into law in April 2021. The U.K. boosted its target to 78 per cent by 2035. Russia made a promise to "significantly reduce the net accumulated emissions by 2050."

 The U.S. announced that it would cut its planet-warming emissions by 50 to 52 per cent by 2030. The U.S. carbon goal still falls 5 to 10 percentage points short of what's needed to avoid the worst impacts of climate change. The environmental groups were disappointed that Biden didn't provide a timeline for phasing out the use of fossil fuels. U.S. climate envoy John Kerry has acknowledged scepticism from world leaders who questioned whether Biden's promises would endure.

© Ramachandran