Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Chinese pollution – the cost of doing business

For some time I have been arguing with others that China is not a rich country at all as the cost of cleaning up pollution should first be subtracted from the sovereign wealth of China in order to get a more proper image of Chinese wealth. I never quantified that opinion. Until today.

The problem with China are its immense dimensions with respect to size, wealth and pollution. Last weekend I had been thinking how to scale back these immense dimensions. I decided that the only way forward is to divide China’s immense foreign exchange reserves by the immense size of the country. The outcome should then be compared with the cost of clean up efforts (e.g., the notorious Volgermeerpolder near Amsterdam).

According to WolframAlpha (a site which I highly recommend), the foreign exchange reserves of China amount to 2.033 trillion US dollars while the size of China is 9.597×10^6 km2 which is 9.5 trillion m2. The size of China is including water areas which makes sense given the enormous water pollution (e.g., rivers).

Dividing these two ridiculously big numbers gives a ridiculously small number: 0.21 dollar cent per m2. Even if Chinese pollution would “only” amount to 1% of its immense size – or 1/1000 – then the outcome of $ 0.21 would only be multiplied by 100 or 1000.

Obviously, I should also include air pollution (in m3) and I should have been using cubic metres of soil as waste may be well hidden under the soil. Contamination of ground water will further increase the number of cubic metres that will once need to be cleaned.

However, what is the use of decreasing the $ 0.21 to a whatever lower number ?? No country will ever be able to clean up pollution with such an expense per m2. Even when multiplied by 100 or 1,000. Technology should of course help driving down future clean up costs. Inflation works the other way around however.

The real beneficiaries of this situation are the customers to whom China have been supplying for years. It is very clear that the cost price never ever allowed for a clean manufacturing process. Business ethics and greed do not go well together. Après nous, le déluge.

In my opinion, China’s sovereign wealth is very much different than the public view. This will have immense consequences once it becomes the new public view.

I reiterate again what Abraham Lincoln once said: You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.

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