The determinant effect of domestic politics on international climate negotiations: China’s two-level game in providing carbon reduction

By Xiajun Ge

Introduction

The Intergovernmental Panel on Climate Change (IPCC), composed of the world's top scientists, recently re-emphasized the dangers of climate change and the urgency of reducing greenhouse gas emissions (Harvey, 2023). They pointed out that more than 3 billion people worldwide live in places highly vulnerable to climate disruption. Additionally, the extreme weather caused by the El Niño phenomenon has increased the demand for global cooling and heating, resulting in continued growth in carbon emissions in 2022 (IEA, 2023). Due to the tragedy of the commons, the earth's inhabitants continue to exploit the planet at the expense of the environment. Given these circumstances, the provision of carbon reduction or climate change mitigation is exceptionally significant. As a result, climate change is a global challenge that concerns every single individual and state. However, the level of effect might vary depending on where they live. In general, carbon reduction brings non-excludable welfare to the global population, meaning carbon reduction is non-rivalrous because one state's reduction will not cause others' losses. Based on the features of this international public good, the provision requires collective actions and shared responsibilities among the international community. 

However, carbon reduction faces the same problem as other public goods like education and public health: undersupply (Chin, 2021). To achieve a sufficient supply of these goods, international organisations and states have been making efforts to clarify the allocation of responsibilities among different actors through negotiations. This essay mainly focuses on using two-level game theory to explain the role of China in international climate negotiations and the specific actions to mitigate climate change. To mitigate climate change, it is crucial that China bear primary carbon reduction responsibilities because of its tremendous quantity of carbon emissions and the increasing capabilities proved by the rapid growth of its GDP and national power (Maizland, 2021). China’s trajectory follows the historical trend of economic development in today’s industrialised countries, which has caused copious amounts of carbon emissions in the past few centuries. Many scholars have offered quantitative evidence to prove the positive correlation between economic growth and carbon emissions in the short run (Osadume, 2021). During recent decades, China has faced the dilemma of balancing the provision of carbon reduction with national economic development. According to the two-level game of Robert Putnam (1988), China's behaviour on climate change, including its position on climate change international negotiations and its degree of commitment to mitigation, needs to consider the influence of both international and domestic political factors. This paper first provides a historical overview of China's role as an emitter and contributor to carbon reduction. By observing its changing role in different stages of climate change mitigation, different attitudes toward providing carbon reduction will be reflected. Next, international factors that can effectively impact China are analysed to understand different voices from multiple players at the international negotiating table. The essay further elaborates on the demands of domestic politics and stresses their importance. Comparing these two layers, this paper argues that, despite China's progressive contributions to climate change, the international community should not expect their expectations to be satisfied, especially at the expense of China's domestic politics. 

Background – the changing attitude of China in climate change mitigation

From the founding of New China in 1949 to the announcement of reform and opening up in 1978, China experienced heavy losses in economic power, such as the Great Leap Forward and the Cultural Revolution. Domestic politics during this time paid most attention to class struggle within the party and socialist economic construction. Overwhelmed by self-preoccupation, the CCP did not participate in international carbon emission reduction negotiations, nor did they make many international initiatives or multilateral negotiations related to trade or other aspects.

Starting with the opening-up, Chairman Deng Xiaoping announced economic development as the primary goal of China. As one of the developing countries, China stated that industrialised states should shoulder the burden of climate change mitigation as they have already enjoyed the benefits of development through having been heavy emitters in the past. Developing countries should have the right to develop. However, to expand its existence and gain more recognition as a newly built state, China aimed to have more interactions with the international community by actively participating in multilateral negotiations. In 1993, China participated in the ratification of the United Nations Framework Convention on Climate Change (UNFCCC) (United Nations, 2023). Under this environmental treaty, China promised to take action to tackle climate change challenges, indicating China's understanding of the urgency of carbon emission reduction issues and the need for action. Domestically, China's Agenda 21, passed by the State Council in 1994, proposed improving energy efficiency and conservation as a strategy for sustainable development (Zhang, 2014). At the beginning of the 21st century, the rapid development of China's economy has also brought a series of environmental pollution problems. In this context, President Hu Jintao proposed the "Scientific Outlook on Development" in 2003 as a major strategic thought of the CCP. This proposal covers the basic requirements of adhering to a civilized development path with sound ecology, building a resource-saving and environment-friendly society, and realizing the harmonious development between man and nature (Liu, 2012). A further improvement in China's attitude towards climate mitigation can be witnessed as a result of this domestic proposal. At the international level, China's main arguments in international climate negotiations relate to advocating for financial and technical support from developed states. This is evidenced by China signing the Copenhagen Accord with the United States and other countries in 2009. This accord is not legally binding and cannot force countries to reduce emission requirements and targets. Instead, it serves as a global consultation platform for advancing the cooperation process in the field of climate change. The Copenhagen Accord establishes the financial and technical assistance provided by developed countries to developing countries and the establishment of adequate financial and technical cooperation mechanisms (Chen, 2010).

Throughout the 2010s, awareness of climate pollution in China further progressed. In 2014, the index of PM2.5 in the Beijing-Tianjin-Hebei (Jing-Jin-Ji) region occupied headlines on media platforms (World Bank Group, 2020). After identifying it as the outcome of burning fossil fuels, China realised the importance of developing new energy sources for sustainable development. As a result, domestic carbon reduction policies and projects started to form. An example of such a project would be the Wudongde Dam, the world’s 7th largest hydropower station, which was constructed in 2015. The Wudongde Dam’s annual power generation can save 12.2 million tonnes of coal, equal to 30.5 million tonnes of carbon reduction (National Energy Administration, 2021). In the same year, on the international stage, China signed the Paris Climate Change Summit, which legally bound itself to a series of emission reduction commitments. For example, China committed to restricting its CO2 emission peak before 2030 and complying with the shared goal of limiting global warming below 2 degrees every year (Liu & You, 2021). 

In recent years, China has taken increasingly important and active roles in the provision of carbon reduction. Great achievements, like the vigorous development and utilization of clean energy, will continue to promote the cause of carbon emission reduction. President Xi Jinping of the People's Republic of China delivered an important speech at the general debate of the 75th session of the United Nations General Assembly, stating that China will achieve carbon neutrality by 2060 (You, 2021). Additionally, since China's current largest source of carbon emissions comes from the power sector, the government has been operating a national emissions trading scheme (ETS) since 2021, requiring large emitters to account for emissions and setting emission quotas for companies based on emission intensity. This includes a subsidy for companies that generate an emission surplus, which is expected to stimulate a subsidy surplus of 360 million in 2022 (Tan, 2022). This has positively impacted the green transformation of different industries and enterprises in China.

China's stance and actions on international negotiations and climate change mitigation changed from development-centric to an emphasis on sustainability. It is significant that the actions taken within the territory align with the increasing commitment to international negotiations. This consistency indicates that China has a preference for domestic politics over international pressure in the two-level game.

International Pressure

The international pressure on China primarily originated from its current image. In 2006, China replaced the US as the largest carbon emitter (Vidal & Adam, 2007). Additionally, China is expected to contribute more to mitigating climate change due to its sizeable economic scale and population base. Because of this, China faces more international pressure to reduce carbon emissions. 

The first major international pressure source comes from the least-developed and small-island developing countries. Due to their geographic positions and underdeveloped economies, they are highly vulnerable to climate change and have greater incentives to push the agenda of international climate negotiations and the allocation of responsibilities to more developed countries. However, the individual influence and voice of these states are restricted. As a result, they often choose to unite to form a coalition based on common goals. By establishing international organisations and platforms to conduct dialogue with other more substantial players, they can enforce pressure and appeal for more actions. For example, in COP27, the Alliance of Small Island States (AOSIS) included 39 member states. AOSIS re-emphasised the responsibilities of China for being the largest emitter and requested a loss and damage fund to compensate for the loss caused by carbon emissions (Worth, 2022). Though China rejected it during the meeting last year, the pressure from these states will only increase as carbon emissions continuously threaten their survival.

China’s current ambitious stance on carbon emissions can be explained because Beijing regards its performance in environmental protection governance as part of the US-China rivalry. When Trump withdrew the United States from the Paris Agreement, China saw the chance to obtain leadership in multilateral climate change processes and global climate change governance (Haas, 2017). However, as another vital player in this game, the United States is unsatisfied with burdening its historical responsibilities for so long after recognising and accepting its role in causing climate change. In March 2023, the US House of Representatives discussed and passed a motion, with 450 votes in favour and 0 against, to remove China’s label as a “developing state” (Queripel, 2023). Besides the intention to cancel preferential policies provided by international organisations to China based on its developing identity, the motion from the US also seeks to push China to comply with more international obligations, including providing global public goods. The US hopes that China’s efforts on carbon reduction and new energy development can expand from the domestic sphere to the international community, including providing financial and technical support to other “real” developing states. 

Besides external pressure, China also attempts to cultivate an image of itself as a responsible leading power. Therefore, China seeks to actively participate in all fields of international initiatives. Regarding international climate negotiations, China’s ambitious stance and active participation in carbon reduction contribute to a positive reputation, which might entitle it to take the lead in standard-setting. In 2021, the 26th UN Climate Change Conference of the Parties officially defined climate change as a global security threat, highlighting the urgency and importance of providing for carbon emissions (United Nations, 2021). As a globally responsible power, China has the opportunity to demonstrate its leadership and commitment by addressing climate change, which would enhance its legitimacy as a great power among the international community. 

Domestic Politics

Just as countries differ in the extent to which they provide international public goods because of their national priorities and preferences, different interest groups within China have different preferences about how much carbon emissions should be allowed (Yale, 2023). In China, provincial leaders are the subject of analysis instead of private companies because the influence of the private sector on the government's decision-making is very limited in China's political system. However, China’s decentralised administrative system gives local leaders high amounts of authority, making their participation crucial in the provision of carbon reduction. China’s central government primarily focuses more on long-term gains and national development, especially after Xi removed limits on the presidency (BBC, 2018). Because of this structure, subnational officials prefer short-term benefits to help them achieve better political performance. The average term of a local leader in China is 3.8 years (Hong, 2017), and considerable economic growth through the exploitation of local resources is the most visible indicator of political success to help them move up in the cadre system. Therefore, there needs to be political incentives for leaders who work in resource-rich provinces to support carbon emissions reductions; otherwise, they will continue to exploit local resources for personal gain. It can be seen from the graph below that China's mineral resources are abundant but unevenly distributed across regions. In resource-rich areas like Shanxi, mineral resources are at the heart of local economic production. In regions like this, where they can achieve higher GDP and revenue growth from labour-independent natural resources, they consider providing public goods unnecessary, as local officials can still achieve significant political performance instead of relying on public opinion from local citizens. Thus, at the national level, China needs to balance the preferences of different interest groups, in this case the local government, and their divergent degrees of willingness to provide carbon reduction. 

The reliance of specific areas on carbon-emitting energy sources such as coal and oil determined China's position in international negotiations when economic development was the priority. However, the massive pollution costs accompanied by rapid economic growth made the topic of sustainability an unmissable presence. In addition to the decline in biodiversity, land desertification, and haze caused by atmospheric pollution, climate change has led to frequent extreme weather events, such as droughts and floods, in various provinces and cities in China, threatening the safety of people and property (Bao, 2009). Specifically, the major snowstorm in the south in 2008 made the government aware of the seriousness of ecological problems (Bao, 2009). Although the central government prioritised pollution control during the 17th National Congress, the public still expressed their opinion through protests against the lack of governmental action to address pollution. Calls for government action continue to be expressed through protests against economic development projects with high pollution costs, such as the Shifang Protest in Sichuan province in 2012, where students and residents staged a mass protest against a planned investment in a polymetallic resource processing project because it threatened the environment and public health (Su & Lv, 2012). Despite an initial crackdown on protests, the local government eventually compromised and terminated the project. This illustrates that although China is identified as an authoritarian regime, central and local leaders still listen to public opinion. 

The Chinese government has made several efforts to tackle climate change based on domestic pressure. These pressures also explain China's transition to more proactive attitudes toward carbon reduction in international negotiations. In 2006, the Chinese government passed reform policies, including the Renewable Energy Law of the People's Republic of China, to promote the use of non-fossil fuels. As a result, carbon emissions per unit of GDP were reduced by 20% from 2010 to 2016 (Sun 2016). The central government also aims to achieve the 2060 Carbon Neutrality Target by providing financial subsidies for renewable energy. The number of subsidies reached over 600 billion in 2021 (Sun et al., 2022), and in 2018, the PRC (People’s Republic of China) included the Environmental Protection Tax in the taxation system. Additionally, officials have increasingly discussed the idea of a carbon tax, which, according to the simulations (Wei et al., 2022), could effectively motivate industry to improve the efficiency of electricity generation and reduce carbon emissions. However, because of domestic pressure, the current environmental protection tax rate is relatively low, and the carbon tax has been delayed for multiple reasons. Green taxes require higher standards of industrial technology and procedures of production and operation, meaning companies need to accept the higher cost and massive resources also need to be invested in technological advancement (Wang et al., 2022). The Chinese central government insists on the implementation of an environmental protection tax because it can not only contribute to carbon reduction but also bring energy restructuring and productivity improvements (Li, 2021). The agenda of carbon taxes has been repeatedly pushed through with the expectation that they will help companies resist risk, improve product quality, contribute to a low-carbon economy, and ultimately achieve the domestic goal of sustainable development, but they have not yet been implemented (Wei & Dagar, 2022). 

Another factor in domestic politics that has influenced the carbon tax push and climate negotiations is China's current priorities in the post-COVID era. Although China has maintained slow economic growth during the epidemic, the country is still facing a real estate crisis, low employment rates, and other domestic pressures. COVID-zero policy stagnated the domestic economy with declining national consumption, internal demand, and confidence in the market. The growth rate of 3% was the lowest since opening and reform, which is deemed unacceptable by the current leaders (Ruwitch & Feng, 2023). Under these circumstances, the recovery of the domestic economy and GDP growth became a priority for China (Lee, 2022). Carbon reduction and other international contributions also became sidelined at this point, as they mainly contribute to long-term development. Domestic leaders are urgently seeking immediate achievements to reflect good performance and regain confidence instead of long-term investments in sustainability. 

Two-level game: the dominance of domestic politics 

Many argue that two-level game theory does not apply to China because there is no domestic conflict of interest as a result of China’s one-party system and authoritarian regime (Feng, 2021). However, from the evaluation above, we can conclude that different stakeholders and interest groups in China are represented by local governments sitting behind the chief negotiator. One important feature to consider in a two-level game is the size of the winsets, a collection of strategies or decisions that increase the possibilities of reaching the desired goals. China’s win-sets to achieve international agreement are relatively large because domestic ratification of agreements rarely encounters opposition. However, resistance will still be expected when core interests or fundamental rights are violated. For example, when citizens’ health was threatened by the negative consequences of increasing carbon emissions. Therefore, public opinion plays a more important role in decision-making than expected. China is also progressive and gradual in its domestic goal-setting and allocation of responsibility for carbon reduction, with a strong focus on meeting domestic political needs. China often creates the impression that it has small win-sets as a negotiating strategy to help gain more bargaining power. For example, in nearly every speech at climate conferences and negotiations, Chinese spokespeople list the achievements and state that China has already made significant efforts to combat climate change within its constraints. Other players would assume the potential gain of China is little, and therefore China will have more capacity to defend its national interests. 

The current stance of China on the international negotiation table is the result of balancing the needs of both domestic and international levels, prioritising domestic politics. To maintain its image as a major responsible power, China promised at COP27 to fulfil its obligations and provide continuous carbon reduction. By adopting a proactive approach and taking action on carbon emissions, China can enhance its reputation and image in the international arena. However, domestic politics require China to prioritise economic recovery. Therefore, China refuses to pay for environmental damage in other developing countries and instead tries to place the blame on developed states based on their historical responsibilities.

Another argument against applying a two-level game is that China's action on climate change is purely a response to international pressure. The state itself focuses on economic growth and not on climate change; hence, one of the main reasons why China implements climate mitigation strategies is due to its desire to expand its influence and legitimacy as a great power. However, looking at the substantial and large-scale efforts on carbon emissions and environmental protection, it is not convincing to interpret those actions simply as a compromise to international pressure. In the two-level game, international negotiations affect domestic politics (Kroll & Shogren, 2008). After witnessing global attention to climate change and seeing the statistics of predicted damage in the foreseeable future provided by professional scientists and international organisations, China's awareness of the importance of carbon reduction was raised. Participation in international climate negotiations allowed China to exchange voices with other players and understand other nations' negotiating positions. In the 2000s, when multiple negotiations focusing on the damage of carbon emissions were conducted multilaterally, China also started to measure its own energy structure and emission quantities to form domestic climate governance. Nevertheless, the impact of international pressure is limited, especially when it conflicts with domestic politics or priorities. In the early years of international negotiations, China shifted its attention to the historical responsibilities of developed countries and prioritised domestic economic development. In the later years, when the economy was growing rapidly, domestic pollution prompted China to focus on providing carbon emission reductions. The domestic demand for carbon reduction and environmental protection is the determining factor in China's demonstration of high commitment in international negotiations. The environmental tax and a range of Chinese efforts have been interpreted by many as a compromise in response to international pressure. However, on closer examination, they are all beneficial to China's long-term sustainable development. The response to international pressure is an added benefit. 

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