Green price tag for China's boom

BHP Billiton recently announced the highest corporate profit figure in Australian history, due substantially to China's appetite for resources.

China's unique combination of high technology and skills, strong work ethic and low labour costs is turning it into the manufacturing powerhouse for the world. China's extraordinary economic growth is underpinning Australia's and not just by buying our commodities. China is now our second-largest market for merchandise exports, behind Japan, but ahead of the US.

We exported 38 per cent more merchandise to China last year than to the US. Our exports to China are growing faster than those to the US - even with the US free trade agreement in place.

The manufacturing revolution in China is flooding the world with cheap, high quality manufactured goods, lifting millions of Chinese out of poverty, and transforming their country. The changes are dramatic. One can often not see more than 800 metres in Shanghai due to pollution. Twenty-five years ago Shenzhen, near Hong Kong, was a fishing village of a few hundred thousand people. Today it is a city of 12 million. This is growth at a staggering rate - Wollongong growing into three Sydneys in 20 years.

Real living standards are rising around the globe because China continues to produce ever more goods ever more cheaply. China's growth is doing more today to free people from degrading poverty than any rich country's aid budget. Yet is anyone asking questions about the impact of China's manufacturing brilliance on the environment?

My father had one electric drill for the first 25 years of my life. I can visualise it still: grey, large, heavy, with a keyed chuck. I have owned three drills in the past six years.

I bought a new rechargeable one last week, made in China. The old drill, made in Japan, was fine except for the battery. But the new drill came with two batteries and was substantially cheaper than the one replacement battery. So I bought it. A great deal for me, but a lousy one for the environment.

The cheapness of the new drill means instead of just a new battery, a whole new drill with case, accessories and two batteries has been made, and the old drill has gone into landfill.

Millions of consumers around the globe are making such choices every day. How often lately have you bought something just because it was cheap?

We have more kids' toys than we need, because they are often so cheap it is easier to say yes. I'll buy my boy the car he wants for $2 when I'd think again if it were $6. Yet making the dye-cast metal car has the same impact on the environment, in terms of resources consumed and pollutants produced, irrespective of its price.

The Chinese manufacturing revolution raises two issues.

The first is personal. Maybe we need to ask ourselves different questions before buying things these days. Instead of asking: "Do I want this, and can I afford it?" perhaps we should ask: "Do I want this and can the environment afford it?"

The market mechanism does not reflect the full price of what we are buying. The prices of the resources used do not necessarily reflect that they are running out. The pollution generated in the manufacture is typically not priced at all. And when the product eventually goes into landfill, that cost is typically heavily subsidised by government.

The second issue is global. China's rapid growth is likely to continue long into the future. Most economists agree China's GDP will surpass America's sometime in the 2020s. Yet global resources are finite; and the capacity of our ecosystems to absorb pollution and landfill are also finite.

A world in which each Chinese person has the environmental impact that each Australian and American has today is utterly unsustainable. Yet this is precisely where we are heading: and it is no answer to ask the Chinese to remain poor and undeveloped to lessen the impact on the environment. That is unfair and impossible.

Research is needed into the environmental impact of China's manufacturing revolution and into creative policy responses to the environmental challenges posed by our over-consumption.

In the meantime, my choice to buy a new drill instead of a replacement battery was the wrong one, certainly for my grandchildren, if not for me. Perhaps it is time, for each of us, to think about what we buy, and why, and about what the full price of each purchase really is.