During the frantic final two days of negotiations at Copenhagen over the weekend, Barack Obama and Hillary Clinton set a clever trap for Chinese premier, Wen Jiabao. Having just announced that the US would establish and contribute to a $100bn international fund by 2020 to help poor nations cope with the challenge of climate change, they added a non-negotiable proviso: all major nations would first be required to commit their emissions reduction to a binding agreement and submit these reductions to "transparent verification".
Everyone in the room knew that "all major nations" primarily meant China. From the beginning, China has steadfastly refused to accept outside monitoring and verification of its progress toward any promised targets. But the 11th-hour US proposal immediately isolated China. The onus was now on Beijing to agree to standards of "transparent verification". If it did not, poorer countries standing to benefit from the fund would blame China for breaking the deal.
Clinton's proposal had cunningly undermined Beijing's leadership over the developing bloc of countries. In anger, Chinese officials responded that such demands were an insult to China and would be a violation of Chinese sovereignty and national interests. Wen had been outflanked and was angry, even leaving the conference centre and subsequently snubbing Obama in a couple of previously planned bilateral and multinational meetings involving the US president.
Which raises the question: why the extreme response? China has long been engaging in a dangerous game of manipulating important economic numbers and concealing domestic commercial realities. Despite all its progress over 30 years, Beijing is afraid to shine too bright a light in dark places, and even more afraid that outsiders might be allowed to do so. In important respects, the government actually embraces opaqueness as a perceived advantage. The thought of "transparent verification" was seen as the thin end of the wedge, allowing outside experts broad authority to peer into the workings of middle China.
Teams of international economists, scientists, inspectors and statisticians roaming China to gather information on carbon emissions and reduction initiatives would have been unprecedented. In promoting China, Beijing projects an image of order and competence to the world. In parts of its wealthier coastal cities, China is that. But these international teams would undoubtedly discover exactly how dysfunctional the heart of the country really is. They would see first hand and report back how China's 45 million local officials remain the most formidable obstacle to improving transparency in China's sprawling economic structure protecting their turf, defending their privileges, arbitrarily enforcing the law, and when it comes to economic performance blatantly cooking the books. Beijing still wants to assure outsiders that it remains in charge even though in important respects it is not.
This lack of accountability and transparency strikes at the heart of China's credibility in any global climate change agenda. Wen would not want foreign experts reporting to political masters in America and Europe that Beijing's capacity for compelling local officials and locally managed, state-controlled enterprises some 120,000 companies and countless other subsidiaries to implement climate change initiatives is extremely low. This would simply strengthen suspicions that decentralised China cannot actually honour future commitments despite promises that it intends to.
Then there is the further problem of cheating in current and future carbon reduction schemes. Developed countries need to feel confident that incentives offered to developing countries to cut emissions (in both absolute terms and emissions relative to economic growth) can be verified. Indeed, earlier this month, the UN body in charge of the clean development mechanism a proviso under the Kyoto protocol allowing developed countries to purchase carbon offsets for funding "clean energy" developments elsewhere suspended approvals for dozens of Chinese windfarms over suspicions that China had held back the building of planned windfarms and deliberately lowered previously allocated subsidies to make the wind farms eligible for earning credits industrial policies that would disqualify these farms from benefiting under the scheme. China has so far received carbon credits worth more than $1bn, which is almost half of the total issued under the UN-run programme.
China's government has vigorously denied that it is attempting to illegitimately manipulate the scheme. But the point is that there is no system for independent and external verification; nor is Beijing proposing to allow one. Meanwhile, China had previously pledged that 15% (and possibly 20%) of its energy would come from renewable sources by 2020 and that special efforts would be made to close dirty power plants and impose world-class vehicle efficiency standards and proposed various other measures to cut emissions. Again, developed countries suspect that China will receive plaudits and concessions from any future carbon emissions regime without actually keeping its promises.
Alas, given the desperation to announce a "deal", Obama backed down. The so-called "Copenhagen accord" merely compels developing nations to self-report their emissions every two years and allow outside scrutiny of the data. China is off the hook for the moment, but whether this is enough to satisfy the US Congress when deciding whether to approve any future binding agreement is another matter.