Saturday, November 8, 2014

CHINA'S ADDICTION EXPLAINS THE NEW WORLD ECONOMY

 

How China’s ivory addiction explains the new world economy
By Ana Swanson, New York Times
November 7, 2014

Tanzania, the world’s biggest source of illegal ivory, lost an average of 30 elephants per day in 2013, contributing to a trend that has seen half of the country’s elephant population die in the last five years, some to natural causes and others to poaching, according to a report released Thursday by the London-based Environmental Investigation Agency. Fueling these killings is an upsurge in demand for ivory in China, the world’s largest market for illicit elephant tusks. The trafficking chain between Tanzania and China has become the biggest conduit for illegal ivory in the world, according to the report.

Why exactly is China fueling the ivory trade? Here are the five top reasons.

1. China’s poorly regulated system for legal ivory sales. China views ivory carving as part of its cultural heritage. It has sanctioned a small industry for products made with ivory obtained in legal auctions. A complex system of permits regulates the companies that carve and sell ivory, including some that are state-owned.

In practice, however, this legal industry cloaks a massive black market. Those who have obtained government licenses can generate huge profits by laundering illegal tusks into the stock of more expensive legal ivory. This makes it virtually impossible for buyers to distinguish between the two.

Just like with the drug trade, there’s a long-running debate about whether establishing a regulated market or banning the product entirely would be more effective at limiting the ivory trade. Some argue that banning ivory in China would drive up the price in the underground market and fuel poaching. Yet, even in its current state, China’s system provides camouflage for an illegal industry.

A new report that accompanies this video by the Environmental Investigation Agency says Tanzania is the hub of a resurgent elephant poaching industry thanks to growing demand for ivory in China. (Environmental Investigation Agency)

2. Growing ties with Africa and porous Chinese borders. China became Africa’s largest trading partner in 2009. Ivory accompanies shipments that move between China and Africa, buried in containers of dried fish, plastic waste and grains.

People traveling between Africa and China also can carry ivory in their luggage. More than one million Chinese, from businessmen to factory workers to chefs, have moved to Africa over the past decade. Chinese officials say that 90 percent of ivory seizures involve individuals concealing ivory in their suitcases.

According to the EIA report, diplomatic channels are also often used to smuggle ivory. The report alleges that that bags of ivory were loaded onto Xi Jinping’s own plane during a visit to Tanzania in March 2013, presumably without the Chinese president’s knowledge.

3. Gift-giving and corruption. The ivory trade has close ties to Chinese practices of giving expensive and exotic trinkets, which is sometimes linked to business and official corruption.

One United Nations report suggests that Chinese demand for ivory might be driven, counterintuitively, by the high price of ivory -- just like other expensive status symbols like watches and diamonds.

The chart below shows the price and quantity of imports into China and Hong Kong have increased as the price has gone up. The report offers two explanations: that mammoth ivory is subject to some kind of speculative price bubble, or that it is what economists call a “Veblen good.” (A Veblen good refers to any product for which demand rises as its price goes up -- contrary to the law of supply and demand.)

If this is true, the Chinese government’s current crackdown on corrupt government officials might help to dampen sales of ivory as it chills questionable behavior -- as it has done for watches and luxury cars.

4. The suppression of the Chinese environmental movement. Toxic air, water and food products mean environmental issues are increasingly on Chinese minds. However, limitations on free speech and collective organizing have greatly hampered a nascent environmental movement.

Environmental organizations and activists are subject to government surveillance and hampered by restrictive laws; some have been arrested or detained for inciting social unrest.

5. Lack of knowledge about the ivory industry. Many Chinese who buy ivory may not realize that the trade is illegal, or that elephants have to be killed in order to obtain their tusks. And Chinese thinking on animal rights is still an early stage compared to Western countries.

This is changing, slowly. Both dog ownership and Buddhism, which values animals and often involves vegetarianism, are increasingly in vogue among Chinese urbanites. And public education about endangered animals is on the rise.

Yao Ming, the Chinese former star of the Houston Rockets, joined with WildAid, a San Francisco-based charity, to make a series of successful commercials in 2011 that urged Chinese to stop eating shark fin soup. Yao and WildAid partnered again on a documentary that was screened in China in August about the mass slaughter of the ivory trade.

In the long run, this kind of education is probably the most effective way to reduce China’s massive purchases of ivory, since it pushes down the demand for the good. This may be far more effective than just attacking supply, since limiting ivory imports will only push the value of them up.

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