The End of the Chinese Miracle?

Good article on the problems facing China as it continues to push for double-digit GDP growth. Environmental costs are not factored into the GDP, just like the external cost which businesses impose upon society is not factored into their costs of producing. While Jagdish Bhagwati would like you to believe that environmental damage is negligible and overblown, the exact opposite is likely more true.

The good news is that concern for the environment rises with GDP per capita - as people have more material wealth, they begin to value their health and environmental beauty, which is relatively scarce, more. Thus, you're seeing a lot more environmental concern in China right now. The Chinese government, paradoxically, seems perhaps more economically aware than the US government, and they are working to slow down environmental damage. With their power they can do a lot. One might think that with China's authoritarian regime, it could stop environmental damage faster than the US -- but that's probably not true. The best policy will always be subsidies for clean energy and energy conservation and taxes on pollution.

For those looking to cash in on the possible clean-energy boom, the solar stocks are definitely worth watching: JASO (a favorite of mine), FSLR, SPWR, STP, and even little DLSL, which does solar water heaters -- possibly the most cost-efficient solar if subsidies are eliminated. These stocks are down on speculation that Germany, the main purchaser of solar power, will cut subsidies. Right now it's risky to hold them, as any day Germany could cut subsidies and you'd see a severe drop in them...that could be buying time. I expect JASO and others to jump on earnings, although it's hard to say.

PUDC washes coking coal and FTEK provides a fuel additive which reduces nitrous oxide pollution (N2Ox) among other things.

Disclosure: Long JASO for a trade.