The United States is in the midst of its third major debate on nationwide ballistic missile defense-the first culminating in the 1972 ABM Treaty and the second sparked by President Reagan's "Star Wars" speech in 1983. This time the Cold War is over, the objectives for the defense are limited, and technology has advanced to the point where some options may be technically feasible.

However, intercontinental ballistic missiles (ICBMs) are not the primary threat to the United States, as events since September 11 demonstrate. Other homeland defense programs, especially civil defenses against bioterrorism, are more important. Yet emerging missile states may acquire ICBMs some day. To the extent that this is a concern, diplomatic efforts can limit the spread of ballistic missiles, and deterrence can dissuade their use. National missile defense (NMD), then, is insurance against the relatively unlikely event that ICBMs will be launched against the United States.

If the United States decides to deploy a limited NMD, the questions become what type and how much? A midcourse NMD system (one that attempts to intercept missile warheads as they fall through outer space) of the sort proposed for deployment in Alaska is the most technically mature option and would probably work well enough against emerging ICBM threats to justify limited deployment, assuming that the threat materializes. However, such a defense should contain only about 20 interceptors to minimize adverse political reactions from Russia and China. Over the long run, midcourse defenses may be vulnerable to sophisticated countermeasures. Therefore, the United States should place greater emphasis on land, naval, and air-based boostphase intercept options (defenses that attempt to intercept the ballistic missile while its rocket motors are still burning) because they are more robust to countermeasures and they pose relatively little threat to Russia and China. Space-based boost-phase NMD systems have the advantage of global coverage; however, they are technically more challenging, probably more expensive, and more destabilizing.

China and the United States share a new and rapidly expanding border-the Internet. It is a border that neither country fully understands. The possibility for misunderstanding is great because the Internet is not only transforming the relationship between the two countries, it is also transforming the countries themselves. It could be argued that China is going through the greater change. Unlike the past where information was mediated by the State, the mass media, and the work unit, Chinese citizens with Internet connections and a command of English have unprecedented direct and immediate access to information and people around the world. Because of abundance of Chinese language content, Chinese who can only read Chinese still have access to a wealth of information. The Chinese government has imposed its own unique regime on the networks in China that connect to the Internet. Though the United States and China both participate in the Internet, the regimes that they use to govern their networks are very different.

This paper examines the impact on global warming of development and structural changes in the electricity sector of Guangdong Province, China, together with the possible effect of international instruments such as are generated by the Kyoto Protocol on that impact. The purpose of the paper is three-fold: to examine and analyze the data available, to put that data into an explanatory economic and institutional framework, and to analyze the possible application of international instruments such as CDMs in that locality. Our plans are to supplement this work with similar work elsewhere in China.

This research contributes to two groups of existing studies. First, several researchers have studied China's energy industry, including the utility sector, in the context of global greenhouse gas emissions and abatement policies. Not much attention has been paid to the electricity sectoral development at the sub-national level and its regional differences. Yet, important decisions are taken and important constraints operate at the sub-national level. Second, since the Kyoto Protocol provided for the Clean Development Mechanism (CDM) as a policy instrument to involve developing countries in carbon emissions abatement in 1997, a number of studies have focused on the operation of CDM. Applying CDM is challenging because its rule of additionality requires that a "baseline" estimate be made of what developing countries, including China, would do to reduce carbon emissions in the absence of CDM. Minimizing moral hazard and other incentive problems is a daunting task. The studies to date have focused on discussions of general embedded problems and desirable principles for applying the additionality rule. However, how to identify baseline factors in specific economies and evaluate their impact on the energy sector decisions in terms of transaction or institutional costs remain unsettled questions.

This study is a first step towards filling that gap. By investigating Guangdong's electricity sector, we hope to highlight new characteristics of Guangdong's electricity market and institutions, which may have been neglected from large model and highly aggregated approaches. At the same time, by examining the economic and institutional features of the decision making process in Guangdong's electricity sector, we hope to get a better understanding of the factors affecting possible baselines and to draw some preliminary implications for CDM and other carbon abatement policy instruments. This study may also provide a reference for other regional analyses and permit some preliminary implications for baseline and abatement policy studies to be drawn.