Can China clean up its act?

PHOTO: Free-Photos

Asit K. Biswas and Cecilia Tortajada

POLICY FORUM | October 18, 2017

After decades of staggering growth, China faces air, water and soil pollution problems on an unprecedented scale. Asit K Biswas and Cecilia Tortajada take a look at what the country’s policymakers are doing about it.

Since its market reforms in 1978, China has recorded an average annual growth rate of around 10 per cent, the fastest growth rate ever recorded over three decades in human history.

From 2003 to 2015, after joining the World Trade Organization, China’s gross domestic product increased from less than US $1.7 trillion to over $11.1 trillion, and its per capita GDP rose from less than US $1,300 to over $8100.

This phenomenal economic growth, though, has come with the serious environmental costs of intensive air, water and soil pollution. According to the World Health Organization, China is the world’s deadliest country for air pollution, contributing to more than one million deaths in 2012. Only India (600,000 deaths) comes anywhere close.

Water pollution is also pervasive. In 2014, 15.7 per cent of the country’s groundwater was found to be ‘very poor’, and another 44 per cent ‘relatively poor’. Only 3 per cent of urban groundwater sources are classified as ‘clean. In the North China plain, covering some 400,000 square kilometres, 70 per cent of groundwater is unfit for human contact.

Air and water pollution are visible. But soil pollution is a hidden problem that has not received proper attention. Heavily contaminated soil can have lush and green vegetation in the same way as healthy soil.

Cleaning soil pollution is expensive and takes decades. The removal and cleaning of only 1200 cubic metres of soil, over 6.5 hectares, in Love Canal, USA, took 21 years and millions of dollars.

Chinese National Survey data released in 2014 indicated that 16.1 per cent of all soil and 19.4 per cent of farmland were contaminated by chemical pollutants and dangerous metals like arsenic, cadmium and lead. The area of land contaminated amounts to 250,000 square kilometres – bigger than the entirety of the United Kingdom. Some 35,000 square kilometres of land is so polluted that no food crops can be grown.

With the effects of environmental pollution in China becoming more devastating and visible, the country’s government this year strengthened its Environmental Protection Law.

The new law stipulates that local officials who may be complicit in environmental transgressions can be fired or demoted, business leaders who do not comply with the regulatory requirements to control pollution can be detained for 15 days, and violators whose actions can be considered to be criminal can be prosecuted.

Companies violating environmental standards may have their utilities cut, equipment confiscated, or could be shut down.

The new laws are much tougher. Previously, pollution fines were so low that it was cheaper for factories to pay the fines than take corrective actions. Equally, enforcement and implementation of the laws were weak and often non-existent.

In addition, the central government had limited real power over the local government officials who are on the frontline of implementing environmental compliance. The main performance indicator for those local government officials until the law change was economic growth. As polluting companies were often important to the local economies, government officials had a strong incentive to turn a blind eye to environmental violations.

This laissez-faire attitude started to change when, in 2014, Premier Li Keqiang said: “We will declare war on pollution and fight it with the same determination as we battled poverty,” and environmental pollution has become “nature’s red-light warning against the model of inefficient and blind development.”

Then, in July 2017, President Xi Jinping informed all the ministers and governors that environmental pollution control would be one of the country’s top three priorities in the coming years along with poverty reduction and managing financial risk.

Shortly thereafter, an army of 5,600 inspectors from the Environment Ministry and Communist Party’s anti-corruption watchdog and personnel unit were dispatched to the provinces to see how the local officials are protecting the environment. The first of four rounds of inspection started last July.

During the first three rounds, some 18,000 polluting industries were fined over US $131 million and more than 12,000 officials were disciplined.

The inspection teams included officials from the Party who can punish municipal and provincial officers for not taking their environmental tasks seriously. These punishments would adversely impact on their career prospects because party rules would bar them for promotions for 6-24 months.

By internalising environmental protection measures in party cadres’ performance evaluations, officials hoping for promotion have become especially sensitive towards taking environmental issues seriously.

The courts have also started discussing measures against polluters. In July 2016, a court in Shandong province imposed an unprecedented penalty of US $3.3 million on a glass manufacturer for emitting toxic gases containing 255 tonnes of sulphur dioxide, 589 tonnes of nitrogen oxides, and 19 tonnes of dust particles, between November 2013 and February 2015, one month before the factory was ordered to be closed.

The strong actions of the Chinese Government are forcing low-end polluting industries to either become more environmentally efficient or shut down.

Because of these new environmental safeguards, there will have to be some policy adjustments. Many of these policy adjustments were outlined in the 13th Five-Year Plan, 2016-2020. These include the introduction of measures to reduce all types of environmental pollution with specific targets, increase efficiencies of use of energy and other resources, and improve access to healthcare and education.

These measures may reduce annual growth, but the focus will be on the quality of growth to achieve a “moderately prosperous society” by 2020.

Over the short term, there will undoubtedly be some disruptions to supply chains. However, the emphasis on environmental management will accelerate the establishment of new industries for monitoring, protection and other management services. This, over the medium–term, will more than make-up for any short-term losses in employment and economic activities caused by a rebalancing of the economy.

It should be noted that China really has no other option but to meet the current environmental problems head–on. If business as usual policies continue in coming years, the economic, social and health costs will become prohibitive.

As Western countries have learnt, it is far cheaper, both economically and socially, to live in a clean environment rather than in a polluted one.

China grew economically at an unprecedented rate. Don’t be surprised if it also cleans up its environmental pollution at a similar unparalleled rate.

Asit K. Biswas is the Distinguished Visiting Professor, Lee Kuan Yew School of Public Policy. National University of Singapore, Singapore. Cecilia Tortajada is a senior research fellow at the Institute of Water Policy, Lee Kuan Yew School of Public Policy, National University of Singapore.