U.S. Assistant Attorney General John Demers discussed the China Initiative and the process for assessing risks posed by Chinese acquisitions or the business operations of Chinese companies in America.
Council on Foreign Relations, "CFR Backgrounders: China's Environmental Crisis," April 25, 2014
China's environmental crisis is one of the most pressing challenges to emerge from the country's rapid industrialization. Its economic rise, which has averaged around 10 percent annual GDP growth for the past decade, has come at the expense of its environment and public health. As the world's largest source of carbon emissions, China is responsible for a third of the planet's greenhouse gas output and has sixteen of the world's twenty most polluted cities. Life expectancy in the north has decreased by 5.5 years due to air pollution, and severe water contamination and scarcity have compounded land deterioration problems. Environmental degradation cost the country roughly 9 percent of its gross national income in 2008, according to the World Bank, threatening to undermine the country's growth and exhausting public patience with the government's pace of reform. It has also bruised China's international standing as the country expands its global influence, and endangered its stability as the ruling party faces increasing media scrutiny and public discontent.
A History of Pollution
While China's economic boom has greatly accelerated the devastation of its land and resources, the roots of its environmental problem stretch back centuries. Dynastic leaders consolidating territory and developing China's economy exploited the country's natural resources in ways that contributed to famines and natural disasters, writes CFR's Elizabeth Economy in The River Runs Black: The Environmental Challenge to China's Future. Moreover, China's Confucian roots helped spur policies that often promoted man's use of nature, hindering the development of a conservation ethos. "China's current environmental situation is the result not only of policy choices made today but also of attitudes, approaches, and institutions that have evolved over centuries," Economy writes.
It wasn't until the 1972 United Nations Conference on the Human Environment that China began to develop its environmental institutions. It dispatched a delegation to the conference in Stockholm, but by then the country's environment was already in dire straits that were further exacerbated by economic reforms of the late 1970s. Spearheaded by Deng Xiaoping in 1978, these reforms boosted China's industrial output at an average annual rate of more than 11.4 percent.
The legacy of decentralization characterized by Deng's reforms remains at the heart of China's environmental struggles today. The reforms diffused authority to the provinces, creating a proliferation of township and village enterprises (TVEs) to encourage development in rural industries. In 1997, TVEs generated almost a third of the national GDP. But local governments were difficult to monitor and therefore seldom upheld environmental standards. Today, environmental policies remain difficult to enforce at a local level, where officials often retain economic incentives to ignore them.
China's modernization has lifted hundreds of millions out of poverty and created a booming middle class. In some ways, the country's trajectory of industrialization is not unlike those of other modernizing nations, such as Great Britain in the early nineteenth century. But experts point to the nation's staggering size and pace of its growth, noting that its environmental effect on the world is far greater than that of any other single country. "It's on a scale and speed the world has never known," says Jennifer Turner, director of the China Environment Forum at the Woodrow Wilson Center.
How Bad Is It?
China's energy consumption has ballooned, spiking 130 percent from 2000 to 2010. In January 2013, Beijing experienced a prolonged bout of smog so severe that citizens dubbed it "airpocalypse"; the concentration of hazardous particles was forty times the level deemed safe by the World Health Organization. Later that year, pollution in the northern city of Harbin shrank visibility to less than 50 meters. China Daily reported that December was the worst month in 2013 for air quality, with more than 80 percent of the seventy-four cities with air-monitoring devices failing to meet national standards for at least half the month. Based on a 2012 Asian Development Bank report, less than 1 percent of China's 500 largest cities meet the WHO's air quality standards.
Coal has been the main culprit in the degradation of air quality. China is the world's largest coal producer and accounts for almost half of global consumption. Coal is also the source of as much as 90 percent of the country's sulfur dioxide emissions and half of its particulate emissions. Mostly burned in the north, it provides around 70 percent of China's energy needs. However, emissions levels from coal plants alone in 2011 potentially contributed to a quarter of a million premature deaths that year, according to a Greenpeace analysis. Another troubling trend compounding air problems has been the country's staggering pace of urbanization, with the government planning to move 70 to 75 percent of China's population to cities between 2000 and 2030. China is the world's largest emitter of greenhouse gases, having overtaken the United States in 2007.
Yet experts cite water depletion and pollution as the country's biggest environmental hazards. Overuse, contamination, and waste have produced severe shortages; approximately two-thirds of China's roughly 660 cities don't have enough water despite the fact that China controls the river water supply of thirteen neighboring countries and has dammed every major river on the Tibetan plateau. The impact is particularly felt in rural areas, where some 300 to 500 million people lack access to piped water. Industry along China's major water sources has also polluted the supply heavily; in 2005, a plant explosion leaked around one hundred tons of toxic chemicals into the Songhua river.
The pace of contamination has garnered increased media attention: in March 2013, Shanghai came under scrutiny when roughly 16,000 dead pigs were discovered floating through the Huangpu River. Lack of waste removal and proper processing has exacerbated the problem; almost 90 percent of underground water in cities and 70 percent of China's rivers and lakes are now polluted. Combined with negligent farming practices, the water crisis has turned China's arable land into desert, which today claims around 27.5 percent of China's total land mass. Some 400 million Chinese lives are affected by desertification, according to the government, and the World Bank estimates that the overall cost of water scarcity associated with pollution is around 147 billion RMB, or roughly 1 percent of GDP.
Cost of Environmental Damage
Environmental depredations pose a serious threat to China's economic growth, costing the country roughly 9 percent (PDF) of its gross national income, according to most recent figures from the World Bank. China's Ministry of Environmental Protection calculates its own "green GDP" number, estimating the cost of pollution at around 1.5 trillion RMB, or roughly 3.5 percent of GDP, according to its 2010 figures. Due to the sensitivity of the topic, the ministry has only been releasing such figures since 2006, and intermittently.
Data on the public-health toll of China's pollution paint a devastating picture. According to a Global Burden of Disease study, air pollution contributed to 1.2 million premature deaths in China in 2010. In late 2013, an eight-year-old girl in Jiangsu province became China's youngest lung cancer patient; doctors attribute her illness to air pollution. Epidemiological studies conducted since the 1980s in northern China suggest that urban air in China causes significant health complications, including respiratory, cardiovascular, and cerebrovascular diseases. The pollution has also been linked to the proliferation of acute and chronic diseases; estimates suggest that around 11 percent of digestive system cancers in China may stem from unsafe drinking water. Human cases of the avian flu (H7N9 virus), which broke out in China in March 2013 and has claimed more than forty lives, were caused by exposure to infected poultry and contaminated environments.
China's neighbors, including Japan and South Korea, have also expressed concern over acid rain and smog affecting their native populations. In May 2013, government officials of the three countries added air pollution and climate change to a list of diplomatic issues for the region to solve. Moreover, a recent study reported that emissions from China's export industries are worsening air pollution as far as the western United States.
The damage has also affected China's economic prospects as it continues to pursue resources and pump investment into other countries. Its close economic partners, particularly in the developing world, face costly environmental burdens attached with doing business with China, note CFR's Economy and Michael Levi in their book on China's quest for resources, By All Means Necessary.
Environmental damage has cost China dearly, but the greatest collateral damage for the ruling Communist Party has likely been growing social unrest. Demonstrations have proliferated as citizens gain awareness of the health threats and means of organized protest (often the Internet). In October 2012, demonstrations against an $8.9 billion petrochemical plant expansion in the eastern city of Ningbo suspended the project. Several months later, anger boiled over in Shanxi province, where a factory spilled thirty-nine tons of toxic chemicals into local water sources. In May 2013, thousands of demonstrators gathered in the southwest city of Kunming to protest the building of a nearby chemical plant, which would produce half a million tons of a carcinogenic chemicals annually.
Economy points out that one of the most important changes in China's environmental protest movement has been a shift, beginning in the late 2000s, from rural-based protests to urban movements. The issue has worried the top leadership, which views the unrest as a threat to the party's legitimacy and authority. A February 2013 poll by People's Daily named the environment as one of the top issues citizens wanted addressed by the central government. By early 2013, public protests had succeeded in consistently gaining concessions from local governments, and in March 2013, Li Keqiang, China's new premier, pledged that his government would show "even greater resolve" in tackling China's pollution crisis. Such remarks from the central government reflect "a changing understanding within China about the relationship between economic development and societal wellbeing," Economy and Levi write. But experts say the jury is still out on the current government, which has shown more resolve in cracking down on public dissent. "It seems to me that environmental protests could well fall within the sphere of concern over threats to China's domestic security," says Economy.
What's Being Done?
The government has mapped out ambitious environmental initiatives in recent five-year plans, although experts say few have been realized. In December 2013, China's National Development and Reform Commission, the country's top economic planning agency, issued its first nationwide blueprint for climate change, outlining an extensive list of objectives to achieve by 2020. Since January 2014, the central government has required 15,000 factories, including large state-owned enterprises, to publicly report real-time figures on their air emissions and water discharges. And the government has pledged to spend $275 billion over the next five years to clean up the air. More recently, China's legislature amended the country's environmental protection law to allow for stricter punishments against companies or individuals caught polluting the environment.
China is also one of the biggest investors in renewables; its spending could total 1.8 trillion RMB ($300 billion) in the five years through 2015 as part of its pledge to cut its carbon intensity. According to its National Energy Administration, renewable energy sources comprised 57 percent of newly installed electricity-generating capacity in the first ten months of 2013. "China is also reaching out and partnering with international companies to jointly create technologies," says the Wilson Center's Turner.
The Internet has facilitated greater information transparency. Since 2008, the U.S. embassy in Beijing has issued pollution readings via a Twitter feed, a service that also spread to consulates in other major Chinese cities. In 2012, Beijing publicly demanded—to no avail—that Washington cease the practice. Later that year, it began publishing its own hourly data in seventy-four cities.
While policy implementation has been inconsistent, a thriving environmental NGO community has grown to push the government to stay on track. Tens of thousands of these groups—often working with U.S. and foreign counterparts—push for transparency, investigate corruption, and head grassroots campaigns. Friends of Nature is one of its oldest; Global Village and Green Home are among other well-known NGOs. Despite state support, these organizations inevitably face constraints from government fear that their activities could catalyze democratic social change. Beijing, for instance, has advanced an amendment to China's environmental protection law that would bar such groups from suing polluters. The central government has structured its efforts in much of the same way it has pursued economic growth, Economy writes, "by granting local authorities and factory owners wide decision-making power and by actively courting the international community and Chinese NGOs for their expertise while carefully monitoring their activities."
Yet some are sanguine about China's prospects. Despite the political reforms that will be needed to catalyze any real change in the environmental sphere, the public response to China's crisis has sprung some optimism about the future. "If there's any country in the world that can turn it around, it's China," Turner says. "The Chinese people believe they have a right to a clean environment. How can you not be optimistic about that?"
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