China requires more than RMB 80 billion (US$ 10 billion) in annual environmental investments, of which roughly half will have to come from overseas, according to State Environmental Protection Administration (SEPA) head Xie Zhenhua. Enterprises have been told they must meet state emission standards by the end of next year or be shut down. Major cities and tourist areas are to meet air quality standards by the same date. Priority technological needs include energy-efficient building materials and other energy-conserving technologies, fueling infrastructure for natural-gas-powered vehicles, coal-desulfurization technology and technologies to control agricultural runoff and organic waste. Xie complained about lack of U.S. Government grants and soft loans to help China acquire U.S. environmental technologies.
During a meeting with a visiting trade delegation from Idaho September 24, Xie said 20 years of 8-percent economic growth had created numerous environmental problems in China. The government’s current goal is to maintain economic growth of 7 percent while keeping pollution at 1995 levels.
SEPA recently announced that all industrial enterprises in China must meet the new national pollution standards established in 1998 by the end of next year or be shut down. Currently, fewer than half meet the standards, according to SEPA. Compliance is highest in the east (48.8 percent) and lowest in the west (23.5 percent). Major cities, provincial capitals and tourist areas must meet air quality standards by the same date. To date, only Shenzhen has been given a passing grade (others may be in compliance but have not been evaluated by SEPA yet). This policy has been dubbed shuang da biao (reach two targets).
Xie mentioned the following as the environmental problems requiring most urgent attention:
Since most air pollution is energy-related, Xie said China must shift its energy structure from the current heavy reliance on coal more toward oil and gas while at the same time burning its coal more cleanly and efficiently. He said desulfurization of coal had proven to be cost-effective. Reducing total energy use through conservation is also essential, he said, noting specifically that more energy-efficient building materials could have a major impact.
Xie observed that, while China may have adequate environmental legislation in place, enforcement is another matter altogether. The two greatest obstacles, he said, are funding and technology. In a September 23 article in the English-language China Daily, unnamed SEPA officials noted that reform of China’s state-owned enterprises (SOEs) presented a third major obstacle to implementing environmental regulations. Large, financially weak SOEs are among China’s worst polluters. Their equipment is outdated and they don’t have the resources to modernize or implement pollution controls. The SEPA officials said some local officials have not given adequate support to SEPA’s work, fearing that cracking down on SOE polluters will hamper economic growth and affect social stability by causing large-scale layoffs. It is no surprise, then, that Shenzhen — a free-market special economic zone (SEZ) bordering Hong Kong with few if any SOEs — is the only Chinese city to meet air quality standards to date. Shenzhen is one of 11 "model" cities that are to meet the standards a year ahead of schedule (i.e. by the end of 1999). Other coastal SEZs, such as Xiamen in Fujian Province and Zhuhai in Guangdong Province, are also among the model cities.
Xie said that all levels of the Chinese Government recognized the imperative for sustainable development. He said total environmental spending by enterprises and all levels of government now surpassed 1 percent of GDP, reaching RMB 100 billion (US$ 12 billion). To put this number in perspective, the World Bank estimates China needs to spend 2 percent of GDP annually over the next 20 years just to improve its air quality to the level that prevailed in the United States in the early 1980s.
Xie said 20 percent of this year’s special economic stimulus package was being devoted to environmental projects. He was apparently referring to a RMB 60 billion Chinese Treasury bond issue intended to stimulate demand through public works spending. However, the September 16 China Environment News (Huanjing Bao) quoted State Development Planning Commission Vice Chairman Li Rongrong as saying RMB 6.7 billion — or 11 percent — of that bond issue was being spent on environmental projects. Li added, however, that 93 percent of a separate RMB 34.3 billion bond issue for basic infrastructure construction would be devoted to completing already-initiated urban transit, water supply, gas supply, waste-water treatment, solid-waste management and other such projects that could be considered environment-related. Also, Li said at least part of a RMB 15.3 billion bond issue to subsidize interest rates for technological upgrades at SOEs would allow those firms to produce urban rail and environmental protection equipment that China currently must import. Li added that RMB 2 billion (US$ 242 million) would be spent this year on 123 projects to treat waste water going into the three key rivers and three key lakes, raising the total water-treatment capacity in those watersheds to 11.4 million tons per day.
Xie told the Idaho delegation that Beijing was converting part of its bus and taxi fleets to run on compressed natural gas (CNG) or liquefied petroleum gas (LPG) to reduce emissions. But he said construction of fueling stations for them was proceeding slowly. According to Embassy sources, Beijing expects to have 14,000 CNG/LPG-powered taxis and 3,000 buses on its roads by the end of this year.
Xie noted that China already had extensive environmental cooperation with Canada, Europe and Japan, totaling about US$ 3.3 billion. But he said U.S. cooperation was much smaller in scale, which he attributed to the lack of U.S. Government grants and subsidized loans to support exports of U.S. environmental technology to China. Xie cajoled the U.S. government and business sectors to cooperate better. Typically, he said, when U.S. environmental delegations visit China they are either all government officials or all business people, whereas when the Swedish environment minister, for example, recently visited SEPA, 30 Swedish CEOs came along. He was pleased, however, that the Idaho delegation was an exception to this pattern.
Speaking to reporters later in the day, Xie lauded Beijing’s efforts to improve its air quality for the October 1 National Day celebration, marking the 50th anniversary of the founding of the People’s Republic of China. Air quality has indeed improved in recent weeks, primarily because: 1) the weather has turned cool with the coming of autumn; and 2) the municipal government imposed a temporary ban on diesel-powered vehicles in the central city and ordered certain factories within the city to shut down until after the celebration. This goes to show that authorities can improve air quality — at least temporarily — when the political will is present. China’s political leaders do not want Beijing’s customary smog to obscure the view of jet fighters overflying the National Day parade or present a bad image for the international TV cameras. But Xie stressed that Beijing, while it has made a good start at controlling pollution, still does not meet national air-quality standards and is among the 10 most polluted cities in the world.