China Faces Its Environmental Crisis: “Grave Concerns?- Part 2

A February 1999 report from U.S. Embassy Beijing

Summary: The Summer 1998 Yangzi River floods demonstrated that the costs to China of neglecting infrastructure and damaging the environment are rising. China has only a narrow safety margin. Pollution will grow more serious until 2010 but energy and water shortfalls will last decades longer. In this second part of a summary translation of “Grave Concerns? two Chinese Academy of Social Sciences Environmental and Development Institute researchers examine a China approaching environmental crisis. As its economy grows, China faces increased pressure, including green trade barriers, from the developed countries. Uneven development, the shirking of official responsibility, and very poor cooperation among ministries hinder sustainable development efforts. Rapid development, environmental crises and regional disparities also make political modernization much more difficult. The greatest problem of all is the neglect of the political and economic dimensions of sustainable development in favor of the purely technical. Short sighted policy making and ineffective enforcement of laws and regulations are not just the failures of individuals but are inherent in the present system.

“Grave Concerns -- Problems of Sustainable Development for China?[Shendu Youhuan -- Dangdai Zhongguo de Kechixu Fazahan Wenti] is a volume in the influential China’s Problems Series. “Grave Concerns?was published by Today’s China Publishing House in October 1998. Authors Zheng Yisheng [STC: 6774 2496 3932] and Qian Yihong [STC: 6929 5650 4767] are the Vice Director and the Secretary-General of the Environment and Development Research Institute at the Chinese Academy of Social Sciences. A thread running through this book like some other books in the “China Problems Series?is that many of China’s problems stem not just from the actions of bad individuals or bad policies but from deep structural problems in China’s political and economic system.

Page numbers refer to the first edition of “Grave Concerns?published as a volume of the China’s Problems series by the Today’s China Publishing House [Jinri Zhongguo Chubanshe] in October, 1998. Additional background information on Chinese environmental issues can be found among the ninety unclassified Embassy Beijing reports posted on the U.S. Embassy web page at http://www.usembassy-china.gov/english/sandt/index.html Some informal translations from the Chinese press bearing on the Chinese environment (including Summer 1998 Yangzi floods) are available at http://www.usembassy-china.gov/english/sandt/sandsrc.htm

SUMMARY TRANSLATION BEGINS

Our Common Danger

The Summer 1998 Yangzi River floods, the biggest Yangzi River basin flood since 1954, reflect China’s environmental crisis in microcosm. Experts had warned of the great danger of natural disaster there. Even as some people give their lives to save flood victims, other people are creating (without realizing it) the conditions for more natural disasters. The flood was caused chiefly by the ecological deterioration of the Yangzi River basin. Zhuang Guotai, director of the Ecology Section of the State Environmental Protection Bureau, said that the peak flood rate at Yichang on the Yangzi of 60,000 cubic meter per second was no record; it was no more than the twenty-third highest flow level recorded. The causes of the flooding included: [Note: For an overview of the Summer 1998 Yangzi River floods, see Yangzi River Floods and the Environment End note.]

China Enters 21st Century With A Narrow Safety Margin

This is the critical time for making the needed changes in these trends. It is also what some economists call the “golden age of Chinese economic growth?-- the years 1990 to 2010. Growing economic inequality and especially the growing gap in incomes among urbanites (4X ratio between the top and bottom ten percent) as well as between the city and the countryside is an alarming trend. [pp. 151 ?154]

How the Crisis Will Erupt

“Environmental deterioration is expressed through the worsening of socio-economic contradictions within society. In some countries, this is the main way in which environmental deterioration appears. If we do not pay attention to this and only consider environmental/ecological deterioration itself and its direct effects, we can miss the big picture such as ecological disaster in a mountain village or the health effects of pollution on an urban population. These are serious problems, but still far from adequately reflect the very great threat that environmental degradation poses to the sustainable socio-economic development of the entire society.?

[Note: For an example of the vicious cycle of poverty and desertification at work in Ningxia and Inner Mongolia see PRC Desertification: Inner Mongolian Range Wars and the Ningxia Population Boom End note.]

?.. The environment is one of a country’s key economic characteristics ... The acceleration and the accumulation of environmental change in individual countries and on the global scale will have ever greater effects on the competitiveness and social stability of many countries. The developing countries lag far behind the developed countries in their capacity to exploit and sustain resources (including the capacity to use resources very efficiently). While unsustainable development for developed countries means something that doesn’t meet the test of long-term sustainability, for developing countries, the problem looms as a very pressing problem of poverty and survival. There is an old Chinese saying, “He who is not concerned with far-off dangers will surely face a present danger?[Ren wu yuan luu, biyou jinyou]. But the developing countries today face both present dangers and far-off dangers. If the present crisis is not resolved, there will be no tomorrow in which to confront the long-term danger.?

Environmental Problems Complicate Social, Economic Problems

“In short, China has the greatest environmental pressure of any country on Earth. In these circumstances it is not reasonable to discuss the long term danger facing all of mankind with the Chinese who are themselves one-fifth of humanity. The question is, will these environmental problems make China’s economic and social problems even more difficult to solve??[pp. 154 - 155]

Disaster-Prone China Faces Rising Environmental Costs

In 1990, one hundred members of the Chinese Academy of Sciences warned that many natural disasters occur throughout China. China is one of the most disaster-prone countries on Earth. The frequency and extent of natural disasters continue to climb. With economic growth, the economic costs of environmental pollution and ecological damage are also rising sharply. In the year 2020, air pollution alone is expected to impose an annual cost equal to 13 percent of China’s GDP. [pp. 156 - 158]

Sooner or Later “Compulsory International Environmental Assessments?Will Come

As global economic integration proceeds into the Twenty-First Century, resource-poor China must consider its own comparative advantage on the world market. But there are many uncertainties. Many foreign observers, including Vaclav Smil (author of “China’s Environmental Crisis? [Translator's note: See Environmental Scarcities, State Capacity and Civil Violence: China on  the University of Toronto web site for reports by Vaclav Smil and other scholars on the environment and state capacity in China. End note]  and Lester Brown, are concerned at the coming very large export demand from China for food, oil, iron ore, and other ferrous minerals. What price will China have to pay for these raw materials as the international competition for these resources becomes more acute? [p. 159]

“The developed countries will eventually demand, regardless of whether their demand is reasonable or not, that the developing countries reduce their emissions of greenhouse gases and other pollutants with regional and global impacts. .. This trend is becoming more and more serious. More and more developed countries will want to put restrictions on China as the “leading source of pollution?

And there is no doubt that as the Chinese economy grows, the developed countries will put more pressure on China. More and more people around the world are saying, “Chinese determination to modernize is the greatest threat to the global environment? To the Chinese people this is the “voice of the strong?and represents to a certain degree the selfish interests of the strong. We must protect the “right of development?principle contained within the idea of sustainable development. Nonetheless, a Chinese insistence on not making fundamental changes in its own production and consumption patterns and holding to its own standards and rules would be unrealistic. [p. 159 ?160]

Green Trade Barriers

Green trade barriers are becoming more common. Increasing pollution in Chinese coastal waters and new European and Japanese health standards have sharply reduced Chinese exports in some categories such as shellfish market to Europe. Chinese products which do not meet ever stronger regulations lose access to foreign markets. Trace pesticides in Chinese cotton have resulted in losses of millions of dollars in exports to Europe. China in 1997 had 134 products with environmental standards but far fewer than Germany which has 7500 commercial products (40 percent of the total) with an “Environmental Blue Angel?standard.

Some of these barriers, which arise not just from environmental concerns but out of attempts to protect the economic advantage of developed countries within international trading rules, are becoming more common. [pp. 160 ?164] The “technical trade barriers accord?of the WTO Uruguay round stipulates “These rules do not prevent any country from taking necessary measures to protect the lives and health of people, animals and plants and to protect the environment? The ISO 14000 environmental management series standards were published in draft by the International Standardization Organization (ISO) in September 1996, so now sustainability has become a selling point in international trade competition. [pp. 190 ?194]

The rapid increase in the Chinese work force by 15 million workers each year not only makes redundant workers more common but also reduces the economic incentive to convert to labor saving technologies which are often more environmentally-friendly as well. [pp. 165 ?166]

China: Unique Regional Disparities Make Problems Worse

The uniquely large environmental, population, economic and cultural disparities in China are getting larger and merging into a single large problem. Poor, crowded countries probably have the least tolerance for income disparities. Political and economic problems arising from unequal incomes and regional disparities are important parts of the Chinese sustainable development problem. China has little room to maneuver when faced by an array of associated problems including increasing disputes at all levels over scarce resources, disrespect for law, growing local protectionism, and backsliding and slowing up in efforts to establish the rule of law.

The Chinese Microcosm: Developed China vs. Developing China

China is becoming unfortunately a microcosm of the whole world. The developed parts of China have become concerned about the environment, the poorer provinces cannot afford it. And so polluting industry moves from developed to developing China. Will China someday have islands of environmental splendor amid environmental squalor? If China does not pay attention to the problem of inequality, a vicious cycle of ecological decline could create inter-regional battles for resources and create tensions between the developed ethnic Han areas and the economically backward areas in which the minority people live. If economic development does not increase society’s ability to solve these increasingly serious social problems, then China will face a life and death crisis. China has a lower capacity than the developed countries to absorb environmental problems and problems of social inequality.

Rapid Development Makes Political Modernization Difficult

Political modernization has been much more difficult for developing countries than for the western countries which modernized much more slowly. Developing countries are faced with several crises simultaneously where western countries face only one crisis as a time. The result of the multiple crises developing countries face has often been severe instability. China has especially serious concerns since it is approaching its absolute limits in several areas ?resources, population and the environment. These pressures have become increasingly severe during the rapid growth of China’s economy.

PRC Sustainable Development Not a Luxury But a Necessity

Sustainable development is not something just for the rich countries. If there had never been a Rio Conference, China would have had to choose sustainable development. The excuses must stop. Some of the popular excuses for not taking sustainable development seriously include:

Quick Fixes, Ineffective Policy, Shirking Responsibility

Short term, short-sighted fixes predominate in China. China’s dams are designed only to withstand the largest flood that comes in 10 or 20 years. Overdrawing ground water in water-short areas is another problem. Short-sighted policy making is very common in China. Water pricing is a classic example. Chinese water prices are far below cost and the failure to collect sewage fees means that once expensive water treatment plants are constructed, they are too expensive to operate. Short-sighted policy making and the failure to enforce rules is not a matter of the failure of individuals but of an entire system in which poor coordination and the avoidance of responsibility is inherent in the present system that encourages this behavior. [pp. 174 - 175]

When the Crisis Comes Along, Which Department Handles It?

Sustainable development is a trans-regional, cross-departmental, and cross industry problem. Yet in China sustainable development policies and enforcement regularly fall victim to regionalism, the narrow views of a government agency or a particular field. This makes it easy to ignore a large, uncertain problem or problems that cross ministerial lines. The Summer 1998 Yangzi River flood was one such case. Although some specialists, considering El Nino and heavy snows on the Qinghai ?Tibetan Plateau, predicted the floods, there is very little money available for cross-disciplinary work that is invaluable in natural disaster prediction. Parts of important problems are handled by separate ministries that refuse to cooperate.

Officials Ignore Big Issues, Seek Influence, Foreign Trips

No one analyzes problems systematically. Many officials are obsessed with personnel problems, foreign trips and making an impression on the boss and so forget big cross-boundary issues. Foreign experts who helped draft “China’s Agenda 21?recall how dozens of ministries submitted separate work reports that were very hard to merge. Some people joke about this saying, “The people care about the big issues, the leaders work on small details? Important issues such as Yangzi River flooding risk estimates which require input from geologists, hydrologists, meteorologists and other experts from many different agencies are difficult to address. Many officials only want to report good news so they bury the bad news. Some newspapers love to get a foreigner to say how great China’s economic growth has been. All the while some other countries with problems much less serious than China, such as Japan, warn their people of the seriousness of the economic problems confronting their country. [pp. 172 ?178]

The Clash Between New Development Views and Reality

Sustainable development is much discussed by academics and the top leadership but it hasn’t reached the working level. The environmental protection bureaus at every level are still very weak in any confrontation with agencies and departments proposing development. This imbalance is much more pronounced outside of the big cities. Very often the environmental protection bureaus have no say at all in development projects.

Sustainable development has in practice been very often just a slogan. The division of labor between organizations means in fact a divorce between departments working on overlapping areas so that environmental protection work is ineffective. Yet the practicality of projects should also be considered. In some of the propaganda and implementation of sustainable development in China over the last few years it can also be seen that some proponents of sustainable development in China do not chose the most appropriate way to deploy resources. [pp. 181 ?183]

Some progress has been made. It was largely plant upgrades during the 1980s, particularly in heavy industry, that prevented Chinese pollution from increasing proportionately with economic growth. Cost-benefit analysis should be done to determine the most efficient way of reducing pollution.

Why Is Environmental Work Ineffective? Political and Economic Realities are Often Ignored

“Why are people and work units unwilling to do what needs to be done but are often quite eager to do what they shouldn’t do??This often happens not for scientific or material reasons but because social, political and economic realities are often ignored. In particular, the individual advantage-seeking behavior of people in society and the network of people’s relationships need to be better understood in this regard. Even if something makes sense economically, it may not be practical for reasons of political advantage. Take for example, the case of interest groups working against the public interest for their own private interest or the innumerable instances of interpersonal exchanges for private advantage.

[Note: Many books and articles have appeared over the last year about corruption arising from the structure of the political and economic system. See the press clippings at http://www.usembassy-china.gov/english/sandt/sandsrc.htm for examples. End note]

This ignorance of political and economic realities is a consequence of China’s long neglect of the social sciences. It shows the limits of making policy purely on the basis of technical considerations. In foreign countries expertise from both the natural sciences and the social sciences is applied to these problems. China is far behind in this respect. The big research projects focus too much exclusively on discussions among experts on the environment, ecology and energy efficiency. Yet problems of sustainability and development are in the end human problems. These problems must be addressed.? [pp. 184 ?185]

Plant Renovation is Expensive - Where’s the Money?

Foreigners don’t understand what a tremendous investment would be required to replace the heavily polluting industrial plants of China. And they are unwilling to help by transferring technology to China. China must finance these changes by the earnings of these plants. Unlike the Western countries during past decades, China cannot accumulate capital by sucking dry foreign colonies or by relying on cheap Middle Eastern oil supplies. Among the voices of those on the international scene calling for environmental protection there are some who want to stop China’s economic development. [p. 186]

Developing Countries Catch Up Amidst Environmental Crisis

The developing countries have higher and faster growing populations than the developed countries and a lower living standard. The developed countries are determined to achieve a developed country standard of living. Yet the environmental capacity of the world is limited and a global environmental crisis is already taking shape. Today’s developed countries already used up the most easily obtainable resources during their own path to development. So the conditions of development have already been irrevocably altered.

China Nears Outer Limits: Its Development Path Must Differ

China as a country that is nearing the absolute limits of that its resources and environment can support cannot just follow the same developmental stages that the developed countries of today followed. [pp. 186 ?190]

Pollute First, Clean Up Later: Good Excuse But We Better Not

The experience of the developed countries themselves demonstrates the Kuznets cycle ?that only when development reaches a certain point does the environmental protection capacity of a country become great enough to reverse environmental deterioration. When developed countries try to force developing countries to adopt strict environmental regulations, the developing countries can respond that by limiting our development, these restrictions will delay the development of a strong environmental protection capacity. “Yet the developing countries should also consider how new technologies and knowledge can help them take a short-cut and avoid the Kuznets inverted U-curve that shows pollution increasing with incomes but later declining with even higher incomes [p. 182]. The developing countries may be able to avoid repeating the pollute first, clean up later experience of the western developed countries? [pp.197 ?199]

Conservatism and Inertia Block Life Cycle Costing

New production philosophies have appeared which recognize the interactions between the mode of industrial production, society and the economy. Life Cycle Analysis (LCA) can help a company reduce material inputs and move to clean production. This method requires closer cooperation and information sharing among suppliers since the manufacturer wants every part and every step of the production process. “The decision making process for this means of production extends to individual consumers and communities?so the boundaries of the company are greatly extended. The greatest obstacles to the move to cleaner production are conservative attitudes and inertia in industry. [pp. 202 ?203]

Sustainable Development Means Rejecting Consumerism

For the developed countries, the switch to sustainable development involves changes in individual and social values and accepting a standards of living lower than what they have already achieved. This collides with individualism and some other cultural values. The developing countries need to rid themselves of the very often expressed desire to “copy and import western technologies and make the westerners pay for it.?Developing countries must reject the dream of developed country consumerism. Yet a drop in living standards can be avoided in the developing countries by more efficiency resource utilization. “Some countries try to solve their pollution problems by cleaning up at the end of the production process. But doesn’t work since technology can’t accomplish that. What is needed to create cleaner and higher efficiency processes at every step of the production process in China. This simply can’t be accomplished through foreign assistance.?[p. 203]

The Multinationals: Key Support for Sustainable Development

Industrial development in the developing countries not only threatens the environment but this development can lead to transformations that can help solve the problem.?[pp. 203 ?206] Investments by foreign multinationals in the developing countries are the major source of capital for sustainable industrialization. In many cases the environmental standards followed by these multinational companies far exceed the requirements of the host developing country government. [p. 204]

END OF PART II OF SUMMARY TRANSLATION