Pollute at Your Own Risk: the Political Economy of Environmental Protection in China

May 29, 2015 3:30 PM

At least one third of China’s 641 million internet users may have viewed the documentary Under the Dome, a viral condemnation of the government’s policies and the behavior of state-owned enterprises, mixed with pedagogical elements that explain the effects of pollution on human health. At one point in the documentary, Chai Jing, the investigative reporter behind the exposé, even refers favorably to Tokyo, where she says only 6% of commuters drive to work.

But even before the release of Jing’s call to arms, there appeared to be interesting movement in the spirit of new policies. Earlier this year, the Supreme People’s Court announced new rules that should make suing of polluters easier. There is also growing pressure to make pollution monitoring more incentive-based.  Up to this point, it has not been in the local governments’ short-term interest to properly measure polluters’ activities or to hold large emitters accountable.

According to Xinhua, a law stating that “responsible persons would face up to 15 days detention if their enterprises dodge environmental impact assessments and refuse to suspend production after being issued a ban” should come into effect this year. This is not an obvious deterrent, but it is encouraging that tools other than shaming through social media, and arbitrary enforcement of existing environment-related laws (China's Environmental Protection Law hasn’t been modernized since 1989), are becoming available.

Another interesting development where political communication intersects with environmental policies are official efforts to manage citizens’ growth expectations. Cities like Shanghai, for example, have completely abolished economic growth targets which could allow a shift in focus toward greener policies. According to Reuters, the Chinese leadership “has called for greater tolerance for slower growth, and a handful of provinces and municipalities have lowered their goals for 2015 growth after missing targets last year.” In principle, a gradual slowdown of the economy may be easier for the political leadership to justify if it can point to environmental progress. But improving the public health side of Chinese cities will be extraordinarily difficult.

Living dangerously in China’s cities

More than 60% of the largest cities in China are already confronting water scarcity. Desalination initiatives are in place – one mega-facility to be completed in three years will remove salt from 120,000 tons of seawater on a daily basis and pipe 50,000 tons of potable water to Beijing. Uneven access to clean water is estimated to slow down the economy by two percentage points of the rural gross domestic product, according to the World Bank.

Pollution is a notorious challenge: more than 250,000 people in China’s capital cities died prematurely because of air pollution, according to one recent report. The World Bank, in collaboration with an expert team from China calculated that the costs of premature death due to air pollution amount to close to 4% of GDP. Reuters has reported that just “eight of the 74 cities monitored by the ministry [of environmental protection] met national pollution standards last year, according to official data” that was published in February.

As some commentators have observed, the way that China handles the growth of its cities will have global implications: "The choices China makes in the years ahead will have an immense impact not only on the long-term viability, livability, and energy efficiency of its cities, but also on the health of the entire planet. Unfortunately, much of what China is building is based on outdated Western planning ideas that put its cars at the center of urban life, rather than its people." That is Peter Calthorpe’s concern, articulated in 2012, and equally valid today. Former U.S. Treasury Secretary Henry Paulson believes that “controlling pollution and a stable urbanization plan are two of the biggest issues facing China’s economy” and all available evidence suggests that his assessment is correct.

According to one study from the MIT Joint Program on the Science and Policy of Global Change, air pollution ten years ago already cost the Chinese economy more than $100 billion on an annual basis. While the costs of missing work and paying for health care can be added up, the less observable costs, such as lower stamina, and increased fatigue, are harder to quantify, so the true costs of environmental degradation are higher than most statistics suggest. Economist Patrick Chovanec also warns that “protests taking place at chemical plants [over health risks from toxic emissions] across the country have led to the closure of several factories, which is bound to have an impact on production and growth.”

Words are not enough

When the economic costs, the human toll, and the citizens’ demand for a cleaner environment are added together, the government’s promises to do something are hardly surprising. But to what degree will verbal commitments be translated into tangible change on the roads, factory floors, and construction sites?

Recent history is not necessarily encouraging. Already eight years ago, one government report asserted that “China has set the goal of building a resource-conserving, environment-friendly society, and is endeavoring to coordinate energy development with environmental protection.” This articulation of policy objectives by China’s National Development and Reform Commission was, in hindsight, not realistic at the time.

To be fair, the recent announcement that Beijing will close its remaining coal power plants, the pledge to close more than 1,200 coal mines around the country, a suspension of the 32 billion yuan Xiaonanhai dam construction, the movements away from growth targets, the shifts in the legislative landscape, the central bank’s proposal to support green investment, and initiatives on the local level to combat congestion and pollution all indicate that there is a will to correct the course.

As cities are experimenting with local carbon markets, end-number license plate policies (which ban cars from the roads on some weekdays depending on whether the car’s license plate ends with an even or odd number), license plate lotteries in Beijing and even license plate auctions (which have raised 5 billion RMB in revenues in 2011 in Shanghai), Chinese citizens have shown a remarkable tolerance for policies that hurt their wallets. As the air improves, the contents of those wallets will be safer – and, as Ms. Chai might say, easier to see.

More From

Jan Zilinsky Former Research Staff

More on This Topic

PIIE Briefing

Ha Jiming (China Finance 40 Forum) and Adam S. Posen (PIIE), editors

January 2019
PIIE Briefing

Ha Jiming (China Finance 40 Forum) and Adam S. Posen (PIIE), editors

June 2018