Environment: Inconvenient Truth or Opportunity?
For two decades China’s economy has rocketed along. With average annual growth exceeding 9% every year, the economy is doubling in size every eight years. China is on track to becoming a global trade and economic superpower. But there is a downside to the economic miracle. The nation’s environment has taken a battering. Massive industrial expansion, rapid urbanization, increased energy consumption and the proliferation of motor vehicles have placed a huge strain on China’s air, water and land resources.
Chinese and international commentators warn the situation has reached a crisis point.
China’s Environment Report Card
According to the World Bank (2004) China has 16 of the world's 20 most polluted cities and China’s Ministry of Water Resources admits 70 per cent of China's rivers and lakes are polluted; more than 300 million people rely on unsafe drinking water.
China is now the world's leading emitter of acid rain-causing sulphur dioxide and up to one third of the country is affected by acid rain. In 2005 Chinadischarged 26 million tons of sulphur emissions, an increase of 27% over 2000. The increase was largely caused by coal-burning power stations according to China’s State Environment Protection Administration (SEPA).
When it comes to green house gas emissions China is second only to the USA – and catching up fast. In May 2006 the World Bank reported that between 1992 and 2002 China’s greenhouse gas emissions increased 33 percent. The global CO2 increase during the same period was 15 percent.
The Costs
The economic and social costs of China’s environmental woes are mounting. International agencies estimate that environmental degradation is costing China up to 9 percent of its annual gross domestic product (GDP).
Other direct and indirect effects include loss of scarce arable land, reductions in crop yields, severe flooding, and increased death and illness from respiratory illness, especially in urban areas. The World Health Organisation warns that increasing levels of water and air pollution will generate huge public health costs for China.
The Government’s Response
China’s environmental woes are not the result of official indifference. Since the 1980s China has implemented a national framework of environmental laws and efforts have been made to improve air, water and soil quality. But Beijing has struggled to make inroads. A lack of resources, difficulties in enforcement at local levels, and the sheer speed of economic growth have undermined recent efforts.
The current Chinese leadership acknowledges development and growth must be sustainable. Premier Wen Jiabao has made green development a key theme of his administration’s policies. The extensive domestic media coverage of industrial toxic spills into Harbin’s Songhua River in late 2005 seems evidence that the central government is trying to exert pressure on industry and provincial authorities to implement more stringent environmental standards.
In 2006 Zhou Shengxian, head of SEPA, admitted efforts to cut sulphur dioxide and other pollutants were failing (China Environment News). Zhou said breakneck economic expansion had overwhelmed official efforts to cut emissions and energy use. ‘The central leadership is treating reductions in energy use and major pollutant emissions as two major hard targets - red lines that can't be crossed,’ said Zheng.
In the current Five Year Plan (2006-2010) China will outlay $USD 175 billion on environmental protection, which is more than 1.5 percent of the national GDP. Key areas include alternative or green energy generation, waste water treatment, waste disposal, and controls on emissions.
This heavy expenditure and government policy focus will see the environmental sector grow in scale and importance. Business opportunities for foreign investors, especially those with specialized environmental solutions and technologies will increase. Official estimates suggest the annual output value of China's environmental protection industry will exceed USD100 billion by the end of 2010, with a projected annual growth rate of 15 percent
With all eyes on Beijing for the 2008 Olympics, China is keen to demonstrate its green credentials. Officials cite the increased use of clean energy such as natural gas (now 57% of energy in Beijing), the closure and relocation of polluting industries such as the Shougang steelworks, and the adoption of the Euro III Environment Standard as evidence of their commitment.
Business Opportunities
Australia’s LNG industry has already been a major beneficiary of Beijing’s search for cleaner energy sources. The focus is now turning to Australia’s major reserves of uranium. Major potential also exists in other areas including solar and wind power, and clean coal technologies for China’s massive coal burning energy sector. Australia's acknowledged expertise across a range of environmental technologies and services is increasingly recognized in China. The success of the 2000 Sydney Olympics in adopting environmentally-friendly design elements is of particular interest as Beijing prepares for the 2008 Olympics. The capital’s reputation for poor air quality is a major source of concern. The city is increasing its reliance on clean energy resources, and relocating or closing down polluting factories. And if official sources are correct, there are signs of improvement. According to the China Daily Beijing had 64 percent of days with good air quality in 2005 - 36 percent higher than 1998 and the amount of sulphur dioxide dropped 29 percent compared with seven years ago.
(China Daily August 28, 2006)
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