China Makes the Environment a Priority

The recent announcement by US President Barack Obama and Chinese President Xi Jinping that the USA and China had agreed to curb greenhouse gas emissions by 2030 generated an extensive and diverse array of responses – from the enthusiastic to the outright dismissive.

But if nothing else, the agreement further underlines that China’s top leadership is putting climate change – and the environment – front and centre of its national and international policy agenda.

Critical is China’s official position that the unfettered economic growth of the past 30 years is unsustainable, and that China’s future growth pattern has to change. To dismiss the 2030 agreement and China’s domestic environmental policy agenda as empty rhetoric or of limited importance would be to ignore ample evidence that China is taking serious steps to tackle both its domestic environmental woes and the global issue of climate change.

China – The Dirty Facts

Despite the positives of three decades of rapid growth, new prosperity and lifting hundreds of millions of people out of poverty, China’s economic emergence has come at a huge environmental and social cost.

In early 2013 China was in the world headlines when air pollution in Beijing reached critical levels; called an “airpocalypse” – the concentration of hazardous particles was forty times the level deemed safe by the World Health Organization.The impenetrable fog of pollution made international headlines and generated an unprecedented domestic media and public backlash. Sixteen of the world’s twenty most polluted cities are in China, and poor air quality is endemic across the nation; rapid loss of scarce arable land continues, and the degradation of national water resources appears to be worsening. China is now the world’s biggest emitter of greenhouse gases, contributing one third of the global total. (NYT 14 Sept 2014; China’s Environmental Crisis by Beina Xu, April 2014, US Council on Foreign Relations)

The Cost to China

Economists estimate that pollution and environmental degradation now costs China 9% of its annual gross national income. And appalling urban air pollution is alleged to have reduced life expectancy in some areas of North China by up to 5.5 years. (NYT 14 Sept 2014; China’s Environmental Crisis by Beina Xu, April 2014, US Council on Foreign Relations)

The last decade has seen an unprecedented rise in the level of social concern and public protest over environmental issues in China. Both urban and rural residents have become involved in openly protesting on industrial projects and environmental problems.

When the PEW Research Center asked Chinese people in a 2008 survey to rate the severity of air pollution on a scale ranging from “not a problem at all” to a “very big problem,” 31 percent rated it a “very big problem.” In 2013, in a repeat of the PEW survey, that percentage had risen to 47. While these numbers tell us only so much, the trend is clear: environmental anxiety is spreading. (Cited in NYT 14 Sept 2014)

The Government Response

With pollution a serious brake on the economy, a growing source of domestic social unrest, and drawing international criticism, the Chinese leadership has taken a number of steps.

The US based Wilson Centre cites as an example the September 2013 State Council Pollution Action Plan. The Wilson Centre notes it is “very unusual for the government to announce a plan that does not coincide with normal five year planning cycle, but the extreme pollution clearly demanded decisive new steps.” The new plan requires Beijing, Shanghai and Guangdong to reduce fine particle density by 25, 20 and 15 percent respectively by 2017. (China Environment Series 12/ 2012-13 / Wilson Centre)

In early 2014 officials in Beijing declared a “war on pollution.” There has been an official overhaul of the country’s Environmental Protection Law – the first formal changes time since 1989. Some of the measures include strengthening the system for fining polluters, permitting some non-governmental organizations to bring legal action against polluters, and holding local officials accountable for the environmental quality of their regions.

The Chinese leadership has banned the building of new coal-fired power plants in key economic areas and will phase out coal use in Beijing by 2020. Trial carbon-trading programs have been introduced in Beijing, Shanghai, Shenzhen and Guangzhou. Caps have been placed on coal consumption in some highly polluted regions. The government has committed $277 billion to an air pollution “action plan” and $333 billion to a water pollution “action plan.” Steps have also been taken to restrict the number of cars on the road and improve vehicle-emission standards. Incentives are being offered to purchase of electric and hybrid vehicles. (NYT 14 September 2014)

China is also one of the world’s biggest investors in renewables, and investment could total 1.8 trillion RMB (USD $300 billion) by 2015 as part of a plan to cut 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’s Environmental Crisis by Beina Xu, April 2014, US Council on Foreign Relations)

While central government enactments like these are positive, commentators caution that the real the challenge is effective implementation of laws and regulations – often extremely problematic at regional and local levels where Beijing’s authority is lessened.

Opportunities for Australia

Austrade sees a wide range of potential opportunities for Australian firms in the environmental protection sector, including soil and water remediation, environmental monitoring instruments and automation control systems, waste management, recycling and disposal, water treatment and water efficiency, desulphurisation technologies, air pollution control equipment, noise control materials and equipment, green-building energy efficiency solutions and industrial energy conservation technologies. (Austrade website)

The massive financial investment planned for China’s environment and renewable energy sectors should create opportunities for Australia’s clean and green industries. However the decision by China to further limit the building of coal fired power plants and to reduce the use of coal is expected to have an adverse impact on Australian exports– the real extent of this impact remains to be seen. The upside is that the potential for cooperation in the researching and development of clean coal technologies should be enhanced.

And once again, the recent conclusion of the China Australia Free Trade Agreement (ChAFTA) should enhance access by Australian environment manufacturers and service providers.