Action Needed on the Environment

When Prime Minister Wen stepped down in 2013 he noted that the next government "should resolve to solve the problems of serious air, water, and soil pollution." What is happening or, rather, not happening?

China's environmental problems are immense, not least those connected to its voracious and inefficient use of coal. In 2011, for example, the country used almost half of global coal consumption, although its economy is still around half the size of the U.S. In fact China uses 50 percent more primary energy than the U.S. to produce the same unit of GDP. And China continues to use coal because current prices are so low -- down 30 percent in the last two years.
Only 12 percent of U.S. energy consumption is coal and coke, compared to 52 percent in China. Unfortunately Chinese coal is mostly highly sulphurous and contains three times more mercury than U.S. coal. It has been estimated that Asian power stations are responsible for over one-fifth of all mercury pollution in the U.S.

Other significant problems include depletion of aquifers through overuse, salination and acid rain, car and factory emissions. Overgrazing and desertification contribute to violent sandstorms which regularly choke the skies of northern cities with sand, dust and polluting particles.

The U.S. has a similar amount of grazing land to China but only 9 million sheep and goats, compared to China's 283 million. This concentration destroys plant life and topsoil, causing ecological devastation. Over a quarter of China is now desert. In 2008 an official survey estimated that China was losing the equivalent of 4,500 million tons of topsoil annually -- for comparison, in the 1935 U.S. 'dustbowl' it is thought that 850 million tons of topsoil were blown away. One sand storm in 2006 dropped 320,000 tons of sand on Beijing. As it takes around 1,000 years to generate an inch of topsoil, such losses cannot be sustained.

The storms can cross frontiers and deposit sand, dust and polluted particles on South Korea and Japan, where schools often need to close. They even cross the Pacific to the U.S. carrying all kinds of pollution; NASA estimates that 10 billion pounds of aerosol pollution arrive in the U.S. from East Asia each year.

Two-thirds of China's provinces now have particulate levels more than double the maximum level condoned by the World Health Organisation. This January the Beijing air pollution index hit nearly 1,000 -- against a World Health Organization level of 25. In December, researchers estimated that China has 1.2 million premature deaths annually owing to air pollution: twice the world average.

Lakes, rivers and even the coastal seas provide stark examples of ecological devastation. An estimated 300 million people drink contaminated water on a daily basis. Poisonous spillages into rivers and lakes from factories are frequent, resulting in lead poisoning and increasing cancer levels. Below-ground water in 55 percent of 200 cities is polluted. Between 10 and 20 percent of arable land is estimated to be contaminated by heavy metal poisoning.

The number of children born with birth defects has been rising in recent years. In 2009 Shanxi province -- the centre of China's coal industry -- reported 18 percent of babies born with birth defects. In 2010 about 30 percent of children in Yunnan province had lead poisoning. The majority of children in China's orphanages now have birth defects; sometimes 98 percent.
Some aspects of China's pollution have improved over the last decade but overall the situation has steadily deteriorated. The combination of air, soil and water pollution makes large parts of China unhealthy, if not dangerous, to life.

Despite more than 30 environmental laws and many regulations aimed at reducing emissions, they are often unobserved. This March state officials admitted that implementation had been "inadequate."

State-owned enterprises are largely untroubled by regulators whilst factories owned by the families of Party officials are left in peace. Enforcement is often slow, limited or non-existent. Furthermore, existing pollution legislation is now beginning to look dated.

The widely criticized Ministry of Environmental Protection officials have little power and below the national level are generally subordinate to powerful local officials who have little concern for the environment.

If business and officials can choose to ignore national policy and laws, it makes China resemble an 'a la carte' state. Without change, pollution will continue to increase and respect for the state will continue to deteriorate. However, change is always possible with firm leadership and good governance.

Civil society is emerging. NGOs have blossomed; despite the difficulty of registration in a state which discourages civil society initiatives, their numbers have risen from zero 20 years ago to around 5,000 today. Public protests are frequent and increasingly common.

Greenpeace for example has 'named and shamed' leading multinationals (including Chinese ones) which appear to have evaded the spirit of the environmental legislation.

Sulphur dioxide emissions have reduced markedly since 2005 owing to controls on power plants. Car exhaust emissions have been controlled but the volume of new cars has overwhelmed the regulations. One of the future positive developments is the rising role of the service sector in the economy as this uses less energy than manufacturing.

China's leaders have regularly drawn attention to the damaged environment passing laws and setting targets. However, vested interests are tenacious. The Communist Party simply hasn't delivered the results and shows little sense of urgency. In March Wu Bangguo chairman of the NPC, China's legislative body, said it should "continue to deliberate the draft revisions" to the environment legislation "over the next five years."

To avoid further environmental disaster, governance needs urgent and radical overhaul. Laws need updating, new powers are required, public involvement is needed and enforcement requires to be tightened up. Above all, China's leaders need to listen to the voices of those choking and coughing in the increasingly polluted towns and villages.

Timothy Beardson founded and ran Crosby Financial Holdings, the largest independent investment bank in the Far East. His book "Stumbling Giant: The Threats to China's Future" was published by Yale University Press in May 2013.