How is Economic Slowdown and Environmental Degradation Democratizing China?

This post is co-authored by Boshu LI

Earlier this month I visited China to launch the First Annual Beijing Week on Energy and Environment, a key initiative under the China Sustainability Project I founded and lead at the Columbia University's Earth Institute. The eight-day training program was offered to forty young professionals and scholars from seventeen nationalities. Among them is Boshu LI, my co-author, and a PhD student at the Peking University in China.

When I first visited Beijing in 1997, and continued to visit China regularly since then, tall buildings were like dispersed mushrooms in a vast, more or less undifferentiated, landscape of millenary culture preserved in low traditional houses. In Beijing, the cumulative gross area of buildings with 10 floors or more was 4.08 million cubic meters by 1990. This number leaped to 32 million cubic meters by 1994 and 83.9 million cubic meters by 2001. Streets were occupied by bicycles, not cars. Eighteen years later, it all changed. Car ownership per thousand inhabitants surged from 9.9, in late 90s, to 105.83, today. At that time, China was already growing at 9.23% annually and environmental concerns were not the top priority for policymakers. Today, economic development is slowing down and environmental concerns are at the top of political and civic concerns.

While many discuss whether some signs of environmental improvement result from economic slowdown, and less intensive use of natural resources, or from successful pro-green regulations, we argue that a much deeper transformation is happening across China. Economic slowdown and environmental degradation are in fact driving democratization in China. Both factors combined are pushing for the advancement of civic participation in the country in ways never experienced before. Not without new forms of internal tensions though...

On one hand, economic slowdown is pushing decision-makers and industries to (re)allocate resources more strategically and pay a much stronger focus on efficiency, since the years of mass production and exponential growth are gone. The government can address this issue in multiple ways, such as higher taxation and higher price policies. For example, the water tariff in China for residential use (US$0.3-0.8/m3) is very low when compared with the U.S (US$4-5/m3). On the other hand, dramatic environmental degradation has been addressed by top-down measures and shock therapy, such as relocation of entire industries and shutting down of factories, to accelerate transformation and shift the economic development paradigm.

One way or the other, new policy mixes and interventions will only be able to mitigate socio-economic crises if unprecedented scientific policy-making, civic consultation and participation are also factored in. In fact, political legitimacy within the context of shock therapies is even more necessary and critical if the Chinese government wants big-push reforms widespread accepted and adopted. However, due to the lack of systematic civic participation in public policy, social tension will not be easily avoidable since there are no clear consultation mechanisms for the public to communicate their preferences and priorities...

The economic side of our argument can be illustrated with the China's refined oil pricing policy, which is set by the government. The National Development and Reform Commission (NDRC) is responsible for setting maximum retail prices of gasoline and diesel fuel, taking into consideration international oil price fluctuations. Regardless of higher or lower prices, the government seems incapable to avoid harsh public criticism. When international oil prices fall, domestic oil prices do not decline proportionally. But when international prices rebound, domestic prices adjust immediately. This "strange" phenomenon, which is called "quick increase and slow decrease", has drawn serious criticism on social media.

The problem is twofold. First, there are no formal channels for mainstream economic agents and citizens to participate in the policy-making process. In fact, China's National Oil Companies' (NOCs) cartel confers these companies an enormous political power, which NOCs have used to manipulate oil prices to their benefit. Second, information needs to be transparent and made public. While oil companies' profits are publicly available as they are listed, the price-setting formula is uncertain. It is difficult for economic agents to forecast production costs with some accuracy, and think strategically, in a context of highly imperfect information. Obviously, this runs contrary to the market-oriented purpose of a pricing mechanism, which is absolutely critical for an efficient allocation of resources and demand-supply match. Moreover, in the case of China, where massive economic adjustments across provinces and sectors are most needed, information systems, communication and participation play an even more critical role.

In December of 2014, the Beijing Development and Reform Commission launched a pricing reform to increase efficiency and control passenger flow in overcrowded subways. This provides a good illustration of (i) how the new economic context requires a stronger focus on efficiency and, eventually, drives prices up (as discussed above); and of (ii) the symbiotic relationship between necessary reforms and broad civic participation. With the new pricing system, now based on the distance travelled, the average ticket fare per person per trip rose 50% from the original 2 Yuan fare (US$0.33), which had remained unchanged since 2007. To gain citizens' support, the Beijing municipal government took a series of measures before introducing the new fare: (a) issued a notice in social media explaining the new system one year prior the new fare was introduced. The notice attracted much attention and the citizens used the internet to express their opinions; (b) held a public hearing and invited 25 representatives from different communities to solicit opinions from a broad spectrum of the population; (c) disclosed key financial information for public reference before the hearing (e.g., subway operating cost and government subsidies); (d) opened additional communication channels for public participation after the hearing, such as emails, fax and online columns; (e) responded to citizens' questions, promised to improve public transportation facilities and service levels, including for low-income costumers. According to a survey by Xinhua News Agency, 80 percent of the respondents in Beijing supported the new ticket fare.

On the environmental side of our argument, "paraxylene" (PX), a chemical essential to the process of manufacturing plastic bottles and polyester clothing, which is dangerous if inhaled or if absorbed through skin, illustrates the point. In Xiamen, Dalian, Ningbo, Kunming, Maoming and some other cities, by reason of environment concern and potential health risks, the local people protested against the construction of PX projects that have already been approved by the authorities. These events usually ended up in loose-loose situations - people get hurt and projects get cancelled - as it was the case in Maoming, Guangdong Province, where four teenagers were allegedly killed and a PX plant project canceled. Overall, in China, some estimates say, there has been a rise of such protests by almost 30% every year.

Behind these mass disturbances related to PX projects bursting regularly across the country, it is not hard to find that local governments did not introduce appropriate civic participation procedures in the decision-making processes. The primary cause of this social unrest is public distrust resulted from government's unilateral decisions and actions. Since PX projects are likely to have a huge impact on public health, they should always be viewed as public affairs (literally!) -- all the way from project approval to actual construction. However, in reality, these processes have been more often than not hidden from the public.

The so-called "democratic participation" is restricted to some elites and experts throughout projects' development, namely for environmental impact assessment. Meanwhile, paradoxically, facing the residents' query and opinions expression, authorities' slow response and negative attitudes have seriously hurt the credibility of the administration at all levels. Authorities are now communicating even less. The unavoidable result of this information asymmetry and communication gaps are widespread public dissatisfaction. After all, how can citizens and residents support development and new projects construction without understanding environmental impact and mitigation measures? PX scandals are much more than public health issues. People are questioning the integrity of officials and the covered link between business and government.

In addition to PX-related events, massive incidents caused by environmental panic continue to occur in China unfortunately, such as the residents in Guangzhou Panyu opposing to garbage incinerator, the residents in Guangzhou Nansha opposing to petrochemical complex, and the residents in Sichuan Shifang opposing to molybdenum copper plant. Without civic engagement and participation, Chinese authorities will not be able to earn the political legitimacy new adjustment policies require.

If more than three decades ago Deng Xiaoping lead China into its great economic transformation and growth, economic slowdown and environmental concerns are these days driving democratization across China. After all, eighteen years have passed since my first visit to Beijing and there are plenty of signs showing that the country is entering a new age of majority and maturity -- one where economic development is not conceived without a social and environmental responsible way.

Boshu LI is a PhD Candidate at the College of Environmental Sciences and Engineering (CESE) at the Peking University in China.