China & the World Economy 7: China and the Environment

Question 1

Introduce the topic of ‘China and the Environment’

Answer 1

• China’s environmental crisis is one of the most serious
  challenges to emerge from it’s rapid industrialisation
• Growth of GDP of 10% a year has come at the expense of the
  environment and public health
• China is the world’s largest CO2 emitter
• The air quality in many of the major cities is way below
  international health standards
• Miscarriage rates are ridiculously high in China, fertility rates are extremely low
• There was even a spike in CO2 emissions from China in 2001 when they joined the WTO
• We do not get very far in these environmental international talks because countries like USA say that ‘total’ carbon emissions is what matters whereas countries like China say that ‘per capita’ emissions matter more, where China is in a normal range. Why should developing countries have to cut carbon emissions that these developed countries have caused from getting so rich? The developing countries can’t catch up economically without high carbon emissions and that isn’t fair to be asked to cut emissions down when they didn’t even cause it. These conferences rarely go anywhere
• Life expectancy north of the Huai River is 5.5 years lower than
  in the south (due to air pollution where the average is 75.3
  years) [UN 2013]
• Water contamination and water scarcity have compounded
  land deterioration
• Environmental degradation threatens future economic growth - if ppl start getting seriously ill, then their productivity falls, threatening China’s international standing. Also fertility affected
• The environmental crisis threatens China’s international
  standing
• Endangered domestic stability as public discontent rises
• As economic growth comes under pressure, leaders in China
  and now taking environmental degradation seriously
• China’s actually now getting cleaner, while India is more polluted now so a lot of its cities are now in the top 10 most polluted

Question 2

Describe China’s history of pollution

Answer 2

• China has had environmental challenges for centuries
• Dynastic leaders have exploited natural resources that has led to famines and natural disasters
• “China’s current environmental situation is the result not only of policy choices made today but also of attitudes,
  approaches, and institutions that have evolved over centuries” (Economy 2004)
• Book - “The River Runs Black. The Environmental Challenge to China’s Future”. Summary - China’s rapid economic growth has led to severe environmental degradation, harming public health, causing social unrest, and straining resources. Elizabeth C. Economy explores the political and economic roots of this crisis, showing how decentralization and weak central oversight create uneven environmental protection. The book compares China’s response with global examples and outlines potential futures for the country
• China introduced its first environmental institutions in 1972 at
  the UN conference on human rights
• By this point the country’s environment was already showing
  strains
• Reforms in the 1970s encouraged rural industrial development
• Later Deng Xiaoping implemented reforms that diffused
  authority to the provinces - led to township and village
  enterprises (TVEs)
• By 1997 TVEs contributed 1/3 of China’s GDP - this has
  since declined
• But local governments were difficult to monitor and rarely
  upheld environmental standards
• Even now, with large SOEs driving growth, environmental
  regulations remain difficult to enforce
• Local officials prioritise growth over environmental concerns
• Also, there’s a lot of corruption
• Yanzong Huang argues that:
  “Despite the government’s stated goals, actual change to
  environmental policies and effective implementation will
  require revisiting state-society and state-market relations and
  China’s bureaucratic power structure”
• The economy’s trajectory is similar to other industrialising
  countries (UK in 19th C)
• However, China’s size means the global impact is much larger

Question 3

Describe the current environmental challenges China faces

Answer 3

• China overtook the US in 2007 in terms of absolute CO2
  emissions to become the world’s largest polluter
• Energy consumption has boomed
• Cities experience severe air pollution and smog “airpocalypse”
• The concentration of hazardous particles was forty times the
  level deemed safe by the World Health Organization (WHO)
• Since then the government has introduced a red alert system
• On high pollution days schools are closed, traffic limited,
  outdoor construction stopped, even manufacturing paused
• In 2015, at least 80% of China’s 368 cities with monitoring
  failed to meet national standards for for small particles
• The main culprit for the high pollution levels is coal
• China accounts for 50% of the global consumption
• Provides 2/3s of China’s energy mix (although renewables
  growing rapidly)
• Coal is being reduced as a share but the energy is still needed
• China is increasingly the outlier in building new coal-fired
  power
• As of 2021 China has 88.1 GW of coal-fired generation under
  construction, or almost half the global total, and a further
  158.7 GW in the pipeline, again, half of the rest of the world
  combined
• The policy of building more coal fired power stations does not
  fit with the recent net-zero by 2060 pledge
• Climate change: China aims for ’carbon neutrality by 2060’
  (BBC news 22 Sept 2020)
• “We aim to have CO2 emissions peak before 2030 and achieve
  carbon neutrality before 2060” (President Xi Sept. 2020)
• However, China is also the biggest energy financier and
  biggest market so China’s decisions will shape how the rest of
  the world moves away from fossil fuels
• China does not need more energy - as it moves to have more
  nuclear and renewables and also change the economic mix
  away from heavy industry
• BUT local officials like new plants as it creates jobs and
  growth (incentives)
• In some cases coal power stations can only sell half of the
  energy they produce
• In 2016 the government stated to claw back control from the
  provinces - existing plans allowed to continue and in 2020
  relaxed curbs on new stations
• Other environmental pressures come from:
• (1) Rapid increase in car ownership - although growth rate is
  declining and more EVs being sold
• (2) Rapid urbanization - target of 60% up from 39% in 2000 -
  urbanization increases energy demand for new factories and
  industrial centres
• Water depletion and water pollution are also serious
  environmental challenges
• China has 20% of the world’s population but only 7% of the
  water resources
• Overuse and contamination have produced severe shortages
• 70% of the water is used for agriculture and 20% for the coal
  industry (Choke point: China)
• Around 2/3s of 660 Chinese cities suffer water shortages -
  Wen Jiabao said that water shortages challenge “the very
  survival of the Chinese nation”
• In 2014, groundwater supplies in more than 60 percent of
  major cities were categorized as“bad to very bad”
• Also in 2014, more than a quarter of China’s key rivers were
  “unfit for human contact”
• Combined with poor farming practice, over grazing and
  climate change, the water crisis risks turning arable land into
  desert
• About 1.05 m miles2 of China’s landmass is undergoing
  desertification, affecting more than 400 million people,
  according to the deputy head of China’s State Forestry
  Administration
• Hence, according to Economy and Lieberthal (2007) soil
  erosion is affecting 40% of China’s land
• The worst is happening in North China’s Loess Plateau where
  1.6 billion tons of top soil is washed into the Yellow River
  annually (Ministry cites ’tougher’ soil erosion battle)
• The desert is increasing 1,900 m2 per year and getting close
  to Beijing
• As a response there is a massive tree planting programme
  (reforestation) - but the effectiveness has been questioned
  (see Economist 2019)

Question 4

Describe the costs of environmental damage to China

Answer 4

• Environmental degradation poses a threat to economic growth
• Some estimates are that 2-10% of GDP is at risk
• China’s Ministry of Environmental Protection estimates the cost of pollution at around 1.5 trillion RMB
  ($227 billion), or roughly 3.5 percent of GDP, according to 2010 figures
• Damage to health is even more serious
• Air pollution contributes to 1.2 million premature deaths per year
• Pollution causes respiratory, cardiovascular and
  cerebrovascular diseases
• Also causes other acute and chronic diseases from drinking
  unsafe water (11% of digestive-system cancers)
• Neighbouring countries are also concerned about acid rain and smog coming from the Chinese mainland (Japan and South Korea)

Question 5

Describe China’s internal concerns regarding the environment

Answer 5

• Protests
• This risks damaging the CCP and leading to social unrest
• Social media has helped citizens understand the health
  impacts
• The number of “abrupt environmental incidents” has been increasing (China Dialogue 2014). China’s environment ministry admitted that poor transparency in project planning has led to public mistrust and rising protests. In 2013, 712 environmental “mass incidents” occurred—a 31% increase. Vice minister Li Ganjie emphasized the need for better public involvement to prevent unrest, pledging to include public participation in future environmental approvals.
• Marquis and Bird (2018) look at how civic activism spurs the
  Chinese government to take action. They highlight the paradox of “responsive authoritarianism”:
  to avoid needing to rule by coercion alone, the government
  seeks citizens’ feedback. It will tolerate some pressures for change, but at the same
  time it resists the associated legitimacy threats regarding its
  capacity to rule. As a result, in some cases the change pressures backfire.
• The issue of the environment is now worrying China’s top
  leadership. “Air pollution in China has turned into a major social problem
  and its mitigation has become a crucial political challenge for
  the country’s political leadership” Center for Strategic and
  International Studies’s Jane Nakano and Hong Yang. The result has been a strengthening of environmental laws
  and regulations

Question 6

What is being done regarding China and the environment?

Answer 6

• Since 2013, China’s five-year plans have outlined ambitious
  agendas
• For example, since Jan 2014 the central government has
  required 15,000 factories, including large SOEs, to publicly
  report real-time figures on air emissions and water discharges
• The government pledged to spend $275 billion over the next
  five years to clean up the air and $333 billion for water
  pollution
• China is also one of the biggest investors in renewable energy
• Historically China has done well on targets and often “over
  achieved”
• China achieved 13/16 of its 2020 environment targets, the 3 left to achieve are still within reach
• China’s strength in green energy and power sources is growing via development of major green energy and power capacities (Merics, 2021)
• China’s latest 5-year plan (2021-2025) aims to shift
  investment from coal to green tech (World Economic Formum
  March, 2021)
• China is aiming to become the global leader in “low carbon
  tech for a carbon-constrained world” - it is making rapid
  progress
• China is expected to reduce its role as a financier of coal-fired
  power stations at home and abroad
• It will increase investment in renewable power, EVs and
  battery storage
• Industry has been told to explain how they will cut emissions
  in line with “carbon neutral by 2060”
• Shifting rapidly from a focus on dirty industry to green tech is
  a challenge
• While there are promising signals that China does want to
  decarbonise the delay to COP26 might be slowing progress
• The poor publicity from the overseas investments in coal is
  also causing a rethink
• The overseas investment question is closely linked to the
  OBOR initiative
• This initially included a large of new coal plants and this has
  been re-examined
• Internally focusing on the environment is “no longer seen as a
  Western imperialist agenda” (Sam Geall of China Dialogue
  2021)
• China sees it as a way to achieve an “ecological civilization”

Question 7

Discuss China’s five-year plan 2021-25, including its unanswered questions

State the major targets

Answer 7

• Carbon Brief review the recent environmental commitments in
  the latest 5-year plan
• The plan targets a 18% reduction target for “CO2 intensity”
  and a 13.5% reduction target for “energy intensity” from
  2021-2025
• It also introduces the idea of a ”CO2 emissions cap” (but
  does not set one)
• The discussion is how these short-term targets are consistent
  with longer terms climate pledges
• The plan also includes targets to increase forest cover (23.4%
  in 2020 to 24.1%)
• Also plans to increase the share of non-fossil fuels in total
  energy to around 20% buy 2025 (up from 15.8% in 2020)
• For CO2 the plan is “CO2 emissions steadily decrease after
  peaking” (peak being around 2030)
• The exact number depends on the GDP growth rate (there is
  no longer a growth rate target for the 5 years)

Unanswered questions
* No CO2 cap is given
* The plan lacks strict measures on climate change
* Analysis suggests that the targets mean that emissions can
still increase at 1-1.7% a year until 2025
* There is also nothing clear on the coal question - the previous
plan had a target of reducing the percentage of coal in the
energy mix (one may be announced later)

Question 8

Can China meet its climate pledges?

Answer 8

• Chinese experts believe that it is on track to meet the 2030
  peak but more effort is needed to meet the net-zero 2060
  target
• If it can reduce CO2 intensity by 18-20% by 2025 than is
  could reach carbon neutrality by 2060 consistent with a 1.5
  degree increase in temperatures
• Although not in the plan a carbon cap is expected soon but it
  is not clear how to influence local officials or what is needed if
  it is to meet that target (not enough research) e.g. previous policies have led to power cuts as local officials
  attempted to hit targets (including no heating in winter)

Question 9

Describe the US-China agreement on climate commitments

Answer 9

• In April 2021 China and the US agreed on the need for
  stronger climate commitments [Reuters article]
• This agreement is despite weakening relations elsewhere (e.g.
  trade)
• The joint statement states that there needs to be stronger
  pledges on climate change before a new round of international
  talks
• Now with Trump, he’s pretty climate skeptical so there is doubt that progress will actually happen
• “The United States and China are committed to cooperating
  with each other and with other countries to tackle the climate
  crisis,” their joint statement said. The two countries will
  continue to discuss “concrete actions in the 2020s to reduce
  emissions aimed at keeping the Paris Agreement-aligned
  temperature limit within reach”
• Previously bilateral discussions had stopped after Trump
  withdrew from the 2015 Paris Agreement (thought to punish
  US businesses)
• In addition they would discuss hydrogen, carbon capture,
  energy storage and financing developing countries to switch to
  low-carbon energy

Question 10

Conclude this lecture

Answer 10

• China faces considerable environmental challenges
• It has tread a careful balance between economic growth and
  the environment
• As Yale Environment said in 2013 “China at a crossroads:
  Balancing the economy and the environment”
• China is making rapid progress but is aware of the difficulties
  it faces in meeting its climate and environmental targets
• Investment in green tech is making great progress and China
  has a history of over achieving on its environmental targets
• The question is whether it is enough