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PRI's Environmental News Magazine

China Growth Costs

Air Date: Week of April 9, 2004

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The Chinese government announced recently that it will establish a “green GDP system” in an attempt to balance its economic needs with its environmental problems. Its economy has been growing at an unprecedented rate, at the expense of natural resources and air quality. Host Steve Curwood talks with the Council on Foreign Relations’ Elizabeth Economy about China’s environmental history, and how its new strategy might work.

Transcript

CURWOOD: From the Jennifer and Ted Stanley Studios in Somerville, Massachusetts, welcome to Living on Earth. I’m Steve Curwood.

We turn our attention this week to the emerging giant - China. Over the past decades, China has been growing its economy twice as fast as the United States, churning out everything from clothing and car parts to computer chips and coal plants. In the process, America has become one of China’s biggest customers and China has become one of America’s biggest creditors. We’re running up a tab to the Chinese of over $100 billion dollars a year. The U.S. debt to China is likely to have an impact on food prices here in the United States in the years ahead, and we’ll have more on that later in the broadcast.

But first, we turn our attention to the toll that rapid economic growth is taking on China’s environment. Land, air and water quality are deteriorating, and recently, the government announced plans to explore a green accounting system to calculate environmental costs related to economic growth.

Joining me to discuss its potential is Elizabeth Economy. She is a senior fellow at the New York City-based think tank, the Council on Foreign Relations, and author of “The River Runs Black: The Environmental Challenge to China’s Future.” Elizabeth, hello.

ECONOMY: Hello, Steve.

CURWOOD: Now, you write that the roots of many of China’s current environmental problems stem from its past, and particularly you point at Mao Zedong’s cultural revolution. Could you explain what you mean by this?

ECONOMY: Sure. Even before Mao Zedong, I think, it’s important to understand that China has degraded its environment for centuries. A lot of people ask me, well, how does China really differ from the United States? I mean, it’s just going through its process of industrialization just as we did, and you can expect there to be environmental costs and consequences.

But the point that I try to make is that China is starting from a very different place than the United States did. War was really a constant fixture in China for centuries. And this meant that you had rampant deforestation for fuel, they were mining for ore. And then these wars were followed by periods of very rapid economic development and growth in which the leaders would try to reclaim land for agriculture but the land was already eroded. This contributed to desertification.

And another sort of interesting fact was the population issue in China. Again, one that people think is a relatively recent one – the fact the China does have a little bit over a fifth of the world’s population. Population pressures were already felt by 1400. There were already a hundred million people. And by the Tang dynasty, roughly 600 A.D., there were already reports of areas in China where overpopulation was a problem, where there were too many people for the resources and the land, and you had migration in search of arable land and better water resources.

CURWOOD: So, what you’re saying then, is what happened under Mao Zedong in the last 50 years or so is really just a reflection of what had happened centuries before.

ECONOMY: That’s right. I think it provided a building block for Mao. Mao really ramped up the degradation of the environment. He called for nothing short of a war against nature. And you had probably some of the worst excesses in Chinese history take place under Mao. You know, back yard steel furnaces, moving polluting industries into pristine parts of the Chinese countryside in order to protect them from what Mao believed would be foreign attacks, attacks from the United States. You had the “great leap forward” in which wetlands and forestlands were reclaimed for agriculture, so you had wide-scale deforestation during this period. So there were some of the worst excesses. But I think it’s important to understand that this is a problem that is centuries in the making.

CURWOOD: Now, of course, today China is moving into the forefront of the international market with an unprecedented rate of productivity and development and growth. What are the sectors that you see are really jumping up in terms of growth?

ECONOMY: Well, at this point in time, China is becoming one of the largest producers of electronics. It’s basically hollowing out the semiconductor industries from the United States and from Taiwan. It has become the second largest importer of oil after the United States. The housing sector is booming. Infrastructure, roads, railroads. You can almost look at any area and say that China’s economy is booming. The auto sector is another one that has really taken off over the past few years.

CURWOOD: So as a result of this economic boom, Elizabeth, what do you see are some of the most pressing environmental challenges that China now faces?

ECONOMY: Well, you know, at this point, demand for water, for example, is growing at a rate of about 10 percent a year in cities, and about five percent for industry. But this is on top of a situation in which 60 million people in the country find it difficult to get enough water for their daily needs.

Energy also, of course. China’s had, traditionally, an overwhelming reliance on coal. A little bit over two thirds of its energy comes from coal, and oil makes up about a quarter, and the rest – some very small amount – comes from cleaner energy sources like natural gas and hydropower. And I think that – not only in terms of the demand side where, as you probably know, China experienced wide-scale power outages over the past year – but also in terms of the pollution. You know, China today boasts 16 of the 20 most polluted cities in the world.

There are other issues that the environment is having an impact on. For example, migration. The fact is that the Chinese government expects that 30 to 40 million Chinese are going to have to migrate by 2025 in search of better land or because they don’t have access to water. I mean, a quarter of China is desert today. And think of it in terms of the fact that China is the same size as the United States. So imagine if a quarter of the United States were desert. And the desert is advancing very rapidly at a rate of about 900 square miles per year. And they have these sand storms that afflict the coastal cities in Asia. So there are these visible signs, and then sort of secondary impacts that the Chinese people themselves feel quite directly.

CURWOOD: Recently, the Chinese government announced that it will develop a green GDP system in order to cut down on its environmental pollution. Please explain how this might work.

ECONOMY: Frankly, I take the attitude of I’ll believe it when I see it. I think environmental natural resource accounting in this country is still relatively poorly developed. And I’m not sure how the Chinese government is planning to do this. I mean, the World Bank and some Chinese economists have done the best estimates of trying to account for environmental degradation and pollution in sort of assessing where the Chinese GDP really is and in terms of what costs are being inflicted on the Chinese population and the Chinese economy from environmental degradation and pollution. But, as I think the Chinese who are involved in this process have acknowledged themselves, it’s going to be a very difficult and complicated process.

CURWOOD: In terms of the green GDP, I’ve read somewhere that they’re going to list environmental changes separately, and their impact on economic growth. How would that work?

ECONOMY: Well, you would look at factory shutdowns because of energy shortages, or factory shutdowns because of lack of access to water. So you might have a coal mine – for example, there’s a major coal mine, Datong in central China, that they estimate loses $100 million a year because it doesn’t have enough water to wash its coal. So that would be the kind of thing that they would do, to list the costs separately.

CURWOOD: Now, one of the things you write in your book is that there’s an estimate of, what, eight to 10 percent of the GDP in China is being lost to environmental degradation. What do you suppose accounts for this?

ECONOMY: That’s right. These are estimates that began to be developed in the mid-1990s by the World Bank and also by western economists and Chinese economists working together. Those numbers reflect a wide range of inputs. They include everything from the cost to the Chinese economy from workers missing days of work and being hospitalized due to respiratory problems from air pollution, to loss of crops because of contaminated water because of acid rain, to factories being shut down because of loss of water. And also, I should say, agricultural land being lost from desertification. So these numbers include the full range of environmental inputs.

CURWOOD: Help me understand the thinking of the Chinese government. Why tackle China’s environmental problems from an economic standpoint? What’s the advantage in doing that?

ECONOMY: Well, I think that it’s part of a broader move within the Chinese government as it transitions from a socialist command economy to a market economy, and sort of use the economy in some ways to advance environmental protection. For example, you have China experimenting with practices that were developed in the United States, for example, on tradable emissions, permits for sulfur dioxide. I think there’s definitely – it’s an admirable goal. The question is only how is it actually going to be affected?

CURWOOD: Tell me, what’s at stake for the United States in all this? What interest is there for Americans in China’s environmental future other than being world citizens?

ECONOMY: Well, I think that the interests are two-fold, if not more, perhaps. First of all, of course, China’s environmental practices have a direct impact on the global environment – everything from biodiversity loss to global climate change, where China is now the second largest contributor to global climate change in the world, right now. The dust storms that I mentioned, the sand storms, actually not only affected Asia, but a few years back found that the dust had traveled to California and even beyond, causing a spike in respiratory problems on the west coast of the United States.

Second, I think for anybody who’s interested in trying to understand where China may be going in the future, the environment is critical. There is the question of China’s demand for world resources for oil, for coal, what’s it going to do diplomatically and internationally? You know, are we going to find a more aggressive China in the South China Sea, for example, asserting its rights for natural gas? So there’s this kind of interplay.

But I also think on a somewhat deeper, maybe more profound level, there is the potential for the environment in China to serve as a catalyst for broader political reform. And you’ve just begun to see in China, now, the environmental movement -- which really began only a decade ago with China’s first environmental NGO -- move from sort of environmental education to very aggressive lobbying of the government, and to change policy. You know, preventing dams from being built. So these are the kinds of developments that I think are important to understand for anyone who’s interested in understanding the future of China.

CURWOOD: Elizabeth Economy is a senior fellow at the Council on Foreign Relations. She’s author of “The River Runs Black: The Environmental Challenge to China’s Future.” Elizabeth, thanks so much for taking this time with me today.

ECONOMY: Thank you, Steve.

CURWOOD: Coming up: as China’s population and its economy grows, it’s running out of land to farm and water to grow crops. But it does have plenty of money to buy food from abroad, says my next guest. And soon, he predicts, we’ll feel rising food prices in our own wallets. Stay tuned to NPR’s Living on Earth.

[MUSIC: CBMW “Sambasunda” THE ROUGH GUIDE TO THE MUSIC OF INDONESIA (World Music Network – 2000)]

 

 

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