Environmental pollution is a serious issue worldwide- but especially here in China. The issue of air pollution in China has reached a fever pitch this year when during the winter in Beijing the PM 2.5 count reached levels as high as 866 micrograms per cubic metre, according to a reading by the US embassy. At the same time the Chinese monitoring centre reported a high of about 700 micrograms.  For a bit of perspective, a reading over 100 is deemed 'unhealthy for sensitive groups' and anything above 400 is considered “hazardous” for all. The World Health Organisation regards any air with more than 25 micrograms of PM 2.5 as unacceptable quality. 
 

In response to these record high levels of air pollution, the public has been crying out for reform and Beijing has responded with some decisive action. On June 15, the Chinese cabinet announced several measures to curb its air pollution problem. The State Council approved 10 “tough measures to accomplish tough tasks” in a statement on its website. One of the targets decided upon by the council was to reduce current pollution emissions by 30% in heavy polluting industries by 2017, an environmental goal in China more ambitious than any in the past. The measures in the new plan are meant to adjust China's energy structure; increasing the use of clean burning fuels such as natural gas and methane, while at the same time raising the quality of car fuel and phasing out older, heavy polluting cars. Some cities, such as Beijing, have already raised car fuel standards but these regulations have yet to be implemented nationwide. The plan also calls for eliminating outdated heavy polluting technologies in the steel and cement industries and denying new building projects that fail to pass environmental evaluations.  
 

Local governments will shoulder the responsibility for local air quality and are expected to enact emergency response measures during times of heavy pollution. This would include restricting traffic and enforcing strict emission limits for polluting industries. However, some people are nervous about placing the responsibility on local governments, who are most concerned with economic growth. Ma Jun, the director of the Institute of Public and Environmental Affairs stated “When it comes to the approval of new projects, the local governments often still pursue the highly-energy and pollution-intensive projects which can often generate higher GDP growth in the short term.” However, one measure in the new plan mandates polluting industries to publicize information regarding how their operations affect the local environment. Mr. Ma is hopeful that the future will be cleaner as local governments and polluting industries will be subject to public supervision.
 

Foreign Direct Investment (FDI) has increased considerably over the past few decades. One of the major reasons for this increase is due to the host country trying to find a pollution haven. The Pollution haven hypothesis refers to the notion that when firms avoid environmental regulations by relocating, it triggers a competition for lax environmental standards in order to obtain a competitive advantage in 'dirty' goods production. The combination of powerful foreign firms and the desire for poor countries to attract FDI will create a circumstance whereby the poorer countries will implement lax environmental policies. According to the pollution haven hypothesis, there are three dimensions to consider. Firstly, as touched upon earlier, many heavy polluting industries in developed countries, where emission policies are more strict, have been moved to developing countries where environmental policies are not as strict, lax, or not enforced. Secondly, the extraction of non-renewable resources in developing countries by multinational corporations in order to produce petroleum products, timber, precious metals, etc. Finally, the dumping of hazardous waste generated by developed countries in undeveloped countries.  
 

As China heads down a road towards environmental reform, what implications does this have for its trading partners, particularly in Africa? Today, China is Africa's biggest trading partner. Over the past decade, African trade with China has risen from USD 11 billion to USD 166 billion. Investments by Chinese state owned and private enterprises have been focussed primarily on environmentally sensitive industries such as oil and gas exploration, mining, hydropower, timber. Also  in infrastructure projects that help to facilitate these industries such as roads, railways and transmission lines. In many cases, Chinese developers are going into areas that are remote, ecologically fragile, and places that have previously been protected as national parks. As China's domestic policies have focussed on economic growth over protection of the environment, their policies risk being exported to Africa and other regions of the world via their foreign investment strategy. 
 

In the past, Chinese financiers and institutions have been criticised for their disregard for social and human rights conditions, as well as for the environment. Chinese financial institutions have been known to win projects by not complying with international standards and undercutting conditions on labour standards and the environment. Today, as Beijing is set to implement and enforce much stricter guidelines to polluting industries, people fear a new wave of potential environmental issues in Africa. Though African leadership is generally concerned about their environment, they have shown a willingness to implement lax environmental standards in order to increase economic growth.  
 

However, it is in the interest of China, which is engaged in a long-term partnership with its African trading partners, to minimize the environmental and social damage caused by their overseas projects. At the same time, African governments need to learn from China and be very selective in the types of investments which they allow and to make sure that these investments do not come at the cost of their environment.

 

By Justin Toy