sustainable development in china

Sustainable Development, Vol. 4, 103-108 (1996)

S.G. Breslin, Department of Politics, University of Newcastle, Newcastle-upon-Tyne, UK

INTRODUCTION

his paper is a response to the article by Wu and Flynn that appeared in Volume 3 of this T journal in 1995. Wu and Flynn identified the

major causes of environmental problems in China and then assessed the growth in environmental consciousness, planning and regulation in contemporary China. Although I believe that their assessment of most of the causes of China’s current environmental problems were by and large correct, I feel that they have underestimated the importance of some of these problems. In doing so, they end up with a more positive assessment of China’s (and therefore the world’s) environmental future than myself. In particular, I will argue that they have underestimated the short-term legitimacy priorities of the party elites and the longer term consequences of the dispersal of central power in the post-Ma0 era.

POPULATION, RESOURCES AND POLITICAL STABILITY: SOME CHALLENGES

Wu and Flynn correctly point to the growth of China‘s population as a source of severe and long- term environmental pressures. If anything, population growth is even more important than they suggest. The first point to make is that China’s growing population is placing increasing strains on already stretched waste disposal facilities. This does not simply refer to direct human waste, but

CCC 0968-0802/96/020103-06 0 1996 by John Wiley & Sons, Ltd. and ERP Environment

also to waste resulting from increased consumption. For example, government statistics show that urban waste in Chinese cities has doubled in the last ten years to a staggering 100 million tonnes of garbage a year. This figure is estimated to rise at an average of 10% each year over the next decade (China News Service, 11/10/95).

It is important to note here that this issue is not just a consequence of an expanding population, but also one of land usage and availability (see Betke and Kuchler, 1987). What is more, ‘there is a downward spiral’ pressure on the population- land usage relationship. As the pressure to increase food production has increased, so there has been an intensification of inputs which, although garnering short-term results, is increasingly rendering land (and the water supply that the land drains into) infertile. Thus Smil(1993: 58) argues that:

‘China’s food output has thus had to keep up with both staggering increases of population and substantial decreases of culti- vated land by intensification of inputs. Yet this very intensification has accelerated the qualitative decline of China’s agricultural soils.’

These pressures would create severe problems even if current levels of consumption were simply maintained. An important component of the environment-development dialectic in China is that it is not just that agricultural land is declining, nor that China’s population is growing, but that the population has new and increasing consumer demands - demands and expectations that the party leadership have helped to generate as part of their strategy for maintaining their grip on power. To make matters worse, many of the new consumer

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goods are not environmentally friendly - for example, many of the refrigerators contain CFCs and all the electrical goods require more (polluting) energy to run.

This brings me to a specific point in Wu and Flynn’s paper. They ask why the efficiency of energy consumption is so low in China and suggest that part of the answer lies in the high proportion of coal in total energy consumption (around 75%). I have two additions to make to this very important point. The first is that Smil(l993: 116) has calculated that only 20% of coal is washed and sorted before consumption. This unwashed coal is not only low in heat efficiency, but also produces more pollutants. Although the technology exists to at least clean up coal supplies, Wu and Flynn rightly point out that the modernization drive in post-Mao China has been dogged by energy shortages and the cash- strapped central authorities have been more con- cerned with investing in quantity than quality.

The second point here relates to the relationship between social, political, economic and environmental imperatives. I suggest that employment considerations are even more important (and even more problematic for the environment) than Wu and Flynn suggest. Primarily for social and political reasons, the central government would rather maintain employment and urban living standards than push ahead with market- rational reforms, even though around a third of the national state budget is devoted to paying subsidies of one kind or another. Rising unemployment is a big enough problem in any society, but has particular significance in China where those welfare services provided by the state (or the market) in the West are provided by the work unit or the collective. If you lose your job, you could also lose your accommodation, your health care and your children’s education - and all of this without any unemployment benefit to fall back on. Thus state-owned factories continue to produce using inefficient and polluting production processes, irrespective of whether the final produce is even usable, because of the social benefit and therefore the political stability that they provide.

The transformation of state-owned industries remains a stated aim of the central leadership and, through more competition, some of the pollution associated with wasted production may be solved. However, in the short term the immediate concerns of fighting for economic survival make effective environmental policy-making in industries a dis- tant concept. As around two-thirds of state firms are currently making a loss, it is unlikely that environmental issues will concern managers very much as they struggle for survival. Thus, as Vice Premier Li

Lanqing noted in September 1995, this primarily means a gradual (and rather slow) transformation from within the existing structure, rather than from open market competition and private ownership. Although private industry was encouraged in China, Li argued that privatization was an entirely different, and currently unacceptable, option (China News Service, 30/9/95). Indeed, what we see here is that the major dichotomy in contemporary China is not the conflict between developmental and environmental logic, but the internal dichotomy within China’s development strategy between social/political logic and economic logic (i.e. between political goals and economic efficiency), with environmental concerns lagging behind in a poor third place.

Similar concerns can also be clearly identified in the countryside, where, if anything, the environmental consequences of economic reform are more severe. The collapse of collective activity has also had damaging ecological effects. De-collectivization has given power to producers who lack the capital (and perhaps the will and vision) to engage in major irrigation or flood control works. Unfortunately, the state has lacked the finances and will to step in to perform these functions from above, and it would be interesting to know how many of last summer’s droughts and floods could have been alleviated, if not avoided, by collective action.

Indeed, the floods which caused so much devastation in the summer of 1995 are testimony to the fact that China is already suffering economic and social problems as a consequence of environmental degradation. On one level, deforestation, the improper use of fertilizers and general soil erosion have caused the floods to be increasingly damaging each year. At the same time, unregulated land reclamation and usage to meet growing population and economic requirements mean that more prop- erty and people are now in the way of the flood water. As a legal officer in the Ministry of Water Resources, Yang Qian, noted:

‘Many cities and towns are expanding themselves and setting up economic development zones without giving consideration to possible floods, and some even built factories in low-lying regions without flood control facilities.. .Even river courses are cut as sites for building residences or industrial projects.’ (Reuters, 11 /7/95)

As the oft-quoted Qu Geping (1990: 103) notes, the sheer size and diversity of China means that it has to simultaneously deal with the environmental consequences of development and underdevelopment:

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S.G. BRESLIN

’China’s environmental problems are two- sided: (1) modern industrial growth has given rise to pollution, and (2) economic stagnation or slow development in large remote areas has resulted in ecological destruction.’

Equally importantly, the de-collectivization of the Chinese countryside has generated mass rural unemployment. For many, the only real chance of finding a new job lies in Township and Village Enterprises (WE), which Wu and Flynn correctly idenhfy as one of the ‘most important forces in China’s economic development’. The expansion of TVEs has been encouraged by local authorities as they provide one of the only sources of new employment in rural sectors. From relatively low start-up costs, they also provide a good source of additional local income through taxation, not to mention the personal wealth of cadres through interlocking directorships.

Its perhaps not surprising, therefore, that the growth of TVEs, particularly in the first decade or so of reform, was dramatic indeed. For example, from 1981 to 1989, the total industrial output value of TVEs increased by an average of 28.6% each year. By the end of the 1980s, rural enterprises employed 93.67 million people, equivalent to 23% of the total rural workforce, and, more importantly, 62% of new jobs in rural areas between 1978 and 1989 (Wang, 1994 2-3).

Although these TVEs absorbed surplus workers, raised taxes and produced new commodities for urban markets (or export), they also generated considerable environmental degradation, which makes the advocacy of Wu and Flynn for ’developing township enterprises’ rather surprising. Indeed, Tian Jiyun considers the growth of TVEs as ’largely responsible for China’s grave environmental problems’ (Japan Economic Newswire, 2/5/94). These environmental problems are partly a consequence of a central government that wanted development on the cheap in the 1980s. Thus, although the expansion of rural industries was encouraged, they were not allowed to compete with state enterprises for energy and raw materials in short supply. They were instead meant to exploit locally available resources, and this they have done at the expense of the local environment.

More important is the role of local authorities. China has developed a whole range of impressive environmental legislation. It has even established an Environmental Protection Committee to enforce environmental law. Nevertheless, when Tian Jiyun noted that TVEs are typically inefficient and polluting users of energy and also have a poor record in terms of waste disposal (in air, water and

land), he also said that there is not a lot that the central authorities can do to rectlfy these problems.

The major obstacles to effective environmental governance in China lie not so much in embracing sustainable development principles within the national government, but in the diffusion of central power to local leaders who continue to ignore central policy and pursue purely economic and local interests. Wu and Flynn note ‘many situations where local production needs take precedence over national environmental goals’. I suggest that this is an absolutely crucial issue here, and that they have fallen slightly into the trap of retaining national state centrist approaches to an economy where the local state is an increasingly influential player.

THE GROWTH OF LOCAL AUTONOMY

The sources of the expansion of local autonomy are too long and complex to go into detail here (see Breslin, 1995). The main general point is that reform has given rise to both centre-province and province-province conflicts which have become an important determinant of China’s reform trajectory. At the very least, provincial competition to indus- trialize has exacerbated and intensified the national government’s own developmental concerns and produced much faster rates of growth than many in Beijing want. More specifically, there are three main factors which lead me to a much more pessimistic evaluation of China’s environmental future than that of Wu and Flynn: the role of local officials; the lack of a truly national market; and China’s growing contacts with the international economy.

Corruption and Official Control

Firstly, we have to face the unwelcome, but very real, problem of corruption. To be fair, the party leadership is well aware of this problem (not least because it damages the party’s already fragde image) and is now on a permanent anti-corruption campaign. Nevertheless, there is a lot of money to be made and the age-old question of ’quis custodiet ipsos custodes’ - ’who will guard the guard‘ - remains an issue here.

In addition to outright corruption, there are several other activities which are less overtly illegal, but which nevertheless militate against the effective use of resources. Many local leaders have partially transferred political power to economic power by becoming involved in running rural enterprises themselves, joining the boards of enterprises or becoming ex officio advisers. Their knowledge, experience and contacts have become highly sought after by new enterprises. Perhaps more

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importantly, while energy and other raw material inputs and access to a heavily overburdened transport system (and of course taxation issues) remain scarce and under local administrative control, maintaining a good relationship with the local industrial bureau is essential for many enterprises.

The available evidence suggests that environmental regulation is far from the only area where central directives have little impact at local level. For example, many of the decision-making powers that the centre has devolved to enterprise managers has become (as Child, 1994, argues, usually inform- ally) lodged in the hands of powerful local authorities. Not only is there a sizeable vested self-interest in maintaining the status quo on such matters as, for example, the liberalization of coal prices that Wu and Flynn advocate, but even i f reforms are pushed through, there can be no guarantee that they will be effective where they conflict with local interests.

Resource Allocation

A second, and very much related issue, is the way that local interests, in conjunction with the relatively underdeveloped state of China’s infrastruc- ture, are obstructing the emergence of a truly national market for most produce. To nourish their investments, some local authorities have moved to guarantee markets for local products by developing protectionist policies. Although the central reformers may not have planned it this way, this autarkic or cellular pattern of development does have a number of developmental advantages: it helps spread development more evenly across the country; it helps maintain employment; it prevents excessive de-industrializa- tion (particularly in areas with heavy concen- trations of large state-owned complexes); and it helps to minimize opposition to reform from less favoured areas. It also, however, has environmental consequences.

I am not as convinced as Wu and Flynn that market forces are always the best way of promoting ecologically friendly development. However, in this instance, the lack of a national market, combined with the intensity of local interests (for whatever reasons) and the primacy of cheap unwashed coals as a source of energy is clearly significant. The most efficient energy users (and therefore usually the least worst polluters) cannot guarantee that their relative efficiency in terms of using inputs is rewarded by increased market shares and profits. Instead, duplicated production is guaranteed across the country, often largely irrespective of comparative economic and environmental costs. The

duplication of production associated with the regional self-sufficiency strategy of the 1970s is typically regarded as one of the key causes of environmental damage in the pre-reform era. It is thus ironic that a development strategy defined to rectify this pattern of development has resulted in increasing many of the same problems!

China and the Regional Economy

’The state is both too big and too small to deal with many of the most pressing environmental challenges: too big for the task of devising viable strategies for sustainable development, which can be developed only from the bottom up; and too small for the effective management of global problems, which by their nature demand increasingly wide-ranging forms of international co-operation.’ (Hurrell, 1995: 147)

Although it is clear that domestic sources of China’s ecological degradation remain uppermost, we should not ignore the relationship between the environment and the internationalization of China. Given the recent massive increase in foreign direct investment in China (there was as much investment in 1993 alone as in the entire preceding 15 years), it is an issue which is growing in importance. China re-entered the international economy at a time when Japanese and other Asian investors were looking to move out of the NIEs and into new low cost production sites. Despite the initial intention of restricting foreign contacts in the Special Economic Zones, China has been exploiting low cost/start-up incentive attractions for foreign investors for over a decade. Furthermore, individual provinces are increasingly competing with each other and other East Asian states for foreign investment by stressing their low cost advantages - the growth of the local competition state.

Most of the analyses of regional investment flows in East Asia emphasize the importance of low labour and rent costs and favourable currency alignments with the USA. I suggest that we should also pay more attention to the importance of comparative environmental regulation in production location decisions. There is clearly a time lag in the development of effective (a very important word here) environmental legislation in different countries. As regulations tighten in one country, then production can be moved to a foreign location where legislation is still relatively lax.

According to the Nash equilibrium theory, China should not be in a position to exploit its


environmental comparative advantage because of the size of the Chinese economy. For example, Kanbur et al. (1995: 294) argue that it is not rational for large countries to environmentally undercut smaller neighbours ‘since the number of firms that can be attracted by undercutting standards is relatively small’. Does this mean, therefore, that China will not aggressively undercut other coun- hies in East Asia, or does it instead infer that the Nash equilibrium model is in some way flawed. The answer (as it so often is to these types of question) is a bit of both. The Nash model assumptions appear to lose validity when we move from a simple analysis of relations between two countries to a more realistic multilateral analysis. China may not be able to attract many firms from, for example, Taiwan alone, but i f you also consider production transfers from Japan, South Korea, Hong Kong, Europe and so on, the total impact may well be significant.

Returning to the issue of local autonomy, the Chinese national government may well have decided that it is not rational to keep lower environmental regulations than neighbouring countries. However, what the central government says and what local governments do are often two different things. The Nash equilibrium approach is more (only more) relevant to China when you disaggregate the national economy. Thus although the number of foreign producers attracted to China as a whole may be insignificant, they are concen- trated in the coastal area in general and in Guangdong (40% of all foreign investments since 1979) in particular. It may therefore be rational for individual provinces, special zones or counties of cities to neglect environmental enforcement (i.e. not regulation, which it has only limited control over) to compete for investment.

Assessing the importance of comparative environmental legislation in industrial location decisions remains complex (see Thomas, 1992). Investors are reluctant to cite the freedom to pollute as a reason for re-location, although some will admit so in private. Furthermore, it is unlikely to be the only reason for relocation in most instances. Perhaps the most concrete example here is Taiwan Plastic’s welcome from the Fujian authorities after their proposed naphtha plant in Taiwan became the subject of much opposition. There have also been a couple of high profile cases of firms importing waste from abroad for illegal (and presumably unsafe) disposal in China (see China News Digest, 28/2/95; China News Service, 17/8/95).

Despite great advancements, environmental legislation and, more importantly, enforcement is still lower in China than in Japan and the East Asian NIEs. Participation in global markets - global

S.G. BRESLIN , ,

investment and trade networks - does have environmental implications as the ecological shadow of the more developed dominant global actors is cast over the less developed. Note how Maull (1992) argues that Japan’s favourable environmental situation is in many ways based on paying other countries to engage in environmentally harmful processes. To what extent is the sustainability of consumption in the developed world dependent on policies that are unsustainable (both economically and environmentally) in individual less developed nations?

CONCLUSIONS

The Chinese have come an enormous way in developing an environmental dimension to policy- making since the Stockholm conference, and W u and Flynn are correct in emphasizing these developments. It is certainly not my intention to slight the endeavours or intentions of Chinese environmental policy-makers. Qu Geping in particular deserves great praise for his role in raising the environmental profile to the position that it now occupies. However, I think we need to be realistic about the size of the obstacles to sustainable development in China. In particular, Communist Party rule is facing a number of challenges. Ruling elites like to remain ruling elites, and political instability and long-term approaches to policy and strategy rarely go hand in hand.

The analysis presented here also suggests that developing an effective environmental agenda is inextricably linked with (and ultimately dependent on the resolution of) overtly non-environmental issues. Indeed, I think an earlier point would bear repetition here. The notion of a development- environment dichotomy in China is too simplistic. It is not simply a case of balancing short-term development priorities with longer term environmental goals, but one of balancing short-term developmental priorities with even shorter term social and political concerns. The Chinese state is still in the process of redefining itself and I suggest that environmentalism will remain subordinate to other goals until some fundamental issues are resolved. Perhaps chief among these are those issues which relate to the territorial distribution of power in China.

If this issue can be overcome, if corruption can be eliminated, if the elites can reduce their dependency on short-term economic development as a source of legitimacy and if the process of expanding international economic contacts can be correctly handled, then there is a chance that the process of environmental degradation can be slowed down. In

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the meantime, bear in mind that arable land continues to shrink, four-fifths of lakes and rivers are seriously polluted and lung cancer in major cities increased by 18.5% from 1988 to 1993 (Smith, 1995: 15).

REFERENCES

Betke, D. and Kuchler, J. (1987). Shortage of land resources as a factor in development: the example of the People’s Republic of China. In: Learningfrom China? Development and Environment in Third World Countries (Ed. B. Glaeser), Allen and Unwin, London, 85-107.

Breslin, S. (1995). China in the 2980s: Centre-Province Relations in a Reforming Sociulis t State, Macmillan, Basingstoke/New York.

Child, J. (1994). Management in China During the Age of Reform, Cambridge University Press, Cambridge.

China N m s Service (17/8/95). Haikou’s imported refuse case has further progress.

China News Service (30/9/95). Green light for private sector; red light for privatization.

China News Service (11/10/95). Urban China produces 100m tonnes of garbage a year.

Hurrell, A. (1995). International political theory and global environment. In: International Relations Theory Today (Eds K. Booth and S. Smith), Polity Press, Cambridge, 129-153.

Maull, H. (1992). Japan’s global environmental policies. In: The lnternational Politics of the Environment: Actors, Interests, and Institutions (Eds A. Hurrell and B. Kings- bury), Clarendon Press, Oxford, 354372.

Qu Geping (1990). China’s environmental policy and world environmental problems, Environmental Affairs, 2,103-108.

Smil, V. (1993). China’s Environmental Crisis: an Enquiy into the Limits of National Development, M.E. Sharpe, Armonk, New York.

Smith, R. (1995). Getting rich is glorious, The Ecologist, 25, 14-15.

Thomas, C. (1992). The Environment in lnternational Relations, Royal Institute for International Affairs, London.

Wang Zhonghui (1994). A Study of Public Policy lnfluences upon the Development of Rural Enterprises, with Particular Reference to China‘s Rural Enterprises, 1978-1992, Depart- ment of Politics, University of Newcastle upon Tyne.


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