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Sino-Indian Relations: Realists and Rivals

Introduction

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The two most populous nations in the world, China and India share a disputed border, are both on the rise economically and politically, and both possess fearsome nuclear arsenals. Their rapidly changing economic and diplomatic positions have put not only their relationships in the wider world in flux, but they have also created a shifting engagement with each other. While China and India’s ever-closer economic ties have created a degree of optimism that their developing relationship will be harmonious and productive, territorial disputes, competition for spheres of influence within South Asia, and increasing friction over water rights will continue to significantly challenge their relationship.

Historical Ties

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Throughout ancient times, the link between India and China has been limited; theHimalaya formed a formidable natural barrier between the two civilizations. The most significant Indian contribution to Chinese culture was the transmission of Buddhism into China during China’s Age of Division 220-618 CE. Although the exact time and manner of Buddhism’s spread to China is still debated, it is likely that it made its way to China over the Silk Road, following merchants engaging in trade between the empires. Chinese scholars and monks also travelled to India to study Buddhism and to translate its scriptures. The most famous of these monks was Xuanzang, whose travels to and seventeen year stay in India were fictionally immortalized in the Chinese story, “Journey to the West”, considered one of the four great classics of Chinese literature.

In the modern era, with India colonized by the British, exports of opium to the Chinese mainland eventually led to the two Opium Wars of 1839-1842 and 1856-1860 between Britain and the Qing Dynasty of the time, though the involvement of what we now think of as India was incredibly limited, as it was a colony of Britain at the time. The post-Second World War period was a time of dramatic change for both countries. India was granted its independence from Britain in August 1947. The process of India’s independence was complicated by its separation from Pakistan which the British enacted immediately before granting independence to both nations as separate entities. Violence followed between the two new countries. Indeed, more than six decades after their separation, India and Pakistan remain at odds on many issues. Similarly, in China, violence ensued until the People’s Republic of China was founded in 1949 as Chiang Kai-shek’s Nationalists, and Mao Zedong’s Communists fought for control of the country. This meant that two giant new nations, both with extensive territories and massive populations, both recovering from differing forms of colonialism and struggling to find their place in the new world order, were created within a very short space of time. Despite their very long histories as civilizations, China and India are thus relatively new nation states. Their early dealings with each other have reflected their struggles to adjust to their relatively new country status and their efforts to find their place in the post WWII international order.

One early contribution that the Sino-Indian bilateral relationship made to wider international relations was the 1954 agreement in which was stated the “five principles of peaceful coexistence”. These principles were agreed as part of a treaty relating to Indian trade with Tibet, over which China had regained suzerainty. The five principles became both the founding principles of the Non-Aligned Movement (NAM) – a grouping of countries that sought to distance themselves from the Cold War by refusing to align with either superpower – and the cornerstone of China’s foreign policy, at least rhetorically. The five principles were: mutual respect for territorial integrity and national sovereignty; mutual non-aggression; mutual non-interference in the other’s internal affairs; equality and mutual benefit; and peaceful coexistence. At the heart of these principles is the agreement not to infringe the sovereignty of another country. Yet, despite their mutual commitment to these principles, within just a few years China and India were at war with each other.

The 1962 Border War

Following the 1959 Tibetan uprising – which was repressed by the Chinese military and resulted in the Dalai Lama’s fleeing into exile in India – there were several skirmishes between Chinese and Indian troops along the border. The border had never been successfully demarcated between the nations of China and India. An agreement reached in 1913 over the border between British India and Tibet – at the time conducting affairs as a pseudo-independent nation following the breakup of the Qing Dynasty – has been consistently rejected by the PRC, despite the apparent presence of Chinese representatives at the negotiations. China refuses to acknowledge any agreement made with the Tibetan authorities as it declines to recognize that Tibet had any level of suzerainty in this period of history. Interestingly, China’s refusal to recognize this agreement has some validity as it was, in fact, in breach of the Anglo-Russian Entente. Signed in 1907, but annulled in 1922, it stated that all dealings with Tibet must be conducted through the Chinese authorities in Beijing.

In October 1962 China invaded Aksai Chin and Arunchal Pradesh, the two largest portions of disputed territory over which it claimed sovereignty, but which were occupied by the Indians at the time. The simultaneous invasions were over a thousand of miles apart. The war lasted precisely one month, with the Chinese winning a military victory and successfully occupying much of the disputed areas. However, once military superiority had been established, a ceasefire was called and the Chinese unilaterally withdrew from all the territory they had gained in the offensive. While China’s real reasons for unilaterally withdrawing and ending hostilities are still debated, it is likely that a key reason for their retreat was the prospect of US involvement in the conflict, which raised concerns in China of an unwanted and unnecessary war with the superpower. Premier Zhou Enlai insisted that the withdrawal was a signal of good faith and that China had always wished to resolve the dispute peacefully.

The casualties in the war were relatively small, with an estimated 2000 Indians and more than 700 Chinese troops thought to have been killed. However, the consequences for the relationship and the region as a whole were extensive. While the Chinese succeeded in demonstrating their military superiority over their Indian rivals, the invasion harmed their international image and fed the belief in the West that China was a belligerent power intent on using aggressive means to expand its territory and influence. The lesson learned by India was that its military was woefully underprepared and wholly inadequate for purposes of self-defense. It therefore set about wholesale modernization of its military capabilities.

Territorial Issues

 

Territorial disputes are probably the greatest issue of difficulty between China and India. The disputes involve ten separate portions of territory, though several of these are tiny. There are two particularly significant areas: the more than 60,000 square km – around three quarters – of what India, and most other countries in the world, consider to be the state of Arunachal Pradesh; and the 37,000 square km Chinese-administered Aksai Chin, to the west of Nepal. It was these two areas over which the 1962 war was fought. At the time the Arunachal Pradesh was sparsely populated, but is now home to around one million Indian citizens. Since the 1962 war there have been many skirmishes along the disputed area, most notably in 1967 and 1987.

Given the size of the larger territories under dispute, it is politically difficult for either country to concede the territory to the other. This is especially true in the case of Arunachal Pradesh, which would be tantamount to the the Indian government effectively giving away the majority of an established Indian state. The other major disputed area, Aksai Chin, is considered by India to be a part of Kashmir and therefore complicates the matter further, given that India is already contesting Kashmir with Pakistan. Certainly, no solution to the current impasse appears imminent and the failure of the two great powers to resolve this remains a constant thorn in the side of diplomatic relations of the two. With that noted there has been some limited success in reaching agreement over the Indian state of Sikkim; initially claimed by both India and China but effectively operating as an independent state, Sikkim voted to join the Indian Federation in 1975. China originally refused to recognize this and continued to display Sikkim as a separate state on maps produced in the PRC. In 2004, it finally accepted it as an Indian state, although it did so with little fanfare.

As with most territorial disputes around the world the problem is exacerbated by nationalists on either side, who are prone to react to even the slightest provocation. Though nationalist responses in China are not as prominent as those that are directed against Japan or the US from time to time, India has emerged as a target for outpourings of nationalist sentiment, particularly over the issue of the disputed territory. Simon Shen, an academic who specializes in Chinese online nationalism, has identified that China’s online nationalists have turned their attention to India in recent years and use the government’s reaction to any perceived provocation as something of a litmus test. India also has its share of hotheaded protesters who make themselves heard whenever China acts in ways considered to infringe on India’s sovereignty over these areas.

Tibet

For historical, religious, cultural and geographical reasons, India continues to play a role in the Tibet issue. Homeland to the Tibetan people, and located on the high plateau of the north-eastern Himalaya, Tibet was unified in the 7th century, but then fractured into various territories which have since been controlled at various times by Tibetans, theDaniel J. Rao / Shutterstock.com Mongols and the Chinese. Tibet has been part of the People’s Republic of China since 1951, though full control by Beijing was only established following a military advance into the region in 1959. While China’s sovereignty over Tibet is accepted by the international community, its continued rule there remains controversial with the Dalai Lama continuing to campaign internationally for the Tibetan people to be allowed greater autonomy. Though China insists that the Tibet issue is a purely domestic matter in which no other country must interfere, India is inescapably intertwined in the problem. This is, primarily due to the fact that when the PLA rolled into Tibet in 1959, the Dalai Lama fled to India where he was given asylum, and allowed to establish the Tibetan “government in exile” – in the northern Indian town of Dharamsala. There have certainly been times since 1959 when the Indian government has wished it could bring an end to its own involvement in order to ease its strained relationship with China over this issue, but the Dalai Lama’s successful international promotion of the Tibetan cause has made this an impossibility, at least while he remains alive. For its part, China continues to raise this matter with Indian leaders, particularly whenever Tibetan refugees flee across the border to seek asylum there.

Competition for Water Resources

Tibet is also relevant to Sino-Indian relations as it is the source of the Brahmaputra River which provides significant water and power resources for Bangladesh and India. To take advantage of Tibet’s vast hydro power, China is planning a series of dams on the various transnational rivers that originate there. One of its proposed mega-dam projects is on the Brahmaputra, where it does a big U-turn in the world’s deepest canyon before entering India, close to one of the borders disputed by the two countries. This bend on the Brahmaputra is considered to be one of the world’s largest concentrations of river energy on earth. This mega-dam at the Brahmaputra is just one of what is estimated to be as many 28 dams on the Brahmaputra that are either planned, completed or under discussion by China. While China denies it, some Indian scientists also fear that China might also be planning to divert 200 billion cubic meters of water a year from the Brahmaputra to the Yellow River and other Chinese rivers.

China’s damming of the Brahmaputra puts control of a key source of Indian water into Chinese hands. More than 185 million people in north-eastern India and Bangladesh depend on the Brahmaputra. In the Indian state of Assam, 80 per cent agriculture relies on water from the river. Damming also affects a river’s ecosystem, altering silt and nutrient flows that risk impacting India’s downstream fertility and fisheries. Additionally, India derives significant power from its own hydroelectric projects on the river and its tributaries. The efficacy of these dams could be affected if China significantly alters the river’s flow volumes

Competition for Influence

As large and now rising nations, China and India have competed for and will continue to compete for influence in Asia and abroad. One keen area of competition is in Nepal and Myanmar. There is a difference in motive for the two of these countries. Nepal is considered to be a buffer state between the two powers, so that influence and access within Nepal is a strategic priority for both China and India. In any potential conflict between the two countries, Nepal would have clear tactical importance. Myanmar, on the other hand, is important to both countries as a source of natural resources, particularly natural gas. To seek influence in Nepal and Myanmar, China and India provide both countries with badly needed infrastructural investment; both Nepal and Myanmar have some of the worst infrastructure in the world. China in particular has been focused on building crucial road links throughout Nepal and into China, boosting trade and enhancing ties between the two countries.

While Nepal and Myanmar are important considerations, the relationship with Pakistan is potentially explosive. China has been Pakistan’s long term ally, while Pakistan remains India’s greatest foe, a consequence of the fact that most Indians opposed Pakistan’s separation from India before independence. During the Sino-Indian 1962 border war, Pakistan saw an opportunity to develop a strategic relationship with a large neighbor that would help to balance against what it perceived as the threat of Indian invasion. For its part, China sees its relationship with Pakistan as a way to offset what it believes to be a US strategy to contain China, which the US employs by forming strategic partnerships with significant powers surrounding China, revolving around the axis of Japan, Australia and India. There is unquestionably some truth in this analysis of US intentions, and India’s position within this alliance system is very important. The continuance of friendly relations with Pakistan is one way China works to counter this US strategy, though this has been complicated over recent years by the US-Pakistan alliance that formed in the wake of the 9/11 attacks. China’s engagement with Pakistan involves it in India’s most prickly international issue, Kashmir, which in turn causes further friction with India at both the government and the societal levels.

China and India are also now beginning to come into direct competition for influence and access to resources in Africa. China’s engagement with Africa has increased significantly in the last two decades as it looks to Africa both as a source of raw materials and as a market for its goods. India’s foray into Africa is still in its early stages, but it is already clear that both countries are pursuing differing strategies within the region. India’s investment strategy has been led by the private sector, where China’s incursion into Africa has been led by large SOEs and government ODA seeking access to Africa’s raw materials such as its oil and timber. Indian multinational companies are seeking to penetrate African markets by exploiting the comparative advantage of a significant Indian diaspora on the continent, as well as the ability of its nationals to speak English. That said, as competition for the continent increases, India’s government seems increasingly willing to engage to secure its competitive position. In 2011 for instance, Manmohan Singh, India’s Prime Minister, announced a three year aid package to Africa worth $5 billion. While significant, it is still dwarfed by Chinese aid that currently tops $20 billion per annum. As the China and India continue their rapid development, this competition for access to Africa’s resources and markets is likely to increase in the future though, for now at least, China appears better placed to take advantage.

Bilateral Trade

Though bilateral trade is not as large as one might expect given the sizes of the two nations, it offers one of the best chances to promote a cooperative coexistence between the two Asian giants. China is already India’s largest trading partner and in 2011 bilateral trade topped $74 billion, though this fell back slightly in 2012 to $66 billion. The 2012 reduction in trade was driven almost entirely by a 20% drop in Indian exports to China, with the trade deficit now $29 billion. Total bilateral trade is projected to reach $100 billion by 2015 with potential for even faster growth after that.

China does not offer India economic complementarity in the way that it does to some ofjbor / Shutterstock.com its richer neighbors to the east, such as Japan and South Korea. India, whose population is expected to surpass China’s within two decades, also competes to be a hub for low-cost manufacture out-sourcing. However, India provides China with raw materials; ore and slag, for instance, account for more than a quarter of all Indian exports to China. India also exports $1.5 billion dollars of cotton to China annually, providing a crucial source of supply to China’s critical textile industry, which is the world’s largest and responsible for a quarter of all Chinese exports. In contrast, Chinese exports to India are predominantly in manufactured goods, in particular electrical machinery which represents around a third of total Chinese exports to India. The fact that India exports raw materials to China and China returns finished goods reflects a slightly imbalanced relationship; indeed, India ran a trade deficit of around $20 billion with China in 2010. Nevertheless, deeper economic ties with China remain in India’s long term interests. Overall, India is developing its own economy in different ways to China. Specifically, India has focused on information technology and services. China’s rapidly growing IT market, which already boasts the greatest number of internet users in the world, offers opportunity for India’s leading IT firms. For instance, Infosys Technologies, an Indian IT firm, set up a Chinese subsidiary as far back as 2004. While its Chinese subsidiary still derives the majority of its income from outside of China, the Chinese domestic market now accounts for one third of its profits; this is projected to grow in the coming years. By 2014, Infosys predicts its Chinese subsidiary will employ 10,000 people, triple what it does today. The Tata Group, through Tata Consultancy Services (TCS), has also established a significant presence in China. It exports IT services to the Chinese banking sector, with Bank of China among its most notable clients. Its workforce in China is expected to quadruple over the next three years, taking the total number of its employees to over 5000. Following in TCS’ wake is India’s Wipro Technologies which has plans to center its Asian operations in China’s western city of Chengdu, in order to focus on growing its Asian market, and to diversify away from the US and Europe. India’s other great success story in China has been Mahindra & Mahindra, a manufacturer of tractors. Mahindra & Mahindra has established two joint venture tractor manufacturing companies in China which, combined, account for more than 30,000 employees and produce more than 30,000 tractors each year, many of which are exported to Europe or India. Indian IT firms are also seeking Chinese investment. By June 2009, the total Chinese investment in IT in India reached almost $30 billion. Much of this came from the Chinese giant Huawei.

Like many foreign companies working in China, Indian firms have also complained of barriers to their entering and expanding within the Chinese market. These barriers are increasingly being raised at the highest political levels. Complaints from the Indian side are met with calls from China for a bilateral Free Trade Agreement (FTA). Although India has been reluctant to agree to this until its trade deficit with China has been tackled, such an agreement, if signed, would represent the largest free trade area in the world measured in size of populace.

The BRICS Nations

Another area of promising cooperation between China and India is their involvement with the BRICS nations – Brazil, Russia, India, China and South Africa. The name originally came from an economist working for Goldman Sachs, who coined the term ‘BRIC’ in 2001 (South Africa was not included in either the original thesis or the initial gatherings of the countries) when writing about the shift in global power balances from the large developed western countries to the large developing ones. Initially not a formal structure, the four BRIC countries sought to capitalize on the success of the term by launching annual summits in 2009, where the countries meet to discuss their positions in the global order and to call for greater equity within it. South Africa was invited to join at the end of 2010 and attended its first summit in 2011. Both Brazil and India seek to exploit the status of the alliance in order to promote their aspirations for permanent membership of the UNSC, though declarations from the BRICS summits do not go as far as to directly call for this. Questions have been raised about the continued relevance of the grouping with varying degrees of economic growth; in 2012, only India and China surpassed GDP growth of 5% with South Africa as low as 2.8%.

Future Trends

Of the potentially disruptive issues that remain in the Sino-Indian bilateral relationship, the territorial dispute is probably the thorniest. There is seemingly some room for maneuver on China’s part in the disagreement over Arunachal Pradesh; certainly it seems impossible that the Chinese would try to make good their claims on an area that is widely recognized internationally as Indian territory and which is populated by more than one million Indian citizens. However, other disputes seem more intractable, particularly where Kashmir comes into the equation. Acts of insensitivity on either side are likely to continue to provoke minor spats, but the prospect of armed conflict between the two is highly remote. Indeed, informal talks on this very issue were held in Beijing in December 2012, though without any significant movement. The last formal negotiation on the matter took place in January of the same year.

The Tibet issue seems likely to continue to be an irritant as long as the Dalai Lama survives. It is probably China’s own calculation on this issue as a whole, not just with India, that the Dalai Lama’s death will help to remove Tibet from the intense international focus that it has been under for the last few decades. From India’s perspective, the trouble the Dalai Lama has caused has likely overwhelmed any soft power that it may have accrued as a result of it providing the Tibetan leader with asylum. There is probably understanding at the highest political level in the bilateral relationship that there is little that can be done in the short term over this issue.

China’s water disputes with its neighbors will likely be a growing problem, particularly given the unprecedented level of its dam building. Tension over water rights with India will be no exception. What is unclear is what its downstream neighbors can do about China’s hydro ambitions. It will likely be an increasing source of acrimony between China and India, especially as India plays catch-up to China’s water projects. India might voice these concerns more vocally on the world stage. It might also gain influence and leverage with other countries that are similarly vulnerable to China’s hydro ambitions to place economic and other pressures against the country.

It is in the economic ties that the greatest reasons for optimism lie. The different directions that the two economies have taken in their development mean that the potential for bilateral growth is significant. For both countries economic development is key and will continue to be so. They share much in common in terms of the continued need to raise large sections of their population out of poverty, a problem that is particularly pronounced in India. The incentive to stay focused on trade rather than to get tied down by territorial disputes or regional competition should remain at the forefront of the minds of policymakers on both sides of the Himalaya.

The election of Narendra Modi as India’s new prime minister in 2014 brought some new-found optimism given his pragmatic approach to international relations and prioritisation of economic cooperation. Modi was already popular in elite circles in China thanks to his careful diplomacy when serving as a regional leader in Gujurat, during which time he made numerous trips to Beijing. Nevertheless, the many thorny issues in the relationship cannot simply be washed away and the presence of Tibet’s prime minister-in-exile at Modi’s swearing in ceremony indicated that he would not simply roll over and acquiesce to all of Beijing’s demands.

The Tibet Issue

Introduction

To many in the West, China’s continued rule in Tibet is often considered to be a foreign occupation, though few inside China accept this point of view. Tibet is of great psychological importance to China and to Chinese people in terms of national identity and the maintenance of Chinese national unity, as well as of enormous strategic importance with regard to China’s traditional national security and its access to water and other vital natural resources.

Geography

The Tibetan Plateau is the highest region on the planet, sometimes referred to as “the roof of the world”. With an average elevation of more than 4500 meters, it is an

inhospitable place to plant and animal life alike and frequently leaves unaccustomed visitors gasping for air. It is home to one half of the world’s highest mountains, including Mount Everest or Qomolangma as the Tibetans call it, with the peak forming the border with Nepal. Tibet is also the source of many of Asia’s major rivers, including China’s two biggest, the Yangtze and the Yellow River, as well as the Brahmaputra, the Salween, the Mekong, the Irrawaddi, the Arun, the Karnali, the Sutlej and the Indus. About 90% flows downstream to China, India, Bangladesh, Nepal, Pakistan, Thailand, Myanmar, Laos, Cambodia and Vietnam. The sources of these rivers are the huge glaciers that exist in the Tibetan mountains, effectively forming enormous frozen reservoirs that are gradually released to flow down river. The constant flow of these rivers creates a stable source of water in regions which are otherwise dominated by monsoon rain falls. The Tibetan rivers are thus extremely important to sustaining life throughout South and Southeast Asia.

The territory of Tibet is large, with the Tibetan Autonomous Region (TAR) spanning more than 1.2 million square kilometers. Historically, though, Tibet has often included the whole of Qinghai province, as well as the western sections of Sichuan, Gansu, and Yunnan, making it geographically almost the size of modern day India. These areas outside of the autonomous region maintain a strong Tibetan identity today and continue to be populated by mainly ethnic Tibetans. Indeed, many of the protests that have made the news in recent years have occurred outside of the autonomous region, predominantly in Sichuan. When the Dalai Lama speaks about Tibet, he’s referring to those parts of the plateau that were historically Tibetan and are primarily populated by Tibetans. When China refers to Tibet, it is normally referring solely to the TAR.

Demographics

Despite covering such a vast area Tibet’s population is relatively small. The harsh climate has dictated sparse population throughout its history and, even with advances of modern technology, this continues to be the case. The TAR has a population of just 3 million people, though the total Tibetan population of areas that have historically been within Tibet numbers around 6 million. Such small numbers in such huge areas make Tibet one of the most sparsely populated places on the planet, a striking contrast to the thronging cities of eastern China.

Unlike the other autonomous regions in China, Tibet has maintained its ethnic identity throughout the history of the PRC; whereas the Uyghurs in Xinjiang, the Hui in Ningxia, the Mongols in Inner Mongolia, and the Zhuang in Guangxi all now account for less than half of the population in their respective areas, Tibetans still represent 92% of the population in their own autonomous region. This is, however, changing rapidly. The opening of the world’s highest railway connecting Qinghai to Lhasa – an impressive engineering feat that takes trains across mountain passes over 5200 meters high – has enabled a much greater flow of people into, and out of, the TAR. Han Chinese currently make up around 6% of the population, but that number is beginning to rise as the Chinese government encourages Han migration into the areas by providing incentives such as housing, business, and pension benefits. Indeed, It is estimated that Han Chinese now make up 50% of the population of the capital city, Lhasa, and the Chinese government is heavily investing in the city’s infrastructure to raise the city to modern Chinese standards. Beijing says that the Han economic migrants have temporarily come to Tibet in order to help modernize the area. Some Tibetans fear that China will use demographics as a way to more thoroughly integrate the region into China. Visitors to Lhasa are keenly aware of the division with the city almost literally split into two areas, one almost entirely Tibetan and the other almost entirely Han.

Tibet remains overwhelmingly Buddhist, though the influence of Tibet’s native religion, Bon, can still be seen in some of the practices. Although the much of Tibetan monastic heritage was destroyed during the Cultural Revolution, Tibet still remains home to many large and small Buddhist monasteries and temples, with Tibetans making pilgrimages at various times of the year to sites of importance. The Jokhang Temple in Lhasa is the centerpiece of Tibetan Buddhism. It attracts tens of thousands of pilgrims yearly, particularly during the winter months when some Tibetans from rural areas may walk hundreds of miles to pay homage by prostrating themselves around the perimeter.

The Tibetan Economy

China currently invests about $2.5 billion annually in the region, primarily in the form of shutterstock_77066617infrastructure projects. Farming, forestry, animal husbandry and fishery accounted for approximately 70% of the total gross output value in 2000. Because of its high altitude and mountainous conditions, the Tibetan growing season is short, and the main crops grown are barley, wheat, buckwheat, rye, potatoes and some fruits and vegetables. Sheep, cattle, goats, camels, yaks and horses are also raised within Tibet, with the yak being particularly well suited to Tibet’s harsh winter conditions. Most of the farming, animal husbandry and forestry is still done by hand or with animal labor. Increasingly, electric and hydro-power, mining, light industry and handicrafts also generating earnings for the region. Tibetan hats, jewellery, wooden items, clothing, quilts, fabrics and carpets are all important money earners, as is tourism, with most tourists staying in Lhasa, Shigatse, and the Mount Everest base camp, though the number of foreign tourists permitted to visit Tibet has been scaled back in recent years. Tibet also has large deposits of gold, copper, salt and radioactive ores, although its lack of infrastructure to date has meant that it has been difficult to extract these minerals. China’s huge investment in infrastructure should mean that mining will be a growing sector for Tibet in the future. Overall, China’s significant investment in the region has meant that many Tibetans have seen a rise in living standards. Annual per capita income, for instance, quadrupled to $1076 between 1986 and 2006, though there are claims that this benefit is felt primarily by Han Chinese migrants and not by the indigenous population. Unemployment remains high at approximately 10.3%, more than double the national urban rate.

The Historical Argument

The Tibetan empire reached its zenith around the 8th century CE with an empire that encompassed parts of Southeast Asia, Central Asia, northern India, Nepal, Bhutan, Bangladesh and also parts of what are now the Chinese provinces of Qinghai, Yunnan, Gansu and Sichuan in China. During the Tang dynasty in around 640 CE the Chinese princess Wencheng was sent to Lhasa to marry the then Tibetan emperor Songtsan Gampo. Many Chinese academics credit this as the first sign of China’s suzerainty over Tibet, though many Tibetans claim the opposite: that this was a sign of Tibet’s power and independence since the Emperor only acquiesced in sending the princess under threat of force from Tibet (a claim which is not accepted by modern Chinese historians and was not recorded in the Chinese written Tang annals). Contemporaneously, an informal treaty was signed between the two countries in which the Tibetans claim that the Chinese recognized Tibet as equal to China. By 821 a formal peace treaty was agreed and signed between Tibet and China, known as the Tang-Tibetan Alliance, and the details of this were inscribed on a stone pillar outside of the Jokhang Temple in Lhasa in both Tibetan and Chinese. This pillar remains in place today.

The 13th century Mongol subjugation of Eurasia brought Tibet and China under one rule for the first time when both countries became subject nations under the Mongol empire. Having conquered China, Kublai Khan consolidated his rule by proclaiming himself the Emperor of the Yuan Dynasty. Despite the Yuan Dynasty being formed as a result of an invasion from an external force, Kublai Khan is considered in China to have been Chinese as he perpetuated China’s cultural heritage. That he was Mongolian is no barrier to this interpretation, as Mongolians are recognized as one of China’s official 56 ethnic groups. As a result, modern Chinese historians argue that it was during the Yuan Dynasty that Tibet formally became part of Chinese territory and has remained so ever since. In contrast, the opponents of this view maintain that China and Tibet were two independent countries subjugated by an outside force; in emphasis, they point out the Mongols ruled the two territories separately much in the same way that the British ruled its colonies independently, and that Tibetan life remained centered on monastic Buddhism rather than Chinese cultural norms. Tibet continued to move in and out of the Chinese sphere of influence throughout the Ming and Qing dynasties that followed the Yuan, leading up to the end of the 19th century.

The 13th Dalai Lama entered a rapidly changing international order when he assumed power from his regent in 1895, by which time both Tibet and the Qing were under pressure from predatory Japanese and European colonial powers. By 1890 the British were negotiating a treaty with the Qing to establish the border between Tibet and Sikkim, which the British sought to include within its Indian colony. Historically, the Himalayan kingdom of Sikkim had been viewed as a vassal tributary state by Tibet, yet the Tibetans were not consulted during the treaty negotiations. Mainly as a result of fear that Russia was making incursions into Tibet in order to establish a sphere of influence, Britain invaded Tibet in 1904 and the 13th Dalai Lama fled into exile. The British invasion of Tibet refocused Qing attention on the region, which had been distracted by challenges closer to home. By December 1904, Tibetan officials left in charge by the 13th Dalai Lama, capitulated to British terms in order to secure withdrawal of troops from Lhasa. In the resulting convention between Great Britain and Tibet, Tibet accepted London’s annexation of Sikkim and agreed not to conduct for relations with foreign states, including China. Tibet also had to pay war reparations.

During this time, the thirteenth Dalai Lama was trying to get Russia to engage on Tibet’s shutterstock_94573753 resizedbehalf, yet Russian help was not forthcoming. Ultimately it suited both the British and Russians that Tibet was neither an independent state nor a vassal of an enemy. London and Moscow concluded that it was in both their interests to recognize a purposely vague Chinese claim over Tibet, especially as the British realized that it would be too expensive to turn Tibet into a true British protectorate as it had done to Sikkim. As a result, some clauses of the 1904 Convention were rejected by the Foreign Office in London, and it negotiated two new treaties with the Qing and with Russia. In a 1906 treaty with the Qing, the government of Great Britain engaged not to annex Tibetan territory or to interfere in the administration of Tibet. The Qing undertook to prevent other foreign states from interfering with the territory or internal administration of Tibet. The British then signed a second 1907 accord with Russia in which the two states agreed to recognize the principle of Chinese suzerainty over Tibet, thus effectively denying that Tibet was an independent nation. Moreover, English legal and historical documents were beginning to equate China with all the territory of the Qing empire. At the same time, as those Han Chinese that sought to end imperial rule began to think what a Chinese nation would be once the Manchus were overthrown, they too began to define their borders by those drawn by the Manchus when they took power. The Chinese became fixated on the humiliation that they were experiencing at the hands of foreign powers so the defense of Chinese borders became a matter of national pride for the Chinese people. By 1912, a year after the overthrow of the Qing Dynasty and the formation of the Republic of China, San Yatsen declared China to be a multi-ethnic state composed of Manchus, Mongols, Tibetans, Han and Uyghurs among others. Promoting this diverse population was one of the ways that the young republic articulated that its aim was to consolidate its country upon the larger Qing borders.

Taking advantage of the chaos during the early days of the Republic of China, in 1912 the 13th Dalai Lama proclaimed Tibet’s complete independence, and a voluntary Tibetan army drove the remaining Chinese out of the Tibet. In 1913, the Dalai Lama returned from exile after an absence of eight years. Importantly, the Tibetan government also negotiated with British India over shared borders and an agreement was signed between British India and Tibet in 1912 which ceded Tibetan territory to colonial India. This is often cited as proof that Tibet acted with genuine independence as a nation state at this time, but it is the only example of Tibet ever acting as such in the modern international system. It is worth noting that Chinese authorities were included in these negotiations and the Chinese representative even initialed the final treaty. Though this is now downplayed by Beijing due to the complications of continued disputes with India over the modern border, it does raise a serious question over the ability of Tibet to act as a genuinely sovereign nation even during this sole example of it apparently doing so. Furthermore, Britain was in breach of its own Anglo-Russian Entente, signed in 1907, in which it had agreed that all matters surrounding Tibet would be dealt with through the authorities in Peking (Beijing) and that no negotiations would be conducted with Tibetan authorities. The chaos and confusion in China after the fall of the Qing left Tibet’s status relatively unaddressed. During this period, the 13th Dalai Lama passed away. Tibet’s 14th and current Dalai Lama was born on July 6, 1935, 18 months after the death of his predecessor.

Tibet under the PRC

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During the struggle against Japanese occupation and the civil war between the communists and the nationalists, it is reported that Mao Zedong pledged that the periphery regions of China, such as Tibet, Xinjiang, and Outer Mongolia, would be free to decide their own future. However, upon the establishment of the PRC in 1949, this policy was repudiated (with the exception of Mongolia, whose independence was accepted by the communists probably as a favor to their allies in the Soviet Union). By 1949, the Chinese were using its radio infrastructure to broadcast into Tibet its need to peacefully liberate the country. By October 1950, the PLA had entered Tibet’s eastern regions. After initially rejecting the idea of Chinese sovereignty over Tibet, the Dalai Lama signed the “17 point agreement” in 1951 after recognizing that it was not in Tibet’s interests to make an enemy of its giant neighbour against which it stood little chance of military success. The Chinese army had already inflicted defeats against Tibetan resistance and it was clear that the battle could not be won. The agreement accorded the Tibetans autonomy over their own affairs, recognized the position of the Dalai Lama and guaranteed freedom of religion in Tibet. It needs to be acknowledged that this both demonstrates that the PRC government recognized the ability of the Tibetan authorities to act on behalf of Tibet (otherwise they would not have conducted negotiations and signed an agreement with them) and also that several of the points in the agreement have been broken by the PRC authorities, in particular the promise not to interfere with the position of the Dalai Lama and the guarantee that local religion would be respected.

The Dalai Lama remained in Tibet after this agreement was signed and, according to his own account of the story, met with Mao Zedong in Beijing on more than one occasion. In March 1959, following three years of sporadic battles at the edges of Tibet between local paramilitaries and the PLA, the Dalai Lama officially repudiated the agreement citing breaches from the Chinese. What followed was an uprising from Tibetans against the increasing Chinese presence in Tibet, followed by a large military response from the Chinese and a bloody wave of repression. The Dalai Lama fled, on horseback, across the Himalaya into India where he later claimed asylum and established the ‘Tibetan government in exile’ in Dharamsala. It took a further three years to fully establish Chinese control over Tibet. The number of Tibetans killed has never been independently verified but the Tibetan government in exile claims the figure to be in excess of 86,000. It is also believed that the US was involved in inspiring the uprising by engaging in training some of the Tibetan paramilitaries, a practice that continued for several years after the uprising was crushed.

Prior to China’s ‘liberation’ or ‘occupation’ (what it is called depends on one’s own viewpoint) there is no doubt that life in Tibet was a long way from the idealistic vision of a harmonious, peace-loving, and free society that some in the West tend to paint it as. Life expectancy was just 36 and the overwhelming majority of the population was illiterate. A majority of Tibetans were hereditary serfs of varying statuses, allowing the elite – including the religious leaders – to live a luxurious life on the backs of a poor, uneducated society that was structurally condemned to remain in poverty through the following generations. In essence, this was precisely what the international communist movement sought to bring to an end. Tibet had no roads, poor sanitation, and no monetary system. Until the 1960s, there were virtually no vehicles of any kind, motorized or otherwise. Punishment for various crimes was barbaric, including amputation of limbs and eye-gouging.

However, whatever the rights and wrongs of the legal or moral claim that China may have over Tibet, there is no question that many Tibetans suffered both during the ‘liberation’ and after, particularly through forced collectivization and during the Cultural Revolution. In this latter period many temples were destroyed and monks forced to tend pigs, sometimes within the walls of their own religious institutions, a grievous insult. While it is important to keep such acts in context – the Cultural Revolution was a chaotic and unpleasant time for most people in China, regardless of ethnicity – it does not excuse such acts in the minds of Tibetans, and many continue to harbor ill feelings over this. Despite the orgy of destruction that ensued in the late 1960s, it is thought that the Potala Palace, the former winter home of the Dalai Lama and Tibet’s most famous symbol, was preserved at the behest of Zhou Enlai who recognized its significance.

The Dalai Lama has remained in exile since 1959 and has spearheaded a very public campaign for Tibetan autonomy, gaining much sympathy and support in Western countries and elsewhere, including in Japan. In 1989 another attempted uprising, marking the fortieth anniversary of Dalai’s flight from Tibet, was crushed on the orders of the then-Party Secretary of Tibet, Hu Jintao, who would later go on to become China’s president and supreme leader. During the incident around 400 Tibetans are believed to have been killed. This occurred just months before the Tiananmen Square incident but did not receive a similar level of coverage due to a lack of media presence on the plateau at the time. Later that year, the Dalai Lama was awarded the Nobel Peace Prize for his “consistent resistance to the use of violence in his people’s struggle to regain their liberty”. The award, and the celebrity endorsements that have continued to flow (the Hollywood actor Richard Gere is the most notable), have helped to keep the Dalai’s drive for “genuine autonomy” within the PRC in the headlines, at least in the West. He abandoned hopes of Tibetan statehood in 1979, though the PRC government continues to paint him as a “splittist” seeking to create a separate country, and maintains that Tibet can exist within the PRC to the chagrin of some of his followers who would prefer a cleaner separation.

The Panchen Lama, Tibet’s second most important spiritual leader who has the responsibility of identifying the reincarnated Dalai Lama after his death, was arrested shortly after being confirmed as the current Dalai’s accepted choice in 1995. Aged just six years old at the time, Gedhun Choekyi Nyima was considered to be the world’s youngest political prisoner by many in the Tibetan movement. Beijing subsequently appointed their own choice of Panchen Lama, Gyancain Norbu, a somewhat difficult position for the CCP to explain given its strictly atheist constitution. Beijing’s Panchen Lama has never been accepted by the Dalai Lama and the campaign for the release of Gedhun Choekyi Nyima continues. He is reported to still be alive and living in Beijing under virtual house arrest and with an assumed identity. This complicates any future succession the Dalai Lama. Under the system in place in Tibet for more than five centuries, the Panchen Lama has the responsibility to identify the reincarnated Dalai, something he clearly will not be able to do whilst under house arrest in Beijing. Any reincarnation identified by Beijing’s hand-picked Panchen is unlikely to garner support from grassroots Tibetans and will be probably be seen as simply a puppet of the Chinese. With this in mind, the current Dalai Lama – who, while in good health, is already in his late seventies – has suggested that his reincarnation might be found outside of Tibet.

In recent times, particularly since the death of Mao and the launch of the reform era in China, there has been a drive towards economic development in Tibet. This has included some of the aspects of Chinese rule that provoke controversy among Tibetans and pro-independence groups such as increased migration of Han Chinese. Most controversial has probably been the development of a railway line that now connects the Tibetan heartland to the rest of China, making it possible to take a train from Beijing all the way to Lhasa (an extension to Shigatse will open in 2014). While this railway represents a notable engineering feat – with passes as high as 5200 meters it is the highest railway in the world – concerns over damage to Tibet’s delicate ecosystem have not been allayed. Furthermore, the massive increase in internal tourism that has accompanied the launch of the train service threatens to erode Tibet’s unique culture even further, turning important historical and religious sites into Disneyland-esque tourist stops. While it is undeniable that this has brought economic benefits to the area, with an increase in GDP per capita of around 400% during the first decade of the 21st century, an astonishing growth rate even by China’s standards, accusations that this increase does not benefit the local population abound. The truth is difficult to ascertain as the Chinese government does not release relevant statistics and may not even keep them itself.

Over the last few years there has been an upsurge in political activity and protest in the TAR and the surrounding Tibetan areas. The most high profile of these was a series of protests in Lhasa in March 2008, marking the anniversary of the 1959 uprising but also timed to gain maximum international attention in the run up to the Beijing Olympics. Riots across Lhasa left hundreds wounded and a reported 18 dead, mostly Han Chinese. The response from the Chinese authorities was initially relatively low key, though Tibetan groups in exile later reported that upwards of 1500 people were arrested, with many allegations of torture being used to extract confessions. Since 2008 security in the TAR and surrounding areas has increased, making it substantially more difficult for foreigners to visit for tourism and almost impossible for journalists or academics to investigate some of the claims being made. In 2012, a series of self-immolations made the headlines both in China and abroad, leading to the Dalai Lama to appeal for Tibetans not to resort to such measures, though Beijing is resolute in its insistence that such acts are committed at his behest.

China’s Traditional and non-Traditional Strategic Considerations

Tibet provides a buffer region between the Chinese heartland and both India and Pakistan, two nuclear powers. While neither of these two countries poses an apparent and immediate threat to China (they are normally more focused on each other) this is a consideration that any strategist would make. In particular China’s relationship with India has been problematic and the two fought a border war in 1962, and have a continued dispute over territory. A sparsely populated region such as Tibet is an ideal way to keep tensions at a minimum between two such nations. Allowing any form of independence to Tibet risks creating a kind of power vacuum that might be filled with Indian influence. From the point of view of national self-defense, no government in the world would countenance this if it did not have to.

Access to water resources will be crucial to China in the coming decades as it seeks to continue its rapid economic growth and improvement in living standards. China has less than half the per capita average of available water resources and large areas of the country suffer from serious drought on an almost annual basis. For this reason, the large rivers that flow through China are essential to the survival and prosperity of its people. Several of China’s largest and most important rivers have their sources in Tibet, including both the Yangtse and the Yellow River which, combined, provide water supplies for more than 500 million people. The Tibetan Plateau is the greatest store of fresh water outside of the North and South Poles. Although not explicitly acknowledged by the Chinese government in any discussion of the question of sovereignty over Tibet, it is clear that this remains a significant consideration for policy-makers when addressing the issue. The control of these river sources is an important advantage that no country would give up willingly, particularly one that is in such a precarious position with regard to its water supplies.

The Psychological Importance of Tibet

Knowing China’s modern history is crucial for understanding its perspective on many contemporary issues. Moreover, comprehending the Chinese interpretation of that history is the key to unlocking much of the Chinese view of the so-called “Tibet issue”. China’s view of itself as a victim of various powerful nations that took advantage of it while it was fragile, and sought to keep it weak by breaking it up, is a powerful lesson both for those in government and for the citizens of modern China. This “century of humiliation” was (in the Chinese narrative) brought to an end by the Communist victory in the civil war in 1949 but the scars remained in the form of Hong Kong, Macao and Taiwan. What is viewed in China as the rightful “return to the motherland” of the first two went some way towards redressing this and the continued desire to “reunify” with Taiwan demonstrates its continued role. Given that nearly all Chinese start from the view that Tibet is part of China, efforts to remove it from the unity of the PRC are viewed through this lens, and foreigners who involve themselves in the issue are ordinarily seen as trying, once more, to “split” China. This is a particularly potent storyline during a period of time in which China’s power is clearly rising and fears from outside are evident.

The View from the West

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Tibet is frequently presented as an almost-mythical “land of snows”, populated by peace-loving religious people who live a simple (indeed, backward) life. The mythical Shangri-La is widely believed to be in Tibet (it has officially been designated as Zhongdian in northwest Yunnan but this is purely for tourism purposes). Tibetan people are portrayed as being deeply religious and almost entirely homogenous in their devout commitment to their religion and its leading figure, the Dalai Lama, as well as to the path of peace that he passionately advocates. In many ways Western depictions of Tibet and its people are simplistic, romantic, and occasionally patronizing.

When Tibet comes into the consciousness of Westerners it is often through the activities of high profile groups such as the International Campaign for TibetTibet House and Free Tibet, all of which are based in major Western cities such as New York, Brussels and Berlin. Richard Gere’s role in several of these groups has raised the profile further and reached audiences that do not ordinarily pay a great deal of attention to international political issues. The involvement of celebrities has sometimes been frivolous; the British rock band, Oasis, was denied visas to play concerts in Beijing and Shanghai in 2009 because of the involvement of Noel Gallagher, the band’s guitarist and lyricist, in a ‘Free Tibet’ concert twelve years previously despite Gallagher’s own confession that he had no recollection of the event and no interest in the movement. Condemnation of human rights abuses in Tibet frequently comes from senior figures in the US political scene as well as from independent NGOs across the Western world, lending such reports an air of credibility despite the difficulty in corroborating many of the individual stories that constitute the reports. The explanations offered by these groups for China’s continued presence and interest in Tibet focus entirely on the economic benefit that China can gain from the region. Free Tibet, for example, cites only the vast reserves of minerals and the sources of much of China’s water supply as its motivation, making China’s motives appear entirely selfish and materially-based.

The most visible manifestation of this feeling in the West came in 2008 with the protests Sam DCruz / Shutterstock.com surrounding the Olympic torch relay, particularly in European cities such as Paris and London. Large crowds of people displayed banners and waved Tibetan flags while some attempted to extinguish the Olympic flame. This was in direct response to the reports of riots in and around the Tibetan Autonomous Region in March of that year. The riots were misreported by some parts of the media in the West (this was not helped by the Chinese authorities preventing many outlets from entering the territory) and so it is not fully understood that many of those that died were Han Chinese, killed or burned alive by Tibetan rioters. These acts, if carried out in a US domestic context, would have been labelled as terrorism. This reporting caused anger among many Chinese who cannot understand where the Western bias comes from and consider it to be simply “anti-Chinese”.

No country in the international system recognizes Tibet as an independent nation and all who have diplomatic relations with Beijing acknowledge Chinese sovereignty over the region (indeed, even those few countries that maintain diplomatic relations with Taipei instead consider it to be part of the Republic of China). The last country to fall into line and recognize Tibet formally as part of the PRC was the UK, which did so in 2008, blaming a bureaucratic oversight for not having done so previously. Even the Dalai Lama himself no longer calls for independence, but for “genuine autonomy” within the People’s Republic.

The Future of Tibet

The Tibet question is one that has shown no sign of simply going away. The Dalai Lama’s successful internationalization of the issue has made it infinitely more complex for the Chinese leadership to handle but their legitimate and rational security concerns, combined with the crucial issue of maintaining territorial integrity of the Chinese nation, mean that the Dalai’s wish for genuine autonomy is unlikely to be granted. The Chinese government, despite its intermittent negotiations with representatives of the Dalai (the last of which took place in 2008 prior to the riots), shows no intention of shifting position and appears to be playing a waiting game, apparently believing that Tibetan resistance will subside after the death of the fourteenth Dalai Lama. Having captured the Panchen Lama and appointed their own, they consider themselves to be in charge of the future of that particular institution. However, the Dalai himself has raised the possibility that a future reincarnation of himself may be born outside of Tibet (previously believed impossible) which might allow for a continuance of a government in exile that maintains some level of loyalty from the Tibetan people. Furthermore, he has already announced that he intends the position to be one only of religious leader and that the head of the Tibetan government should be democratically elected. Even without this, there is no guarantee that the Chinese waiting game will pay off in the long run; there is some evidence, particularly in the wake of the 2008 protests and the recent spate of self-immolations, that Tibetan youth is becoming radicalized in the face of an apparently immovable Chinese position, and without the calming influence of their spiritual leader it is possible that further violence might erupt.

China continues to focus on the economic development of Tibet, hoping that continued economic prosperity will help Tibetans feel more integrated into China. China has invested heavily in Tibetan roads, housing, schools and electrical grids so that it may feel the benefits of being part of China. Yet proposals that carry with them the prospect of greater prosperity, such as the proposal to extend the railway from Lhasa further into Tibet, are also viewed with suspicion by some Tibetans who fear that they are just another tool for the Chinese military to ensure control over the region is maintained. To assuage these fears, China needs to pay more attention to the legitimate complaints of Tibetans who feel that their culture and history is being destroyed. This loss cannot be compensated with the kind of economic progress that has, so far, satiated other parts of Chinese society.

Hydro-Power and Hydro-Hegemony: China’s Prolific Dam-Building

The History of Hydro-Power in China

Before 1949, only 22 large dams existed in China. A dam study by Oregon State University concluded that since that time, the People’s Republic of China has undergone four waves of dam construction. Socialist agricultural policy between 1949 and 1960 encouraged the construction of many small and medium-sized irrigation dams. In particular, the 1958-1960 Great Leap Forward policy advocated that each of China’s 1,465 counties build at least one water conservation dam. As a result, tens of thousands of dams were built in China, mainly by peasant-led teams with limited equipment, materials and training. During the period from 1968 to 1980, the pace of dam construction increased. Water projects grew in size and complexity and were progressively constructed for hydropower and flood control. While fewer dams were built between 1980 and 2000, those that were constructed were larger in scale and more technically difficult. The 1978 market reforms allowed China to import foreign technology, know-how and funding, enabling the building of dams that previously had been too difficult and expensive to undertake.

Government measures since 2003 have led to a decentralization of hydropower production. The State Power Corporation was disbanded, its assets were distributed and development rights on China’s main rivers were shared out. While the central government has a majority of stock in each of the companies into which the State Power Corporation was split, in general, the enterprises act quite independently. The “corporatization” of China’s hydropower sector has created a significant increase in domestic and overseas dam building as companies compete to secure existing assets and to develop new hydro-projects.

Today, China runs about half the world’s approximately 45,000 dams larger than 15 m in height. In total, the number of dams in China is estimated to exceed 85,000. In 2009, China’s installed hydropower was calculated to be approximately 200,000 MW, representing about 17% of China’s total electricity power. According to recent reports, of the 37 GW hydro-power capacity added worldwide in 2014, a full 22 GW (nearly 60%) was added in China alone, dwarfing developments in other nations (the five largest contributors behind China added a combined 8.7 GW). This has brought China’s hydro-power capacity up to 27% of the world total. China continues to set high goals for itself, with China’s National Energy Agency planning to increase China’s hydro-power capacity to approximately 380,000 MW by 2020. Huge hydropower cascades have been proposed and are being constructed on some of China’s remaining pristine river basin systems including the Lancang, (upper Mekong), the Nu (Salween) and upstream of the Three Gorges Dam on the Yangtze. It is estimated that China has relocated a total of almost 23 million citizens since 1949 to make way for its water projects.

The Three Gorges Dam

Large dams are enormous interventions into highly complex ecosystems. Their impact can be felt thousands of kilometers away and often occur many years after construction has been completed. It is impossible to anticipate and mitigate all the social and environmental impacts that such projects can cause. The Three Gorges Dam provides a good indication of the challenges that such large dams pose.

Originally conceived by Chairman Mao and supported by Zhou Enlai, the Three Gorges Dam, and its related infrastructure, is the largest water project in the world. It stretches approximately 2km across the Yangtze River, which flows 6,418 km eastward from the Tibetan glaciers through China’s southwest, central and eastern regions before eventually emptying in the East China Sea at Shanghai. The Three Gorges Dam reaches nearly 200m in height, and has created a reservoir 600km long with a storage capacity approaching 40 billion m³. Three Gorges generates approximately 22,000 MW of electricity, equivalent to the burning of 50 million tons of coal annually, compared with Hoover Dam, for instance, that has an installed capacity of only 2080 MW. It was built at an estimated cost of $27 billion, although if hidden costs are taken into account, some appraise the dam’s actual cost to be in excess of $60billion. Hidden costs include losses incurred as a result of the reduction in commercial fishery production, the cost of landslides caused by frequent fluctuations in water levels and the further population resettlement that these landslides are likely to require, the costs of water pollution as raw sewage and fertilizer run-off collect in the Three Gorges Reservoir instead of being flushed downstream, the shrinking of the Yangtze river estuary, and the weakening of downstream dikes caused by the dam’s faster than anticipated water discharge. Besides generating emission-free energy, the Three Gorges Dam was built to control flooding, to improve water resource utilization and river navigation. Access to the major port of Chongqing, for instance, which receives 90% of its goods by water, has improved markedly even though it is located more than 600 km upstream of the dam. The Three Gorges’ lock system is one of the world’s largest, and has also helped to increase the amount of cargo able to move into the river’s upper reaches.

Despite these real benefits, the Three Gorges Dam has also generated significant problems. Most important of these has been the disruption of the Yangtze’s ecosystem. When the river flowed naturally, it helped to cleanse industrial pollution. It also traditionally transported large sediment loads from the river’s upper reaches to the East China Sea. The Three Gorges Dam has significantly decreased downstream sediment transport, changing the river’s chemical balance, temperature and flow. This in turn is impacting fish habitats. In addition to changing the river’s ecological characteristics, the dam is also blocking fish migration, impacting access to spawning grounds; it also may have contributed to the extinction of the Yangtze river dolphin. Between 2003 and 2005, annual fish harvests from below the dam were 50% to 70% below previous baselines; larva and eggs levels have dropped off even more sharply. Although pollution and other factors were already causing a reduction in fish stocks before the dam was constructed, the Three Gorges accelerated the trend.

The river’s reduced silt load has also deprived downstream agricultural land and fisheries of nutrients. Additionally, because less silt is reaching the river’s mouth, approximately 980 acres of coastal wetlands are disappearing each year. This has allowed sea water to intrude further upriver, affecting coastal agricultural and drinking water. Silt buildup within the reservoir is also impacting its overall storage capacity, causing higher volumes of water to be released from the dam, stressing downstream levees.

Landslides around the Three Gorges Reservoir have also been a greater problem than was first expected. The fluctuating water levels of reservoir have weakened hundreds of miles of its slopes, triggering massive mudslides. Controlling this erosion is projected to require a further investment of $10 billion or more. In some cases, landslides have produced massive waves as high as 50 meters, causing even more damage to the reservoir’s edges.

Every large dam built in China has led to the resettlement of local people because of China’s high population density along its major rivers. Over 1.2 million people have already been resettled as a result of the Three Gorge’s construction. Originally, residents were to be shifted to higher ground nearby, given new homes and new jobs. Yet, greater than anticipated erosion and landslides made large uphill areas unsuitable for building, so the displaced were eventually resettled to 11 different provinces. In late 2007, it was announced that another 4 million people – a number equivalent to the entire population of Scotland – are likely to be relocated from the Three Gorges Reservoir area in the next 10 to 15 years. Officials dispute that these are related to the reservoir’s landslides and ecological degradation, arguing instead that they are part of the national experiment to ease regional overpopulation and to provide greater opportunities for industrial development.

Many scholars are now finding that people displaced due to construction projects face the long-term risk of continued food insecurity, lack of access to good arable land, joblessness and social marginalization. Displaced women are often more severely affected than men. Taking farmland from the host population to give to the resettled groups has also often caused tensions and conflict between the two groups. Studies indicate that early resettlement efforts at the Three Gorges have indeed led to diminished living standards for many of the displaced. Local government corruption has aggravated resettlement challenges as 12% of the resettlement funds were estimated to be embezzled; hundreds of local officials have now been imprisoned.

In addition to the social costs, many now believe that large dam reservoirs can also cause seismic events as their weight can place unsustainable pressure on local faults. The Three Gorges Dam sits on two major fault lines, and scientists have acknowledged that seismic activity has increased slightly since the reservoir first started impounding water. Earthquakes can also damage a dam’s structure. Many of the new hydro-projects outlined in 12th Five-Year Plan are to be constructed in China’s mountainous southwestern region, which is crossed by numerous active fault lines. The tectonic movement in the three parallel Rivers area of the Nu, Upper Mekong and Upper Yangtze is one of the strongest in the world, for instance, yet China is planning to erect a cascade of dams in these areas. Research in the Chinese Journal of Geology and Seismology has recommended that further study be undertaken to determine the role that dam reservoirs play in triggering quake activity.

Environmental Movement Impacts Hydro-Power in China

The Chinese government has tried to address some of the problems associated with dams by improving the legislation which regulates the industry. While not always enforced, recent legislation has required more stringent procedures for environmental and social impacts assessment. A September 2003 law, for example, obliges companies planning projects with significant environmental impacts to conduct environmental impact assessments, and to have the assessments approved by the appropriate Environmental Bureau or the Ministry of Environmental Protection. Additionally, public participation in environmental impact assessment is increasingly encouraged. 2008 legislation has laid-out basic instructions on methods for public disclosure of environmental impact assessments, when to involve the public in the environmental impact assessment process, and who should be included in public participation. Indeed, in 2004 for instance, criticism from environmentalists, the public and the international media at least temporarily halted the development of a 13 dam cascade planned for the Nu River in Yunnan province, one of China’s last free flowing rivers. Laws passed in 2006 made efforts to better protect those displaced by dam construction by setting out appropriate land compensation, requiring that displaced people be provided with a level of livelihood similar to or greater than that which they had prior to the dam being built, and that resettlement plans must include economic development strategies as opposed to simply providing one-off monetary compensation.

Damming of Trans-boundary Rivers – Hydro-Hegemony

Many of China’s new planned hydro-engineering projects are on trans-boundary rivers, including the Mekong, Salween or Nu, Brahmaputra and Amur. On the Brahmaputra River, for instance, a series of five dams is planned to be built close to disputed territory between China and India, which will impact India and Bangladesh downstream, causing concern that China may divert the Brahmaputra’s water for its own needs. Many of the planned dams on trans-boundary rivers are being designed as cascades – one dam after another – or as mega-dams – with walls of 100 meters or higher-both of which have a greater impact on a river’s ecology. One of the new dams approved for the Brahmaputra, for instance, is to be twice the size of the Three Gorges Dam and situated almost on the contested border with India.Overall, about a third of China’s geography is within an international river basin, and China shares 18 rivers with its neighbors, many of which originate in China. Indeed, the Autonomous Province of Tibet provides China with access to some of the best untapped hydro-power in the world as does its Yunnan province, often termed China’s hydro-power storehouse. China is acting as “hydro-hegemon” in regard to its shared rivers as it is damming without the support and partnership of its neighbors, and at times in outright opposition to their wishes. But it is not just the unilateralism of its damming on international headwaters that upsets downstream countries; it is also the opacity around which it builds and runs its dams. China does not readily share environmental or technical information with its neighbors when building the dams nor, many feel, does it give real weight in its decision making as to how its dams will impact river ecology downstream. Indeed, many of China’s international river dams will provide it with the physical ability to change the hydrogeology of the rivers it is damming, thus creating new hydro-strategic and hydro-political realities, and thus allowing it to dictate the status quo of water allocation. By controlling large parts of Asia’s water tap, in an area where per capita freshwater availability is less than half the global average, China is acquiring tremendous leverage over its neighbors.

Yet, China considers developing large-scale hydropower to be critical to meeting its future energy needs and thus its national security. The Chinese government has thus worked to keep these resources under its control, and has been unwilling to sign any comprehensive water sharing agreement with downstream riparian nations or to join any river basin associations such as the Mekong River Commission, which was established in 1995 “to promote and coordinate sustainable management and development of water and related resources for the countries’ mutual benefit and the people’s well-being.” It is also one of only three countries that voted against the 1997 UN Convention on the Law of Non-Navigational Watercourses which lays down rules on the shared resources of international watercourses. Additionally, China has been reticent to share information on water levels and flows with its downstream neighbors once its dams are operational. China is now impounding water for the large reservoir behind the Xiaowan dam on the upper Mekong, for instance, which some believe exacerbated 2010 drought conditions downstream. Only after the drought became severe, and China came under significant pressure from the Mekong River Commission, did it start to provide information on daily water flows from its dam cascade.

China has tried to offset complaints and the potential creation of anti-Chinese alliances by its downstream neighbors by using trade and development incentives – developing the Southeast Asian electricity grid and building sewage and road infrastructure in Cambodia as examples – to weaken their ability to challenge China’s dam-building activities. It also engages in a public discourse that not only advocates the importance of hydro-power to its national security, but emphasizes exclusively the benefits of the dams without considering how they will disrupt downstream ecosystems and water access. Specifically, it talks about flood control, reduction of Chinese CO2 emissions, and the benefits of improved navigation and water flow during the dry season. In many cases, it is also helping to fund and construct dams downriver in places such as Vietnam, Laos, Myanmar and Cambodia. Their own independent construction of dams with Chinese financing has weakened downstream riparian neighbors’ ability to protest the ecological destruction that China’s upstream dams are causing.

The Lancang Cascade

The Lancang Cascade is an example of China’s dam building on trans-boundary water. China is currently halfway through construction of a cascade of eight dams on the Upper Mekong (called Lancang in China). The Mekong River flows 4,800 km from the Tibetan plateau, across China’s Yunnan province, through Myanmar, Thailand, Laos, Cambodia and Vietnam, before pouring into the South China Sea. The Lancang comprises only 16% of the Mekong’s total discharge as measured in the delta, yet it accounts for 100% of the flow at the Laos border, 45% of Cambodia’s average flow in the dry season, and originates 50% of the river’s total sediment. The upper basin is characterized by deep gorges, with more than 80% of the drop in elevation occurring in Yunnan province. Indeed, Yunnan and Laos have the greatest hydropower potential in the basin. The lower basin is characterized by plains and deltas which support large-scale irrigation, fishing, and transportation. The Mekong is vital to the food, water supplies and transportation of over 60 million inhabitants in the region. An estimated 8 out of 10 people within the basin depend on the Mekong River for subsistence, either in terms of fish catch or agriculture, with at least 50% of Cambodia’s animal protein consumption coming from Mekong fish and the Mekong Delta supplying waters for more than 50% of the agricultural component of Vietnam’s GDP.

The Lancang cascade is part of China’s “Develop the West” program. Initial plans for the Lancang cascade were developed in the 1980s, before Yunnan opened to foreign trade, and when China’s political relations with its lower Mekong neighbors were not as robust as they are today. Currently, four of the eight dams have been completed with construction on the fifth dam at Nuozhadu expected to be completed by 2015. China espouses that the Lancang cascade will benefit its lower riparian neighbors by providing flood control in the wet season, increasing water supply in the dry season, improving irrigation and navigation, and reducing overall carbon emissions.

Yet, as seen with the Three Gorges Dam, large hydro-power projects change the hydrology of a river. Of key concern for the Mekong is whether the dams will negatively impact the hydrological dynamics of the Mekong’s “flood pulse” resulting from the river’s seasonal flooding triggered by the annual monsoons. Diminishing the flood pulse could result in declines in biodiversity and volumes of fisheries by altering spawning and migration cues could affect its transfer of nutrients, and could limit the drift of eggs larvae and juveniles to the floodplain habitats. It could also impact rice harvests as 80% of rice production in the lower basin depends on water, silt, and nutrients from Mekong flooding. It might also cause increased salinization as seasonal flooding flushes delta areas, constraining sea water intrusion. The countries downstream are also concerned that the effective powering of their own dams will be dependent on China to discharge sufficient water. Impacts to water levels and fisheries have already been recorded in the lower Mekong basin which is one of the world’s biggest sources of fish. Indeed as water levels reached 50-year lows in 2010 in the Mekong River Basin, China’s dam building along the upper Mekong was blamed as a significant contributor to the drought.

Building Dams Abroad

In addition to damming trans-boundary rivers, China has also stepped up its dam building internationally. As China has absorbed and copied complex hydro-engineering technology initially supplied by the West during the 1980s and 1990s, it is now able to export its own domestically produced turbines, generators and other hydro-equipment to countries abroad, along with its dam building expertise. These exports are supported by a set of schemes known as the “Going Out” strategy introduced in 2001. This strategy encourages investments, exports and subcontracting in overseas engineering projects. Specifically, the government has aided China’s hydro-engineering companies with country-specific research, financial subsidies, and cheap credit. These advantages have helped Chinese companies to position themselves as low-cost competitors. This cost advantage has also been aided by the fact that Chinese construction companies often import cheap, highly productive labor from home to staff all or at least part of their workforce. Their extensive hydro-engineering experience has also allowed them to gain real efficiencies not shared by their competitors. As a result, in 2012, it was estimated that China was involved in more than 300 dam projects in 66 different countries, including the construction of 19 of the world’s 24 largest hydropower stations.

It is not uncommon for these international hydro-engineering projects to help support Chinese strategic interests. Because of its relative isolation from international markets until the early 1980s, China has been late to develop international sources of raw materials, particularly oil, timber and mineral resources. Yet, its position as “the world’s factory” has meant that its demand for natural resources has significantly increased over recent decades. As a result, China has implemented a strategy of retrieving resource deposits which had not heretofore been developed because they have been deemed insignificant in size, geographically remote or politically risky. In many cases, accessing these raw materials has obliged China to invest in secondary infrastructure such as pipelines, roads, railways, dams, power plants and transmission lines. For instance, the Belinga Dam in Gabon is being constructed by China to power a Chinese-built and financed iron ore mine whose output is destined almost exclusively for China’s construction industry. The dam is located in the Invindo National Park, and was planned by China with no public environmental impact statement. Myanmar recently decided to halt the massive China-backed the Myitsone Dam project, which has been opposed by green groups and opposition parties because of its significant environmental and social impacts. The dam was to generate some 6000 MW of power, most of which was to be exported to China, while creating a reservoir the size of Singapore with the depth of nearly a 70 story building, displacing tens of thousands of people.

China’s flurry of rapid international dam building has been driven in large part by its ability to self-finance its projects. This has allowed it to fast-track projects that the World Bank and the European Investment Bank, for instance, have been less quick to consider because of their environmental and social risks. China’s Exim Bank, the official export credit agency of the Chinese government, has delivered vital funding for many controversial large dams, including the Merowe Dam in Sudan, which resulted in a ruinous deterioration of living conditions among displaced people. The state-owned China Export and Credit Insurance Corporation, the China Development Bank, and the China-Africa Development Fund are all also increasingly involved in financing energy projects overseas. In some cases, hydro-engineering companies provide their own financing to their international customers. Sino Hydro, for example, a large state-owned company involved in at least 42 major dam projects, often invests in many of the projects it builds as does China’s International Water and Electric Corporation, China’s National Heavy Machinery Corporation and China Southern Power Grid. For the period 2010 to 2012, Sino Hydro directed over $1 billion towards dam-building and related projects in Zambia. In 2014, the total value of contracted projects in Africa was estimated at $70.8 billion. This self-financing has put increased pressure on Western financial institutions and construction companies to also circumvent internationally recognized – but unenforced – social and environmental standards when designing and building infrastructure abroad, so that they can compete with Chinese banks and construction companies.

China remains wary of Western-dominated environmental norms circumscribing its investment and construction activities abroad. China does not accept any country imposing on it their values, social systems or ideology, nor, as stated in its ‘principle of non-interference in the internal affairs of another country’, does it feel that it should impose its value systems on other countries. China has also defended its approach to overseas investments by insisting that developing countries should not operate at the same standards as developed nations; developed countries also polluted first and then cleaned up after as its economy and technology developed. China has argued that it is unwilling to impose environmental policies on foreign countries which might slow their growth.

Yet, recently there is some evidence that China’s leaders have started to reassess the long-term costs that can come with a no-strings-attached approached to construction overseas; reckless practices, in some cases, have prevented Chinese companies from growing business internationally. The ecological destruction that some of China’s dams have wrought have aggravated anti-Chinese sentiment at several sites in Asia, Africa and Latin America. For instance, in 2006 violent protests broke out at the $2 billion dollar Merowe Dam in Sudan resulting in three dead and dozens injured. Ultimately 15,000 people were displaced, often forcibly, by the reservoir. Protests renewed in 2011 when 1000 people staged a sit-in to protests the government’s failure to compensate them as promised.

China’s frequent policy of employing a Chinese workforce to build dams and other projects abroad reinforces the perception that it is engaged in exploitative practices. To counter this criticism, in 2006, the China’s State Council issued nine principles which should guide the work of firms working abroad. These principles included safeguarding environmental protection, protecting the livelihoods of local communities and peoples, obeying host laws and regulations, and employing local workers in a friendly and fair manner. The principles, while lacking specificity as to who should regulate overseas construction companies, and as to what domestic regulatory tools should be applied to Chinese companies operating overseas, do indicate the Chinese leadership’s desire to avoid future high-profile disasters such as those occurring around the Merowe dam in Sudan. However, without specific regulatory control or penalties for breach of standards, these principles remain mostly theoretical. Some Chinese companies have begun to establish their own environmental policies; China’s Exim Bank and China’s Development Bank, for example, both have environmental policies which are to guide their lending practices, but again these policies lack detail, and do not appear to be well enforced.

Trends

At present, 3,700 dams with greater than 1 MW capacity are currently planned (83%) or under construction (17%). These projects are spread across several continents, but focused mainly in Brazil, Argentina, Central Africa, and China. Even if all of these dams were constructed and realized their anticipated electric output, China would remain the world’s hydropower hegemon with an annual potential of nearly 1.8 million GWh (gigawatt-hours). While China’s position in the hydroelectric field may not be challenged in the coming years, its share within that sector is expected to diminish from 31% of world hydropower produced to around 25%.

China’s 12th Five Year Plan prioritizes the continued development of China’s hydro-power capacity so as to maintain its lead in production. Indeed, China’s National Energy Agency plans to increase China’s installed hydropower from approximately 200,000 MW to 380,000 MW by 2020. While greater efforts will certainly be made to better resettle those displaced by dams in the coming decades, environmental concerns regarding the impacts of China’s large hydro-engineering projects are unlikely to stop their future construction, particularly given the corporatization and increasing power of China’s hydro-power industry.

China’s construction on trans-boundary rivers is also likely to continue even in the face of growing international concern. China will continue to follow a “carrot” strategy to blunt the criticism of these dams, providing downstream countries with infrastructure and other needs where possible in order to get them on-side with China’s actions. China has the construction ability and the finance to proceed with the construction of many of these dams quickly. There is some argument that China plans to get the dams in place before the international community can rally effective support to pressure China to reconsider its actions.

The speed of China’s dam-building has helped many of its projects, both domestic and national, bypass international environmental standards and impact studies. Though hydropower is not an exceptionally high-emission source of energy in the long run, it has been shown to be rather carbon-intensive during initial phases. In 2014, the Intergovernmental Panel on Climate Change stated that short-term emissions from damming and dam-related activity might be ten times the emissions that could have been saved if governments reduced fossil fuel usage via other means. The short run emissions are largely a result of the large reservoirs that form behind newly constructed dams. As these young bodies of water undergo various hydrological changes, they often emit larger quantities of greenhouse gases.

Over many years, however, total hydropower-associated emissions are nearly 30 times lower than coal, which is currently China’s most dominant energy source. In 2013, coal accounted for 73.8% of China’s total 5,396 TWh generated, while hydropower ranked second with a 16.9% energy share. Despite the prevalence of coal as an energy source, coal usage decreased 1.2% through October 2014, and this trend is likely to continue into the future as northern China feels the strain of dwindling local water sources. Coal mining and processing requires an extraordinary amount of water that China can no longer afford to divert, given the drinking water demand of its citizens in northern urban centers like Beijing and Tianjin. If anything, the decline of coal will lead to an increase in the dominance of hydropower, which is already well-established in China. Dams may well supplant coal entirely, and become the primary source of Chinese energy.

In July 2014, China reaffirmed its commitment to pursue further hydroelectric projects on the Jinsha River (the upper Yangtze), Yalong River, Dadu River, and the Lancang Cascade (the Chinese portion of the Mekong River). It will also continue to aggressively pursue the international dam market, both to meet its own energy needs abroad and to create renewable, clean energy infrastructure for other countries. China’s commitment to Africa remains steadfast, with water conservancy and electric power as two of four key focus areas (the other two being communications and construction of ports, bridges, and railways). With these developments and even more plans in place, China is quickly becoming the largest, most experienced and most competitive dam builder in the world.

China’s Challenging Environment

Introduction

The state of Chinese environment today must be placed in the context of the extraordinary development that it has accomplished and of the continuing challenges it will face in the upcoming decades. Since 1981, China has lifted approximately 500 million people out of absolute poverty, an unprecedented achievement. Yet, in 2008, 172 million Chinese citizens still lived on less than $1.25 a day and about 400 million earned less than $2 a day. China’s population continues to grow, and is expected to peak at 1.4-1.5 billion people by 2030. Inequality in China has increased significantly both within the population, between rural and urban residents, and between different regions within the country. Those Chinese moving into the middle classes are demanding a better diet, modern housing, and the consumer goods which have long been common in the West.

China has raised the per capita income and standard of living of its citizens by providing an export-led, average GDP growth rate of over 8% over the last several decades. Much of that growth was fuelled by high- sulphur coal, with lax environmental regulation. The result has been a massive degradation of China’s environment. In 2006, China surpassed the United States to become the world’s largest source of carbon dioxide emissions. An estimated 70% of China’s rivers and lakes are currently contaminated, and 300 million Chinese people drink tainted water.

In part, China has achieved its unparalleled economic growth since the launch of its 1980 market reform through a policy of greater decentralization. The central government today has less of an ability to impose absolute control over provinces than it had previously. Environmental law has also been slow to develop and has not been aggressively enforced. Moreover, China’s “Century of Humiliation” has caused it to be protective of its sovereignty, and suspicious of foreigners and their environmental agenda. Indeed, China has opposed the monitoring of its greenhouse gas emissions as it views this as excessive intervention in its internal affairs. Partly as a result, China has not been transparent about environmental data. Its citizens, even its scientists, and the international community often lack the information needed to understand the full impact of China’s development on Chinese and international eco-systems. The basis of the Chinese Communist Party’s legitimacy has also shifted during the last three decades. Though it cannot ignore issues that threaten social stability, CCP power is now more dependent on its ability to continually deliver improving living standards than it was previously.

This has led China to follow a “grow now, clean-up later” approach to development. In international negotiations, China has vigorously opposed any binding, monitored agreement to reduce global emissions of greenhouse gases, although more recently it has pledged voluntarily to improve its own energy efficiency relative to economic output. Until recently, China’s calculation has been that short-term mitigation is more costly to the regime than adapting to a changing climate later, particularly given development’s immediate financial, political and social benefits. China’s 12th Five Year Plan seems to marks a shift in this attitude. Unlike previous plans, climate change and energy are featured prominently, and a strong emphasis is placed on targeting a more sustainable average annual GDP growth of 7%. The 12th Five Year Plan also adopts as binding domestic law the voluntary climate pledges China first made before the Copenhagen 2009 United Nations Framework Convention on Climate Change. More recently, in a joint announcement with President Obama in November 2014, Chinese President Xi Jinping announced a target of peaking carbon dioxide emissions around 2030 with a goal of reaching that target earlier, and an intention of increasing the share of energy coming non-fossil fuel sources to 20% by 2030.

That said, China’s 11th Five Year Plan also called for a slower average GDP growth rate of 7.5%, which China significantly exceeded. Ambitious local officials often consider Five Year Plan objectives as targets to be exceeded. GDP growth is a way for provincial officials to compete with rival regions and get promoted. Indeed, historically the performance evaluation system of government officials in China stresses the economic indexes while ignoring environmental protection indexes. This incentivizes local officials to prioritize GDP growth. As environmental protection can hamper GDP growth, environmental protection indexes have previously only constituted a small part of performance evaluation. After the 11th National People’s Congress in March 2011, Premier Wen Jiabao acknowledged this when he noted that GDP-oriented criteria for evaluating performance and government officials was an obstacle to achieving the environmental goals laid out in China’s 12th Five Year Plan. As a result, the central government would work toward adopting new performance evaluation criteria for local governments they gave more weight to the efficiency of economic growth, environmental protection and living standards improvements. Yet it will remain difficult to deter business leaders and officials who are profiting handsomely from rapid development.

Ultimately, many factors will influence China’s environmental policies in coming decades, not all of which are under central government control. Factors which encourage sustained pollution include: the continued need to provide economic growth to ensure political and social stability; the difficulty in implementing national environmental policies at the regional level; the ineffectiveness of MEP (China’s Ministry of Environmental Protection); and general corruption. Factors which are acting to protect the environment include the increasing recognition by Beijing of China’s limited bio-capacity, the increasingly vocal demands of its citizens to protect the environment, China’s significant investments in green technologies, and China’s opportunity to lead the world in green markets. It is still unclear which combination of factors will ultimately have the greatest influence on China’s short, medium and long-term environmental policies, or the state of its environment. That said, there is an undeniable trend toward recognizing the importance of environmental protection in China.

The State of China’s Environment

China’s environmental statistics are grim. In 2009, for instance, China surpassed the US to become the world’s largest energy user. While China’s average per capita emissions remain below those of the US, they have overtaken the global average, and are rising rapidly. Despite efforts by China to improve its energy efficiency, its CO2 emissions from fossil fuels rose by almost 80% during the past decade. The Chinese government recently conceded that only 3 of its 74 major cities met national air quality standards during 2013. Indeed, the Beijing-Tianjin-Hebei area had an annual average levels of PM2.5 – tiny pollutants smaller than 2.5 microns – at 106 micrograms per cubic meter, more than 10 times the World Health Organization’s safety level of 10.

This pollution is affecting countries worldwide, and not just because of the consequences of global warming. An analysis of air in places as disparate as San Francisco and Kyoto found chemical signatures of coal-fired Chinese power plants, smelters and chemical factories. Additionally, China’s water is also both in short supply and highly polluted. Growing urbanization is increasing both China’s air and water pollution and exacerbating its water scarcity since urban dwellers consume three times more water and energy than do rural residents. Moreover, an estimated 70% of China’s rivers and lakes are now polluted. In 2009, 57% of the 7 monitored river basins had pollution levels of I-III, suitable for drinking, swimming, household use, and able to support aquatic life. 24% of the water in China’s rivers had levels of IV-V, water unfit for swimming, but suitable for industrial purpose. 19% had V+, meaning that the water is considered useless, unfit for industry or agriculture. 23% of China’s key lakes and reservoirs had water grades of I-III, 42% IV-V and 35% V+. 2.3% of groundwater in 8 regions was rated I-II, 23.9% was graded III, and 73.8% ranked IV-V.

Stresses to China’s environment will continue to grow in the future. By 2030, three quarters of the 11 gigaton projected increase in energy-related global CO2 emissions is expected to be generated by China. By 2030, an estimated 390 million vehicles are projected to fill China’s roads, an almost 3 fold increase from today. Urban floor space will need to double to accommodate the approximately 350 million additional people moving into cities. At the same time, an expanding number of Chinese will rise into the middle classes, increasing demands on the environment further. Even with its aggressive development of alternative fuels, by 2030, it is still estimated that China will need to burn almost 200 million more tons of coal than in 2005 to provide sufficient heating and electricity for its new urban citizens. Indeed, overall coal-based power generation capacity is projected to triple between 2005 and 2030. Proper desulfurization of coal plants will require sizable capital investments and extensive regulatory monitoring. Urbanization and rising living standards will also increase demand for greater varieties of food. China will need to control desertification, overgrazing, the overuse of fertilizers, and over-logging in order to preserve the productivity of its arable lands. Moreover, managing the growing amount of urban waste will be a major challenge.

China’s Position on International Climate Negotiations

Yet, despite pollution levels which are increasingly having consequences for both China and the world, China aggressively defends its right to develop and thus pollute. In 2007, China’s National Development and Resources Commission reiterated China’s past position that “developed countries should take the lead in reducing greenhouse gas emissions as well as providing financial and technical support to developing countries. The first and overriding priorities of developing countries are sustainable development and poverty eradication.” In other words, as a developing country, China must give priority to economic development over environmental protection. Domestic environmental issues take precedence over global concerns. As developed countries are responsible for the large part of historical degradation, they must limit their emissions first, and pay for and transfer technology to developing states to address their environmental problems. These payments are not loans but compensation for the developed world’s historical environmental damage. Developed countries must also take a lead in the reduction of greenhouse gases, and the implementation of signed agreements. The sovereignty of the country’s national resources must be respected. There should be no linking of aid or the implementation of sanctions to any formal agreement to change environmental practices. Environmental considerations should not be used as a reason to interfere in the international affairs of a developing country, or as a reason to impose trade barriers.

China has expanded its position in recent years by noting that population control is one of the most successful strategies to curb emissions. China argues that given its effective population control since 1970, China should be given credit for this key mitigation effort. Additionally, as China has four times more people than the US, China should have a higher emissions quota. China has also advanced the argument that having a modest but dignified level of well-being – which some reason to be about $7500 annually – is a basic human right which takes priority over environmental concerns. China argues that those below this development should be exempt from any requirement to pay for climate policy which indeed includes a large part of its citizens. China contrast this argument with the fact that the richest 20% of the world use over 75% of global resources and emit 51% of global CO2 emissions to maintain their way of life. The Chinese also point out that the ownership and responsibility for emissions is a nuanced discussion; approximately 33% of China’s domestic 2005 CO2 emissions, for example, resulted from the production of exports, raising the question as to whether consumers also bear responsibility for these emissions because of their purchasing decisions.

To bolster its negotiating position, in the past China has formed an alliance with developing and very poor nations. In 1991, for instance, in advance of United Nations Conference on Environment and Development, China convened a forum attended by 41 developing countries which resulted in a unified negotiating position largely reflective of China’s views. During 1987 negotiations for the Montréal protocol to protect the ozone layer, China joined India and Brazil to insist that without significant financial support and transfers of technology from the international community, neither country would sign the Montréal Protocol on Substances that Deplete the Ozone Layer. This resulted in the establishment of the multilateral fund to offer developing countries assistance in the form of both financial compensation and technological transfers. The international community agreed to establish the fund because China and India’s emissions would cancel out the positive impact of the other signatories if they did not participate. That said, China was quick to sign the 1993 Convention on Biodiversity as it was not a threat to its economic growth. With funding in hand, China has worked to meet its commitments under the Montréal Protocol. For instance, in December 2011, China’s Ministry of Environmental Protection announced its HCFC Phase-out Management Plan (HPMP), a US$270 million project to cut consumption of Hydro chlorofluorocarbons (HCFCs) by 1 January 2015 by 17%. As China is the largest producer, consumer and exporter of HCFCs in the world – more than 70% of global HCFC production, and 50% of total consumption of developing countries – its current campaign is essential for the successful implementation of the Montreal Protocol. The plan is aimed at halting the 11% annual growth in Chinese HCFC production that has occurred in the last three years. Christophe Bahuet, United Nations Development Programme (UNDP) Country Director of China expressed optimism that China would reach its targets. Recently, China’s climate stance alongside developing and very poor countries has shifted. During the 2009 Copenhagen conference, for instance, China joined forces with the large, increasingly wealthy so-called BASIC developing states – Brazil, South Africa, India and China – to refuse binding limitations on greenhouse gas emissions, despite entreaties from extremely vulnerable poor countries, especially small island states, whose very existence is at threat by global warming. To this extent, China is no longer an unqualified defender of the developing world.

Increasingly, China has set forth voluntary, non-binding, and non-verifiable emission reduction targets as it did before Copenhagen, when it stated that it would “endeavour to lower its carbon dioxide emissions per unit of GDP by 40-45% by 2020 compared with the 2005 level; decrease its share of non-fossil fuels and primary energy consumption to about 15% by 2020; increase forest coverage by 40 million hectares, and forest stock by 1.3 billion m³ by 2020 from the 2005 levels.” Likely, China’s willingness to put forward these targets was because they were consistent with policies China was already adopting nationally. Indeed, China has many domestic policies related to climate change – to increase energy efficiency and to use more alternative energy, for example – yet these policies are often driven by objectives such as increased energy security, enhancing technological innovation and arresting desertification instead of outright greenhouse gas mitigation.

The Cost of Environmental Degradation to China

Despite its negotiating position in the international community, domestically, China recognizes that environmental protection is a pressing issue. In 2007, the World Bank assessed that China’s combined health and non-health cost of outdoor air and water pollution to be $100 billion annually conservatively estimated, or 5.8% of the country’s GDP. Four of the ten most polluted cities in the world are in China. The World Bank calculated that up to 400,000 people in China die each year from outdoor air pollution, 30,000 from indoor air pollution, and 60,000 from water pollution. An estimated 40% of all the global deaths linked to air pollution occur in China. This is reflected in greater rates of lung cancer and respiratory system problems. China’s water is also producing higher rates of various health abnormalities including liver and stomach cancer, stunted growth, miscarriages and birth defects. Polluted water is also exacerbating China’s severe water scarcity problems. It is conservatively estimated that urban water scarcity costs China about $14 billion annually in lost industrial output, and rural water scarcity generates an additional $24 billion in annual costs. In 2000, the Ministry of Agriculture related that almost 20% of agricultural and poultry products in major industrial and mining districts are irrigated with contaminated water. On China’s current trajectory, the health costs of air and water pollution could triple by as early as 2020, particularly as China’s population begins to age more rapidly.

Moreover, China’s 2011 “Second National Assessment Report on Climate Change” estimated that global warming will significantly impact China in the coming decades. In particular, the report predicted that China’s grain output could fall by between as much as 20% by 2050, putting greater pressure on food prices, and threatening China’s food security. The report also forecasted that global warming would lead to severe imbalances in China’s water resources within each year, and across the years. By 2050, eight of China’s provinces and provincial status cities could face severe water shortages (meaning less than 500 m³ per resident), and another 10 could face less dire chronic shortages. Additionally, since the 1950s, over 82% of Chinese glaciers which feed many of China’s major rivers have been in a state of retreat. With the report predicting that global temperatures will rise between 2.5 and 4.6°C above the 1961-1990 average, this rate of glacial retreat will increase. The report also estimated that sea levels will rise between 10 to 15 cm in the next 30 years, pressing up against China’s big coastal cities and export zones, making them more vulnerable to typhoons and flood tides unless China invests heavily in new coastal embankments.

Social unrest is also an increasing consequence of environmental degradation. The Chinese government received 750,000 environment-related complaints in 2008, a number that has increased approximately 30 percent annually since 2002. This environment-related social unrest risks threatening central authority. Moreover, it is estimated that by 2025 between 30 and 40 million more people may need to relocate due to environmental degradation. The environmental migrants are on top of the high numbers of Chinese citizens slated to be relocated as the result of China’s aggressive dam building.

Challenges to Implementing Environmental Policy in China

Yet while China recognizes the danger of its increasingly stressed bio-capacity, implementing effective environmental policy remains difficult. Perhaps the greatest challenge to implementing effective environmental policy in China is the sheer number of Chinese citizens still well within poverty levels, and the inequality of wealth distribution throughout the country. Until poverty and inequality eradication have been generally achieved, economic growth will be prioritized. Wu Shunze, Deputy Director General of the Chinese Academy of Environmental Planning noted this when he stated that China estimates its industrialization will be completed by 2030, that its use of resources and energy will peak between 2020 and 2030, and that between 2030 and 2050, China will then begin to see a greater shift toward a service-driven economy, and begin to repair environmental damage. China thus anticipates that until 2030, the relationship between the economy and the environment will be “in contradiction”, and will only become preliminarily “harmonious” by 2030.

Until then, China will look for win-win solutions where its environmental policies improve energy security, reduce production costs, promote job creation, and provide it with technological advantage in the world markets without impeding development at home. China’s belief in its ability to “clean-up later” is founded not just on western experience, but on its millennia old tendency to control and shape nature – uprooting forests, redirecting rivers, filling in swampland, building dams and dykes. Successive Chinese dynastic and now Communist governments have long pursued domination over ecological resources.

China’s growing focus on inequality is an increasingly key factor in its environmental discourse as inequality is potentially an existential threat to the Communist Party’s monopoly of power. As opposed to always approaching China as if it were monolithic, international engagement with China about the environment needs to be across multiple levels. What might be expected of China’s increasingly wealthy urban coasts can be an unreasonable demand for China’s poor western areas. Similarly, it is difficult for Beijing to set uniform, national environmental policy. Internal pollution mitigation will require strategies that address challenges at the global, regional, intraregional, city, small town and village levels. In 2009, President Hu articulated this by arguing that China’s wealthier eastern regions must take the first major step toward emissions mitigation, while poor western regions continue to catch up economically.

Since 1980, China has nevertheless implemented a flurry of environmental regulation. Decentralization after the 1980 market reform means that Beijing’s has increasingly imperfect control over its local governments. This exacerbates the environment’s “Tragedy of the Commons” principle. The problem of discharge into China’s rivers is illustrative. To enhance their competitiveness, each locality has an incentive for its factory to discharge its waste as cheaply (often illegally) as possible, with each factory’s waste seemingly inconsequential in relation to the river as a whole. Ultimately, the accumulation of its and other factories’ waste devastates the river. This effect is compounded by the fact that pollution fines are low and that natural resources are undervalued. Additionally, those most affected by river pollution do not always speak out against pollution when their livelihoods are dependent on the offending industry. While farmers, for instance, might suffer lower crop yields, sick animals, and deteriorating health because of polluted water, their income can nevertheless be reliant on the polluting factory which may be providing family members with jobs, investing in local infrastructure and purchasing farm produce, which in itself might be contaminated.

The ineffectiveness of local environmental protection bureaus compounds the problem. Numerous Chinese agencies are responsible for overseeing environmental protection depending on the pollution problem. These ministries often compete for international and domestic environmental funding. Their poor coordination and delineation of public duties creates conflicts of interest, especially at the local level. Nationally, responsibility for environmental protection in China rests primarily with the Ministry of Environmental Protection (MEP) formerly the State Environmental Protection Agency (SEPA). While elevation to a cabinet level ministry has enhanced its power, MEP still remains a relatively weak voice within China’s government. Historically, environmental funding has been low. China’s Environmental Protection Bureaus (EPBs) monitor environmental conditions at the local level. Despite MEP supervision and the bureaus seemingly large manpower – China’s roughly 2500 EPBs employ some 60,000 people – in general, the EPBs report to local governments for budget and resource support. This gives the local government leverage to protect local interests. A chronic lack of funding also hampers enforcement. Bureaus often have insufficient staff and cars for inspections. Factories are aware of these constraints and use this to their advantage by, for instance, discharging at night. Even when bureaus launch campaigns to close or sanction problematic companies, the companies often relapse into violation or reopen once the campaigns quieten down. Also, fines often cannot be applied to companies across administrative boundaries. Counties and cities have often shifted polluting enterprises near the border with downstream counties, so river discharge is carried quickly into the next province. Pollution fines also partly fund EPB activities. This can lead to perverse incentives where a bureau can encourage the persistence of pollution problems in order to pay its wages.

Courts are also often ineffective and enforcing environmental law. While China has an increasing level of environmental legislation, public awareness of environmental law remains poor. Given the poor availability of environmental data, when cases are brought to court, it is difficult for victims to provide conclusive evidence. Additionally, many polluting companies pay relatively significant levels of local taxes. As most courts are funded and staffed by local governments, there is an incentive to interfere with court proceedings in order to protect polluting companies and the taxes which flow from them. As a result, many environmental court cases are thrown out on the basis of flimsy reasoning.

Corruption is also a factor in China’s environmental degradation. In China, corruption can be seen as bribery and cronyism when developing environmental policy and when promoting harmful environmental practices, embezzlement of environmental funding, and bribery during environmental inspections and issuing of permits. Environmental corruption can also be connected to organized crime, particularly in mineral, timber and wildlife trafficking.

Trends

What is certain is that, even if it were to implement every environmental strategy discussed in China’s 12th Five Year Plan, China’s greenhouse gas emissions will continue to rise. What is uncertain is the level of that increase. Many factors influence the rate of environmental degradation within China, and its contribution to global warming. On the negative side, the decentralization that has occurred as China has transitioned to a market economy means that it has less absolute control over its regions than it did historically, so that enforcing national environmental regulation remains challenging. Moreover, courts and regional Environmental Protection Bureaus are often funded at the local level, reinforcing regional control over the implementation of environmental policy. Currently, most market and political incentives encourage local officials to continue to prioritize rapid economic development. While Beijing has indicated a move toward decoupling promotion from GDP growth, most local party officials will continue to be strongly incentivized by the financial benefits that accrue to their region and to themselves as a result of strong economic performance. Corruption will also continue to undermine environmental protection.

As the Chinese Communist Party’s legitimacy now rests in large part on its ability to provide a rising standard of living for its citizens, China will continue to need strong economic growth to raise its approximately 400 million citizens still living on $2 or less per day out of poverty, and provide them with a “modest dignified level of well-being”. In addition, growing inequality throughout the country is placing greater pressure on CCP leadership to provide opportunity for those regions, mainly in the west, that significantly lagged behind wealthier east coast provinces. While China increasingly speaks of the importance of sustainable development, and although it is increasingly investing in green technologies, it is unlikely that these technologies can come online rapidly enough to offset all the pollution that will be emitted as China works to provide a reasonable standard of living for the bottom third of its population. Additionally, China is racing against the problem of a rapidly aging population, trying not to grow old before it grows rich and before the competitive advantage of its huge inexpensive workforce begins to dissipate.

Given the challenges of China’s decentralization, and the pressures of poverty, inequality and a rapidly aging population, what is most likely is that China will continue to be the world’s largest contributor to greenhouse gas emissions and environmental degradation for at least the next two decades. Yet within this high greenhouse gas emission model, there will be an increasing trend toward bringing on line a rapidly growing level of alternative fuels, green technologies and pro-environmental protection policies such as environmental taxes and cap-and-trade pilot programs. Indeed, by the end of 2030, it is possible that China will be a world leader in many of the green technologies that will be most impactful on protecting our global environment going forward.

In international climate change negotiations, China will continue to refuse to be constrained by internationally imposed targets which can be monitored by outside countries. Yet, China’s growing implementation of environmental technologies at home will allow it to be a much more constructive player in international negotiations in the future. Increasingly, China is likely to hold up its environmental accomplishments at home as an example to other countries; for example, by 2015, China is expected to lead the world in installed hydro, solar, wind, and nuclear capacity. Thus, China’s future in the field of environmental protection will be, paradoxically, both world-leading but also internationally uncooperative.

Water in China: A Thirsty Country

Introduction

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China faces severe water shortages. Its current water per capita is one quarter of the world average, yet its overall per capita usage is still low by international standards but this will increase over the coming decades. The water that China does have is often badly polluted and is inefficiently used. Moreover, China’s water is unequally distributed with the Yangtze River basin and areas to the south enjoying 80% of China’s naturally available water compared with just 20% in China’s north.

China’s water scarcity will challenge its future economic expansion. Already, agriculture, industry and China’s growing cities all compete for scarce water resources, as do China’s different regions. Decades-old economic priorities such as food self-sufficiency will be increasingly difficult to maintain because water used in industrial output creates more economic value than it does in agriculture. Water scarcity could also test China’s political stability. Increasing illness caused by polluted water is driving up healthcare costs and generating more internal dissent. In 2005, the Chinese government acknowledged that 50,000 environmentally related “mass incidents” (a euphemism for protests) occurred, many of which were sparked by water degradation.

Population, Ecology and Water Scarcity

Right from China’s earliest dynasties great attention was paid to agricultural productivity. The Chinese bureaucracy mobilized the Chinese masses to construct irrigation systems and to clear land. This created a feedback loop, where increased agricultural productivity led to a rise in population, requiring further hydro-engineering and agricultural innovation to maintain China’s swelling numbers. In this way, China has remained the world’s most populous country for thousands of years. Yet, until the 1978 market reforms, China remained a largely agrarian society. China never achieved sufficient per capita economic growth to drive down a natural reduction in the country’s birth rate. Instead, large families of many sons offered rural parents security both in terms of providing labor for farming and care in old age. After the establishment of the People’s Republic of China in 1949, peace and improvements in nutrition, sanitation and healthcare saw Chinese mortality rates plummet. Moreover, until 1970, Mao Zedong encouraged population growth. As a result, China’s population doubled in less than thirty years from approximately 550 million in 1950 to a little over 1 billion in 1982. China’s population stands at 1.35 billion today, and is expected to peak at between 1.4 and 1.5 billion by 2030.

Impact on the Hydrological Cycle

In order to feed its enormous population, since the 1950s, China has increased efforts to create new agricultural and grazing land through the clearing of forests, the filling of lakes, the draining of swamps and wetlands, and the creation of large irrigation projects. This process has impacted China’s hydrological cycle. When land is cleared of plant life through unsustainable farming and grazing methods, the local hydrological cycle is disrupted, and desiccation – the drying out of the environment – occurs. Instead of catching precipitation which then permeates the soil, areas that are deforested, over-grazed and over-farmed allow surface water to run immediately into streams, instead of returning repeatedly to the region as rain through the process of evapotranspiration. China’s areas of desert or deforested land have increased significantly since the 1950s. Today approximately 27%, around 2.5 million km², of China’s land is desert or suffering desertification, although China’s deserts have begun to shrink since 2005 due to a massive reforestation campaign launched by the government. In the north and northwest of China, it has been estimated that the average annual precipitation has decreased by one third between the 1950s and the 1980s; overall China has 350 billion m³ less water than it had at the start of the century, equivalent to the amount of water that flows through the mouth of the Mississippi River in nine months. Desertification and deforestation have also caused sediment levels to significantly increase in all of China’s river systems due to severe soil erosion. Soil erosion has forced Chinese peasants to constantly seek new, often less suitable, land for farming and animal husbandry, in what has become an environmentally destructive feedback cycle.

Water Scarcity

As China’s population has swelled over the millennia, its per capita water has decreased. China now has an estimated 2,029 m3 of water per capita per annum, one quarter the world’s average. This per capita water figure is expected to decline further as China’s population peaks. This water scarcity is exacerbated by China’s uneven water distribution. China’s precipitation patterns are heavily affected by the East Asian monsoonal climate. Its mountainous geography drains the monsoonal rains as they move from the southeast into the northwest of the continent. In 2000, for instance, southern China, the Yangtze River basin and areas to its south, received approximately 80% of China’s naturally available water, yet the areas supported 54% of its population, 35% of its arable land, and 55% of its GDP. Northern China collected only 20% of China’s water to maintain 46% of the population, 65% of the arable land and 45% of its GDP. In some northern areas, strains on water resources are even worse. Beijing’s and Tianjin’s Hai River basin, for instance, receives approximately 1.5% of China’s water to support 10% of its population and 11% of its arable land.

Approximately 400 of China’s cities currently face water shortages, and over 300 million people drink water contaminated with pollutants including arsenic, excessive fluoride, toxins from untreated factory wastewater, agricultural chemicals, leaching landfill waste and human sewage. Moreover, China’s per capita water footprint is growing. China will not only have more people competing for its finite water resources in the coming decades, but each person will individually demand more water. Today, China’s overall water footprint per capita is still about half that of the US, but is expected to grow by between 40% and 50% by 2030. Factors such as higher living standards, increasing urbanization and further industrialization are driving water demand. China’s rising wealth has meant, for instance, that its citizens are eating substantially more meat. The production of one kilogram of beef requires 600 liters of water compared with the 100 liters required for a kilogram of wheat. This shift in diet can be seen in China’s food footprint numbers. In 1961, China used 260 m³ of water per capita to grow food; by 2003 this figure had more than trebled to 860 m³.

Agricultural, Urbanization, Industrialization, Water Wastage

Currently, 62% of China’s water is used for agriculture, a sector which is responsible for approximately 13% of the country’s GDP. In the agricultural sector, demand for water for irrigation is currently about 400 billion m³, but this is projected to reach 665 billion m³ by 2030. Yet agriculture water usage is extremely unproductive, with 45% of agricultural water lost before it even reaches crops. Water used for industrial output is 70 times more productive in terms of financial value than that used in wheat production. As water becomes increasingly scarce, the agricultural sector risks losing water resources to industrial production, especially if China increases the price of water to better reflect its true scarcity.

China’s growing urbanization is also requiring more water per capita. 70% of Chinese citizens are projected to be living in cities by 2030, up from 51% today. This is significant because urban dwellers consume three times as much water and energy as rural residents. Between 2000 and 2010, for instance, the World Bank estimated that China’s urban water consumption increased by 60%. Moreover, it is estimated that 25% of China’s future electricity growth needed to power its cities will be generated by coal plants. Coal mining, processing, combustion and coal-to-chemical industries are responsible for 22% of the nation’s total water consumption, second only to agriculture. By 2020, the coal sector is expected to consume about 27% of China’s total water. Moreover, China’s urban water distribution networks are particularly leaky. These leaks equal 18% of total urban water supplies on average, or about 1.5% of China’s total water withdrawals.

Overall, the industrial sector uses 23% of China’s water. China’s major industrial water ValeStock / Shutterstock.com users are the metallurgy, timber processing, paper and pulp, petroleum and chemical industries. Water productivity in Chinese industry is also low by international standards. Only 40% of its industrially-used water is recycled, compared with up to 85% in developed countries. Indeed, China’s overall water productivity is poor, estimated to be $3.60 per m³, lower than the average of $4.80 per m³ for middle-income countries, and $35.80 per m³ for high-income countries. The one positive aspect of all of this inefficiency is that there is ample room for improvement with relatively simple measures.

Depletion of Aquifers and Lakes

Extensive irrigation has always been essential to China’s agricultural productivity. Indeed, massive irrigation works built during the Maoist era enabled food production to keep pace with the rapid population growth of the time. China draws on both its rivers and large underground aquifers to irrigate its crops. Irrigated land produces nearly 75% of China’s cereals and more than 90% of its cotton, fruits, vegetables and other agricultural commodities on around half of the farmlands throughout the country. Yet, according to the Ministry of Water Resources, China now uses as much as 60% of the water running in many of its rivers, including the Liao and Yellow Rivers, and as much as 90% of the Huai River. China has increasingly turned to aquifers and lakes to meet water demands no longer satisfied by rain and river water alone. Groundwater now provides potable water for nearly 70% of China’s population and irrigation for approximately 40% of its agricultural land. Nationally, groundwater usage has almost doubled since 1970, and now accounts for 20% of China’s total water usage.

Aquifers are especially important in China’s north, where farmers have been relying heavily on groundwater resources to increase agricultural yields. Yet China is now draining its aquifers at an unsustainable rate. At current rates of depletion, the World Bank estimates that China’s northern aquifers could effectively run dry in as little as 30 years. China’s northern megacities now rely on underground water sources for two-thirds of their needs. For example, in Hebei province, which surrounds Beijing, aquifer levels are dropping by approximately 3 meters annually, forcing the digging of ever deeper wells which increases the risk of both saltwater and arsenic intruding into the water supply, as well as increasing the likelihood of land subsidence. With aquifers and rivers suffering from overuse, lakes are also diminishing. The province of Hebei has already lost a staggering 969 of its 1052 lakes.

Water Pollution

Despite China’s efforts over the last three decades, water pollution has spread from the coastal to inland areas and from the surface to underground water resources. An estimated 70% of China’s rivers and lakes are now polluted. In 2009, 57% of the 7 monitored river basins had pollution levels of I-III, suitable for drinking, swimming, household use, and able to support aquatic life. 24% of China’s rivers had levels of IV-V, water unfit for swimming, but suitable for industrial purpose. 19% had V+, meaning that the water is considered useless, unfit for industry or agriculture and unsafe for human contact even after treatment. 23% of China’s key lakes and reservoirs had water grades of I-III, 42% IV-V and 35% V+. 2.3% of groundwater in 8 regions was rated I-II, 23.9% was graded III, and 73.8% ranked IV-V.

Only a year later (2010), party officials outlined their goals for the future in the 12th Five Year Plan, which aimed for 60% of water between grades I and III, with no more than 15% in the Grade V and V+ categories. As of 2013, 44.3% of the water in the Songhua River Basin was classified as Grade IV and below. In the Huai River and Hai River Basins, 40.4% and 60.9% of all water fell into the Grade IV or worse category, respectively. Though these numbers are still relatively high, they are on track with China’s goals set forth in the 12th Five Year Plan.

Township and village industrial enterprises, in particular, often do not treat their waste water. These small-scale enterprises have little environmental monitoring and are frequently engaged in all manner of heavily polluting production, such as the operation of paper mills, tanneries and breweries. Similarly, townships and villages often inadequately treat their domestic waste. About 80% of China’s 7500 most polluting factories are located on rivers, lakes, or in heavily populated areas. These factories frequently release untreated waste and chemicals into China’s waters either intentionally or by accident. A recent example was the 2012 cadmium spill in Guangxi which polluted an approximately 100 km stretch of the Longjiang River at a level of more than five times the official limit, contaminating water supplies for Liuzhou, a city of 3.2 million people. Cadmium is poisonous and can cause cancer. The same factories also release dangerous airborne pollutants that are absorbed into groundwater or contaminate rivers by way of urban runoff. Some of the most harmful are categorized as polycyclic aromatic hydrocarbons (PAHs), and an estimated 90% of water located in sources near Chinese cities is now dangerously polluted because of their presence.

Rural areas have also seen an increase in water pollution due to chemical pesticides and fertilizers seeping into groundwater sites. For millennia, China’s farmers produced agriculture through “organic” farming methods. Farmers collected every bit of organic waste to ferment for fertilizer. Nothing was wasted, and even human waste, or “night soil”, went into “honey buckets” to transport to the fields. Every winter and spring farmers dredged nearby rivers and canals to add sediment to the fertilizer. Particularly in the south, dense grass at the water’s edge was added to pig fodder, which, after being digested by the pigs, produced manure and helped keep the rivers and lakes clear from vegetation. The entire process of recycling was labor-intensive but efficient. The rivers and lakes remained relatively clean despite thousands of years of intensive farming.

Yet, since 1978, fertilizer applications in China have increased fivefold. In general, animal and human feces are no longer collected for fertilizer, and instead are discharged untreated into rivers. Chemical fertilizer runoff has significantly accelerated eutrophication of many of China’s lakes such as Dian Chi in Yunnan Province, Chao Hu in Anhui Province and Tai Hu in Hubei Province where algae blooms absorb a significant portion of the lake’s oxygen, choking off fish and other aquatic life. Large algae blooms also broke out right before the 2008 Olympics, forcing Beijing to launch a massive emergency clean-up to ensure the sailing events could go ahead as scheduled in Qingdao, in Shandong.

Economic and Health Cost

The World Bank estimated that China’s water crisis is reducing China’s GDP by pcruciatti / Shutterstock.com approximately 2.3% annually, with 1.3% attributable to water scarcity, and the other 1% caused by the cost of water pollution. These estimates do not include the costs of ecological deterioration caused from the drying up of lakes and rivers and from eutrophication. Nor do they reflect the economic cost of disease caused by water pollution, conservatively estimated at an additional 0.5% of GDP. In 2002, the WHO reported mortality from water-borne diarrhea-related illness in China at 108.4 per 100,000, compared with 11 per 100,000 in Vietnam and 5 per 100,000 in Thailand. In 2007, the OECD estimated that 30,000 rural children die each year from diarrhea because of water pollution. In China’s most polluted areas, water has also been blamed for the recent high rates of various health abnormalities including liver and stomach cancer, stunted growth, miscarriages and birth defects.

Regional and national food supply has also suffered due to water pollution. A study in Xingang Village in Jiangsu Province showed that rice yield dropped 77% from 9,750 kg per hectare to about 2,250 kg per hectare. The remaining crop is also of dubious quality, often showing signs of heavy metal leaching from polluted local water. In 2011, it was estimated that up to 10% of China’s rice crop might contain unsafe or nearly unsafe levels of cadmium as a result of widespread irrigation with cadmium-poisoned water.

China has also seen a stunning rise in cancer rates, often localized to certain villages located near areas of heavy industrial activity, where the air and water are both extremely polluted. These villages have become colloquially known as Aizheng Cun, which literally translates as “Cancer Village.” In 2010, the annual death rate for Chinese citizens as a result of blood, bone, breast, liver, and lung cancers was estimated to be 1.2 million lives lost per year. By 2014, that figure doubled with The Lancet Oncology estimating that 2.4 million premature deaths in China as a result of various cancers.

Sanitation also remains a key issue with regard to China’s water supply. In 2008, 327 million Chinese did not have direct plumbing access to drinking water and 535 million were without properly sanitized water. This led to an estimated 62,800 deaths, mostly affecting young children. By 2011, the number of people lacking proper sanitation decreased to 471 million, but the number of Chinese lacking piped-in drinking water increased to 401 million. This sanitation improvement comes on the heels of annual US$10.8 billion government-driven investments from 2006-2010 in domestic sanitation. Water-borne disease, however, is still a major economic drain for China, costing around US$11 billion annually.

Flooding – Yellow River and Yangtze River

Not only are desertification and deforestation exacerbating China’s water scarcity, they are also aggravating China’s flooding challenges. The Chinese Minister of Water Resources, Chen Lei estimated in 2007 that China has lost 2% of national GDP annually to flooding since 1990, and a recent study placed the total costs of floods from 2000 to 2012 at 105 billion RMB annually (US $17 billion). Flooding has challenged Chinese rulers for millennia. From 602 BCE to 1938 AD it is estimated that major collapses of Yellow River dikes occurred once every two or three years. Then, every hundred years or so, the river would change its course. Many of the resulting floods were some of the deadliest natural disasters ever recorded. For millennia the Chinese constructed dikes along the lower reaches of the Yellow River trying to contain its torrents, yet constant ecological destruction along the upper reaches increased erosion which intensified river silting. The silting raised the river bed above the countryside. This “suspended” river greatly increased flood damage when the river inevitably breached its dykes. After 1949, the CCP built almost 3000 dams on the Yellow River, and heavily reinforced its levees and embankments. These hydro-engineering projects involved the equivalent of 500 million workdays and 1.4 billion m³ of reinforced concrete – enough to build 13 Great Walls. Yet many of the Yellow River’s dams have fallen short of physical and economic targets, and have resulted in huge losses of forest lands, wildlife habitat and aquatic biodiversity. Global warming has also increased evaporation at many of the dam sites.

Similarly, parts of the Yangtze River have flooded continually for millennia. Yet, as deforestation and reclamation of land has increased, floods have become more frequent and more destructive. The CCP attempted to solve the flooding by increasing the height of 3600km of embankments and more than 30,000km of levies. The work required more than 4 billion m³ of dirt and stone, or enough material to put a wall around the globe three times. Yet these raised structures could not offset the loss of water absorption capacity caused by the rapid deforestation and agricultural land reclamation that occurred during the same period. As a result, the Yangtze experienced a series of significant floods in 1980, 1981, 1983, 1991 and 1996. Then in June 1998, China suffered one of its worst floods in 40 years, leaving 3,700 people dead, 15 million homeless and causing $26 billion of economic damages. The reinforced embankments and levees proved largely ineffective, with approximately 9,000 of them collapsing. As well as providing hydropower and improved navigation, the controversial Three Gorges Dam was built in large part to control the Yangtze’s flooding, although many scientists believe that the Yangtze is still vulnerable. Additionally, after the 1998 flood, China began to place greater importance on the role of ecology in flood prevention, and has begun an extensive campaign of reforestation and forest preservation.

Drought

Because of the variability of the monsoonal rains, like flooding, drought has plagued the country for millennia. Yet desiccation in many areas has significantly increased China’s drought challenges. Overall, droughts have become more severe, prolonged and frequent during the past 57 years, especially for northeastern and central China. China has been essentially self-sufficient in grain for decades. This self-sufficiency camouflages the fact that China produces one-sixth of the world’s wheat output and one-fifth of global corn. China is thus enormously important to the world’s food supply. If drought forces China to import large quantities of food, it significantly impacts world food prices. Yet, in every year since 2005, drought placed China’s grain crops at risk, and the government was forced to spend billions of dollars digging wells and cloud seeding to encourage rain. Most recently, in 2010-2011, northern China suffered its worst drought in 60 years, impacting most of China’s wheat producing regions. At its peak, it is estimated that 36% of China’s northern wheat fields were affected, and that 2.57 million people and 2.79 million livestock suffered from a lack of water. The water shortages also affected around 161 million people, with an economic cost estimated at $2.8 billion.

Drought has not been restricted to China’s drier north. In western Sichuan, for example, rapid deforestation caused Sichuan’s forest cover to fall from 3.6 million hectares in in 1985 to 2.34 million hectares in 1995. In the 1950s, serious droughts hit Sichuan about once every three years. In the 1960s, this became once every two years and by the 1980s, drought troubled Sichuan counties annually. In 2010, more than 20 million people in Yunnan, Guangxi, Guizhou, Sichuan and Chongqing were left without adequate drinking water and a 2011 Sichuan drought affected almost 8 million people.

Guangxi provides another of the many examples throughout the country where drought conditions have worsened in recent decades. Historians have written that from 1618-1943, major droughts hit the region once every 33 years. From 1946 to 1972, the interval fell to every six years, and in the 1980s, it fell to every two years. There were four major droughts in the three-year period from 1989 to 1991. Since 2000, drought has plagued Guangxi annually. In 2004, for instance, 1100 Guangxi reservoirs went dry, and hydropower generation was cut dramatically. In 2007, one million residents in Guangxi and 250,000 in Guangdong faced water shortages during the worst regional drought in more than 50 years. In 2009, Guangxi, which produces 60% of China’s sugar cane, had a 10% drop in its production due to drought conditions. In 2010, 12 of the 14 cities in Guangxi were affected by water shortages.

Climate Change

How climate change will impact China’s water scarcity is still being studied. However, global warming is having an undeniable effect on the Qinghai-Tibetan Plateau, which is the source of both the Yangtze and Yellow Rivers. An estimated 80% of Tibet’s 46,377 glaciers are now melting more quickly than originally thought, at an average rate of 7% per year. Himalayan glaciers release water steadily throughout the year, most critically during the hot, dry sunny periods when water downstream is most needed. Complete disappearance of the glaciers could eventually cause China’s Yellow River to flow only during the rainy season. Greater melting rates could also increase short-term runoff from the plateau, worsening soil erosion which in turn could lead to greater desertification. Already, recent glacial retreat and desiccation has impacted the local ecosystem. Over a third of the Tibetan grasslands has transformed into semi-desert conditions, which has forced approximately 700,000 Tibetan nomads to abandon animal husbandry. Global warming also seems to be aggravating the evaporation of Qinghai-Tibetan lakes and wetlands.

Power Outages and Reduced River Navigability

China’s water scarcity has also resulted in lower water levels of many of China’s major river systems. For instance, Chinese researchers have discovered that the volume of water entering the Yangtze River at its source on the Tibetan plateau has dropped by 15% over the last four decades. Persistent low levels in China’s rivers mean that the country will be challenged by power outages due to inadequate flow through its hydropower dams. Hydropower accounts for approximately 22% of China’s total installed capacity. It is estimated that the lack of water to run hydropower dams has cut hydroelectric power production by 20% and China may be forced to burn 1 million more metric tons of coal a week to cover the shortfall.

Low levels of water also mean that parts of China’s rivers will continue to become periodically unnavigable, disrupting inland shipping routes. In May 2011, the water level of the Yangtze was so low that officials closed a section of the river from Wuhan to Yueyang. More than 60% of goods transported on inland rivers in China travel down the Yangtze, with shipping volumes at 910 million tons in 2010.

Trends

Serious water scarcity looms in China’s future. This scarcity is likely to increase conflict and competition between regions, sectors of the economy and between urban and rural residents. It will also raise tensions between the government and parts of society that lack access to adequate, clean water sources. Moreover, the Qinghai-Tibetan Plateau is a source of rivers that reach India, Bangladesh, Burma, Bhutan, Nepal, Cambodia, Pakistan, Laos, Thailand and Vietnam. China’s damming, polluting, and use of international rivers is likely to increase tensions with these countries. Many of these countries, especially India, are already facing their own severe water crisis, which will only be exacerbated if China diverts river water that needs to be shared internationally. Additionally, China’s rapid industrialization and poor waste treatment systems now threatens to export China’s pollution and water-borne disease to its neighbors downstream. Political relations could be further stressed if water shortages cause mass migrations of people. In fact, some analysts suggest that the so-called “oil wars” of the 20th century could be replaced by “water wars” in the 21st. China’s food supply is increasingly vulnerable to water shortages. In the future, it is likely that China will need to turn to global food sources to meet its future nutritional needs. This in turn will increase food prices around the world.

China’s immediate water solution is to use water more conservatively, and to improve pollution control. Historically, China has solved growing water demands through the construction of massive hydro-engineering projects such as theThree Gorges Dam and the South-North Water Diversion Project. In the future, China will increasingly need to solve its water deficit through ecological conservation, pollution management, more efficient water usage, and a redistribution of economic output by raising the price of water to reflect its scarcity and true economic value.

Agriculture and Food Security: A Long-Term Priority

Introduction

Ensuring food security in China has been both a priority and a challenge for Chinese leaders throughout the ages. With China currently supporting 20% of the world’s population on approximately 10% of the world’s arable land, today is no exception. Historically, China has met its food needs through a policy of agricultural self-sufficiency. China continues this policy of grain independence today. This policy of grain self-reliance is driven in part because China’s leaders continue to distrust the intentions of other nations, particularly as China’s rising power status threatens to disrupt the existing international order. Drawing lessons from history, today’s leadership believes it is better not to risk being vulnerable to food markets outside of its control, or to chance having food be used as a weapon against it.

That said, China’s ability to maintain continued growth in agricultural output is under threat unless there is further reform in the agricultural sector. Increased urbanization, plateauing yields, water shortages, small farm sizes and uncertain property laws are all making it difficult for China to continue to increase agricultural production. China’s 12th Five Year Plan (2011-2015) recognizes these challenges. Investing in hybrid seed research, repairing irrigation infrastructure, reclaiming rural land that has been lost to environmental degradation, and improving land contract law have all been stated as clear priorities. The plan also recognizes the continued need to invest in rural areas of the country, so that China’s remaining farmers can earn a reasonable living and adequately invest in their children’s future within and beyond the farm sector. What China’s 12th Five Year Plan does not discuss is its growing agricultural footprint in Africa. To date, China has developed agricultural aid projects in more than 40 African countries and recently large Chinese agricultural companies have been employed to help sustain Sino-African agricultural aid initiatives.

China’s Agriculture under Mao Zedong

Paddy Field Plougher near Inle Lake Myanmar (Burma)

When the PRC was founded in 1949 its new leaders continued to support a policy of agricultural self-reliance. This agricultural policy was driven by Mao Zedong’s view that the post-World War II order, with its corresponding American ascendancy, was potentially aggressive and imperialistic. Under this view dependency on grain imports risked making China vulnerable to having its food needs being turned into a weapon against it. In addition, Mao wished to use his country’s limited foreign exchange resources to purchase industrial plant and equipment rather than food, aiming for rapid industrialization. Indeed, until the famine caused by the Great Leap Forward (1958-1961), China exported grain to the Soviet Union in order to purchase plant and heavy equipment, at the expense of providing adequate per capita calories for its citizens at home.

Agriculture thus became the basis on which China’s planned economy was built. As China transitioned to a planned economy, the Communist planners began to under-price farm products relative to heavy industrial goods. This was because the planners were trying to ensure that the industrial sector produced high profits which could be plowed back into industry. To keep industrial profits high, costs had to be kept low; the most easily affected cost was labor. In order keep wages low, food needed to be cheap. Thus, farming became the key to the success of the entire Chinese planned economy. To achieve China’s goals, soon after he took power in 1949, Mao orchestrated the largest act of expropriation in world history. Approximately 200 million acres of land were taken from wealthy landowners and redistributed to nearly every peasant family in China. An estimated two million landlords lost their estates, sometimes through violence and almost never with compensation. Mao soon undercut this mass creation of private land ownership by implementing socialist policies of collective agriculture. The launch of the First Five Year Plan in 1953 saw farmers organized into cooperatives where they pooled their land and shared the proceeds. Under the collective structure, each farmer kept title to his land and was paid both labor wages and a dividend based on the value of the land contributed to the collective. After some success under the cooperative model, Mao began to move farmers into communes in 1958 in order to gain greater control of agricultural output. Mao believed that communes would generate greater farm output as it allowed an increased usage of irrigation and mechanization. Surplus farm labor could be redeployed into the rural and urban industrial sectors. Healthcare and education for the rural citizens could be more easily delivered. Just as importantly, communes would be an effective platform for mass political indoctrination. Mao’s communes pursued a “grain first policy” in which basic crops such as rice, wheat, and corn were planted regardless of the suitability of the soil and other conditions. The shift to communes eliminated household farming, except on small family plots, and all land ownership transferred to the state.

As a result of Mao’s policies, from 1952 to 1978, China increased industrial production as a percentage of national income from 19.5% to 49.4%. Grain production rose by 86%, an average annual increase of 2.5%. However, grain production increased at a rate similar to population growth, meaning that average grain output per capita was little change during this period. China also increased the production of cash crops by 16%. Up until 1960, China exported grain, peaking at 5 million tons in 1958. After the famine of the Great Leap Forward, China began to import grain, yet these imports averaged 1.6% of total consumption, meaning that China was almost completely self-sufficient in food under the planned economy.

However, these numbers are deceptive. Much of Mao’s industrial development was inefficient. Poor economies of scale, inadequate transport, and poorly skilled labor meant that China’s huge industrial investment generally failed to effectively build upon China’s existing industrial base, although its development of human capital skills and rudimentary infrastructure did lay the foundations for broader industrialization during the Reform Era. Throughout the socialist period, Chinese consumers remained on strictly rationed diets consisting primarily of coarse grains. Most consumers were deprived of daily access to cooking oil, sugar, meat, and vegetables for extended periods. In the 1970s, despite increases in grain production, urban residents ate an average of 2,328 calories per day, while rural intake was even lower at 2,100 calories daily. Average grain output per capita remained virtually unchanged and the absolute poverty rate hovered between 30 and 40%.

The primary weakness of communes was the absence of incentives. Farmers did not keep produce from their lands, which undermined their work effort. Instead, commune members were given work points based on particular tasks; these points were converted to grain and cash pay-outs at the end of each crop year. Free riding and an inability to monitor agricultural labor became endemic. Output also suffered because decision-making was concentrated in the hands of collective leaders who themselves were frequently following dictates from above, stifling any prospect for innovation. The pricing during this era also did little to encourage the efficient production or allocation of goods and services. Additionally, agricultural inputs such as fertilizer were in constant short supply. Because of the hukou housing registration system (which, while more relaxed, remains in force today), farm labor had no opportunity to move from agriculture to industry. This entrapment of Chinese villagers effectively designated them as second-class citizens.

Agriculture during the Reform Era

After 1978, a series of reforms was introduced into the rural sector to improve its economic performance. One step was to de-collectivize Chinese farmers into what was termed the Household Responsibility System (jiating lianchan chengbao zerenzhi), where the government leased agricultural land to households. The government then raised the prices that farmers would receive for any farm output they produced above mandatory quota deliveries, by 41% for grain and by around 50% for cash crops. Initially, the state purchased all grain sold by farmers above quotas. Eventually, private agricultural markets were re-established. Greater freedom of choice was allowed in terms of the types of crops cultivated. Fertilizer and new high-yield seed usage became more widespread. The result was a surge in agricultural output. Grain output swelled from 304.8 million tons in 1978 to 501.5 million tons in 2007. This growth reflected a significant rise in crop yields as grain sown area decreased from 120.6 million hectares in 1978 to 101.6 million in 2004. Additionally, agricultural output became significantly more diversified as farmers moved into labor-intensive cash crops such as aquaculture, cotton, edible oils, fruits and vegetables. Between 1978 and 2007, for instance, crop farming went from 80% of agricultural gross value output to 50.4%, while animal husbandry and fisheries increased from 16.6% to 42.1%. Between 1990 and 2004, China’s vegetable output expanded so quickly that China added the equivalent of California’s vegetable industry every two years, and orchards now cover over 5% of China’s farmed area, double the share of any other major agricultural nation. Grain prices also fell in real terms. Between the late 1970s, maize prices decreased 33% and wheat 45%. Coupled with rising incomes, these decreases meant that grain, as a percentage of rural and urban household consumption, fell from 40% and 20% respectively in the late 1970s to about 14% and 3% in 2004. Households also began to consume a more varied diet adding meat, poultry, fish, eggs and dairy produce. China now produces in excess of 3,000 calories per capita per day. Moreover, the government no longer plays a significant role in agricultural production. Aside from restrictions on land ownership, China today has one of the least distorted domestic agricultural economies in the world. The majority of grains, oilseeds, and fiber crops, and all horticultural and livestock products are sold to small private traders who compete in efficient and integrated markets with minimal regulation.

Maintaining Grain Yields in the Future

Throughout this period of reform, China maintained its policy of grain independence, never importing more than 5% of its grain needs. Maintaining this independence in the future, however, will become increasingly difficult. With 20% of the world’s population on approximately 10% of its arable land, China does not have a comparative advantage in land intensive products, such as grain. Furthermore, the amount of China’s arable land is continuing to shrink due to rapid urbanization and environmental problems such as flooding, soil erosion and desertification. Moreover, China’s population will continue to rise until around 2030. It is estimated that by 2050, the total demand for arable land will outstrip supply by more than 12%.

Additionally, part of the reason that China achieved such high grain production over the last two decades was yield improvements driven by the use of new high-grade seed varieties and by massive inputs of chemical fertilizer. Yet further benefits from these inputs are beginning to diminish. In 1975, total fertilizer usage was 5.5 million tons, but this rose to 47.7 million tons by 2005. China’s per hectare fertilizer usage was second only to Japan in the 1990s. Fertilizer saturation is such that previously good or excellent soils are cresting, hardening and becoming devoid of organic material such that further application of fertilizers is leading to diminishing crop yields as well as causing considerable environmental problems. Yield benefits from the extensive use of plastic are also plateauing. Finally, large-scale deforestation has led to soil erosion.

Water shortages and water pollution may also limit future yields unless China is able to implement significant reforms in its water management. China’s freshwater resources of 2304 m³ per capita are less than one third of the world average. Water shortages are expected to worsen as current water demand is still relatively low at 461 m³ per capita, compared with the world average of 645 m³, but this is projected to reach 665 billion m³ by 2030. Water shortages will be worse in the arid and semi-arid areas in China’s northern plain from which much of the future grain output growth will be generated. In addition to water shortages, problems with irrigation system will also stymie yield growth. During the Mao-era, irrigated area tripled. Since de-collectivization, the irrigation system has deteriorated. Additionally, with the reversion to family farming, control of the irrigation system has fragmented, and it is harder to mobilize mass labor for maintenance and construction. The introduction of water fees in the 1980s was designed to encourage more efficient water usage, but the fees were not sufficiently high to have the desired effect. This remains a problem today and increasing water charges is an essential part of dealing with China’s water shortages.

Currently, 62% of China’s water is used for agriculture, a sector which is responsible for approximately 13% of the country’s GDP. Yet agriculture water usage is extremely unproductive, with 45% of agricultural water lost before it even reaches crops. Water used for industrial output is 70 times more productive in terms of financial value than that used in wheat production. As water becomes increasingly scarce, the agricultural sector risks losing water resources to industrial production, especially if China increases the price of water to better reflect its true scarcity.

Extensive irrigation has always been essential to China’s agricultural productivity. Indeed, massive irrigation works built during the Maoist era enabled food production to keep pace with the rapid population growth of the time. China draws on both its rivers and large underground aquifers to irrigate its crops. Irrigated land produces nearly 75% of China’s cereals and more than 90% of its cotton, fruits, vegetables and other agricultural commodities on around half of the farmlands throughout the country. Yet, according to the Ministry of Water Resources, China now uses as much as 60% of the water running in many of its rivers, including the Liao and Yellow Rivers, and as much as 90% of the Huai River. China has increasingly turned to aquifers and lakes to meet water demands no longer satisfied by rain and river water alone. Groundwater now provides potable water for nearly 70% of China’s population and irrigation for approximately 40% of its agricultural land. Nationally, groundwater usage has almost doubled since 1970, and now accounts for 20% of China’s total water usage.

Aquifers are especially important in China’s north, where farmers have been relying heavily on groundwater resources to increase agricultural yields. Yet China is now draining its aquifers at an unsustainable rate. At current rates of depletion, the World Bank estimates that China’s northern aquifers could effectively run dry in as little as 30 years. China’s northern megacities now rely on underground water sources for two-thirds of their needs. For example, in Hebei province, which surrounds Beijing, aquifer levels are dropping by approximately 3 meters annually, forcing the digging of ever deeper wells which increases the risk of both saltwater and arsenic intruding into the water supply, as well as increasing the likelihood of land subsidence. With aquifers and rivers suffering from overuse, lakes are also diminishing. The province of Hebei has already lost a staggering 969 of its 1052 lakes.

Future yield growth will also be hampered by the small area plowed by each farmer, averaging less than a hectare. While de-collectivization initially led to a surge in output growth, the segmentation of large communal plots will hamper growth in grain yields in the future. Small farm sizes restrict growth by preventing farmers from capturing economies of scale that could be derived from greater mechanization, the more efficient dissemination of new seed technologies and the improved maintenance of irrigation structures. It has been estimated that improving fragmentation could increase grain output by as much as 70 million tons annually.

The fact that farmers lease – as opposed to own – their land has also worked to constrain grain yield by discouraging long-term investment. While lease times have extended to between 30 and 50 years, many villages continue to be awarded comparatively short lease contracts of 5 to 10 years. The reality is that China’s land rights are complicated and quickly changing. China recently passed the Rural Land Contract Law which took effect in 2003. The law endeavors to improve the security of land tenure, to clarify the transfer and exchange rights of contracted land, and to permit family members to inherit land during the contracted period. Above all, the law reflects the government’s attempts to allow those staying in farming to gain access to additional cultivated land and to increase their incomes and competitiveness. It strives to encourage farmers to use the land more efficiently. Working against government efforts to improve plot size is the belief by some leaders that family farming provides at least nominal proof that China is still communist as its land is not privately held, and as its land is relatively equally distributed. Many Chinese leaders also believe that agricultural land provides a social security system for its population, as every rural family is theoretically only one season away from being able to feed itself. In the five years following the implementation of the law more than 50,000 land disputes were raised and the government responded with a new draft law in 2009, though this was never passed.

Despite these challenges, grain independence remains one of the primary goals of China’s agriculture policy. In China’s 12th Five Year Plan released in March 2011, the government states that it expects grain production capacity to remain over 540 million tons per annum, and that overall, it seeks to increase grain production by 50 million tons by 2015. To produce more grain than economic efficiency dictates, China will need to invest in agricultural infrastructure, seed research, and organic fertilizers. It will need to provide greater agricultural credit availability, increase plot size, and improve water management.

GuoZhongHua / Shutterstock.comUltimately, as China continues to develop, the priority of its agricultural policy should be less grain self-reliance and more the continued transformation from an agricultural based economy to one that is industry and service based. To join the ranks of the developed world, China will need to promote policies that continue this structural change. Already, agriculture’s share of GDP has fallen from 40% in 1970 to under 10% in 2008. Going forward, China’s real challenge will be whether it can release large numbers of families to live and work in urban areas, leaving a smaller number of farming families that control sufficient land and other resources to make a decent living from farming. It will need to provide these remaining farmers with enough income to invest in their children’s human capital, thus raising their capacity to respond to future economic opportunities within and beyond the farm sector.

Additionally, China will need to better integrate into the economy those workers released from the agricultural sector. Figures from the 2010 census put temporary migrants – that is, those living more than one municipality away from their registered home for a period of more than six weeks – at almost 250 million, or nearly 19% of the overall population. These temporary migrants are projected to grow to 400 million by 2025. Despite the significant increase in rural migrant workers to urban areas, there are still fundamental barriers that discourage permanent migration of individuals and families from rural to urban environments, the most important of which is the hukou resident registration system. Without official residence papers, migrants have poor access to housing, health facilities, and education for their children. It is not uncommon for migrants to work long hours in poor safety conditions and for little pay.

China’s Growing Presence in African Agriculture

 

Increasingly, China’s agricultural policies no longer revolve around just its domestic market. In particular, its agricultural footprint in Africa is growing. According to research conducted by Deborah Brautigam, China has developed agricultural aid projects in more than 40 African countries. Historically, these aid projects were characterized by “quick starting, quick results and quick decline”. Between 1965 and 1986, approximately 50% of Chinese African rural development projects failed. This low success rate has driven Beijing to find ways to make its African agricultural aid projects more sustainable. In particular, China is increasingly engaging Chinese agro-businesses as partners in its agricultural aid projects. In the 1980s, for instance, China began to experiment with trading African debt for equity and lease arrangements in former Chinese aid projects which it then passed to Chinese agricultural companies. By 2002, the Minister of Foreign Trade and Economic Co-operation was stating that Chinese agricultural investment in Africa should be “conducted by enterprises and should be market oriented”, supporting the 1990s policies of making Chinese agricultural investment mutually beneficially for both China and the African countries in which it invested. What this has meant in practice is that the government has increasingly brought in Chinese companies to sustain agricultural initiatives in Africa once these projects are up and running. This “mutual benefit” policy has the additional advantage of finding new markets for its agricultural technologies such as hybrid seeds, and of allowing its agricultural companies to gain international experience.

For their part, there is concern among some in Africa that China is developing agricultural projects so it can ship food to China at the expense of the African consumer. Evidence to date suggests, however, that most of the agricultural products produced on Sino-African agricultural initiatives are sold to local African markets. That said, increasing the overall global food supply is beneficial to China as that helps to reduce food prices for products that it does purchase in the international markets. Of course, this does not just benefit China as ever country that imports foods would welcome downward pressure on food prices. In the longer term, it may also help to create potential new food sources.

Future Trends

There will be four trends to watch for in the Chinese agricultural sector in the coming years. Firstly, China will make every effort to maintain or increase its agricultural yields through greater investment in agricultural research, improvement of agricultural irrigation networks, reclamation of land for agricultural use, and the support of contract land arrangements that provide both security as well as flexibility for farmers to trade their leasing rights. Secondly, China will also support growth in cash crops such as vegetables and fruits, animals, and aquatic products, including investing in fishing ports, fish farms and coastal harbor centers. Thirdly, China plans to heavily invest to improve the standard of living of those citizens remaining in rural areas, including increasing rural access to electricity, roads, quality housing, education, and healthcare. While not actively stating that there are immediate plans to overhaul the Chinese resident permit system, China’s 12th Five Year Plan does affirm that it will, “adapt to the new situation of the rural population migration”, tacit acknowledgement that the hukou system needs further reform. Finally, China’s presence in African agriculture will continue to expand. This expansion will take many forms, but underlying its growth will be the creation of new opportunities for China’s large agricultural companies.

The Chinese Environment: Positive Trends toward Environmental Protection

Introduction

shutterstock_112030406Environmental degradation in China has increased significantly in the last 30 years. In 2000, China’s Environmental Protection Agency found that two thirds of China’s 300 largest cities had air quality which exceeded WHO standards for acceptable levels of total suspended particulates. Additionally, China’s water is also both in short supply and highly polluted.  Stresses to China’s environment will grow in the future. By 2030, it is estimated that approximately 300 million new vehicles will fill China’s roads; an additional 350 million people will move into China’s cities; and an expanding number middle class will demand better food and more consumer goods. By 2030, even with China’s rapidly developing alternative fuels capacity, it is estimated that China will need to burn almost 200 million tons more coal than in 2005 to provide sufficient heating and electricity for its new urban citizens. Indeed, overall coal-based power generation capacity is projected to triple from its 2005 rate by 2030. In 2007, the World Bank assessed that China’s combined health and non-health cost of outdoor air and water pollution to be conservatively $100 billion annually, or 5.8% of the country’s GDP, and that up to 500,000 people in China die each year from air and water pollution.

Yet, despite the magnitude of China’s environmental crisis, positive trends are emerging which will begin to slow the damage being inflicted on China’s and the world’s environment. Perhaps most importantly, Beijing is increasingly recognizing that China is placing unsustainable stress on it ecology. For the first time, China’s 12th Five Year Plan prominently features both the importance of improving energy efficiency, and of mitigating climate change. As a result, in the next five years, Beijing will invest heavily in green technologies, alternative fuels, and energy efficiency. Beijing sees these investments as one way for China to take the lead in green industries; indeed, by 2015, for example, China is projected to have the world’s largest installed capacity of alternative fuels.

This trend toward greater environmental protection is also being driven by a growing emphasis on green lending within China’s banking sector, and by China’s need to comply to international environmental standards such as the ISO 14001 in order to compete in international markets. Domestic and international NGOs are also gradually raising environmental awareness in a whole range of areas. Multinational corporations, too, are playing their part, progressively insisting that their Chinese factories meet local environmental regulations, and introducing into China environmentally friendly technologies and practices.

China’s 12th Five Year Plan –Featuring Climate Change Prominently

shutterstock_87381041For the first time, China’s 12th Five Year Plan highlights climate change and energy efficiency prominently. The plan sets a GDP growth target of 7%, which would be a significant slowdown from the average 11.2% rate of growth reached between 2006 and 2010. The 12th Five Year Plan and subsequent commitments also adopt as domestic, binding law the voluntary climate pledges China made at Copenhagen in 2009. Specifically, by 2015, China plans to reduce its carbon intensity by between 40% and 45% from 2005 levels, to increase its forest cover by 12.5 million hectares and its forest stock volume by 600 million m³. As of 2015, these same goals remain unchanged, and China has pushed them another five years into the future. The country now hopes to realize these reductions by 2020. Measuring China’s progress towards these goals remains inaccurate because the nation has not released many reliable and updated figures on carbon intensity to the public. The figures remain ambitious: by 2020 China aims for an energy distribution of 350 GW in hydropower, 200 GW in wind power, and 100 GW in solar power.

The five year plan sets several separate targets for 2015, including: a 16% reduction in energy intensity; a 17% reduction in CO2 emissions per unit of GDP;  an 8% reduction in demand for both chemical oxygen and sulfur dioxide; a 10% reduction in both ammonia nitrogen and nitrogen oxides. The plan also highlights the need to improve sewage and sludge treatment, and to better the rates of desulfurization and de-nitrification. It also seeks to protect the living environment with policies to reduce rural pollution from agriculture, to expand nature reserve development and biodiversity conservation, and to extend waste management infrastructure. Beijing is also planning to upgrade subway and light rail in cities that already have urban transit systems, as well as to construct new systems in at least nine other cities. It will also build 35,000 miles of high speed railway with the ultimate goal of connecting every Chinese city of 500,000 or more people. China may also soon unveil plans to create 10 million electric car charging spots by 2020.

Looking at the layout of the 12th Five Year Plan, decisions 52 through 54 of the 12th FYP are especially promising. The 52nd decision puts forward a commitment to establishing national parks and outlines a more flexible plan for local governments. Municipal officials in environmentally damaged areas who were once expected to meet certain GDP targets will no longer be held accountable to those numbers. Instead, their decisions and implemented policies will be closely monitored to assure that they are not furthering the environmental damage in their respective regions. The 54th decision works together with the 52nd, laying out the groundwork for a system where all environmentally-related developments must be licensed. With the added scrutiny and pressure to meet economic goals removed, it will be much more difficult for government officials to find legitimate reasons supporting preferential treatment for companies damaging local rivers and farms. Decision 53 acts as a capstone to this policy outline, reflecting China’s recognition that the current environmental situation has resulted from years of damaging habits and forming a national plan to rehabilitate damaged farmland.

China’s 12th Five Year Plan –Emphasis on Renewable Energy

The 12th Five Year Plan also seeks to have renewable energy account for 11.4% of China’s power consumption by 2015. China plans to increase wind power by 70 gigawatts. With regard to nuclear power, China projects installing 40 additional gigawatts of safe capacity by 2015, though after the disaster at Fukushima in Japan, China has also vowed to review and strengthen the safety of all its nuclear power as part of its expansion strategy. China anticipates increasing its hydropower to approximately 380,000 MW by 2020 and expects to have solar capacity of between 10 GW to 30 GW by 2020. Indeed, seven of the planet’s top 10 solar panel makers are now Chinese. At the end of 2014, the China Electricity Council reported that renewable energy sources had increased their share by 19%, while fossil fuel usage declined 0.7%. Energy capacities also increased significantly: China’s non-fossil fuel energy capacity rose by 55.8 GW to 444GW, with solar, hydro, and wind power rising by 10.6 GW, 22 GW, and 23.2 GW respectively. These changes surpass those outlined in China’s 12th Five Year Plan, and put it on track to meet 2020 targets. Should it meet them, China will have the most installed wind, nuclear, and hydro-power in the world, and will have one of the largest solar capacities.

As a whole, China’s renewable energy sector has expanded dramatically over the last few years. From 2009 to 2013, the total production of renewable energy sources expanded nearly 13.3% annually, and is expected to remain fairly high at 11.8% per year in the five years ending 2018. National investment in green energy has also increased quite healthily, with USD $87.5 billion invested in total during 2014, up 36% from 2013 and comprising just over 32% of global investment in the sector. All of these positive changes have catapulted China into the number one spot in many renewable- and green energy-related production indices, and have made the nation the world leader in renewable power development. In the 2015 report from the Renewable Energy Policy Network for the 21st Century, known as REN21, China took the top spot in 11 of 26 categories: greatest investment in 2014 in renewable power and fuels, hydropower capacity, solar photovoltaic and water heating capacity, wind power capacity, and greatest generation by volume of renewable power (both including and excluding hydropower), total hydropower capacity, total wind power capacity, total solar water heating capacity, and total geothermal heat capacity. Wind power continues to rise in China, with Asia as the dominant market for the past seven years. As of 2014, the total capacity of wind power in Asia has surpassed that of Europe, in large part because of China’s extensive investment in the field. Indeed, the whole renewables industry has momentum that will carry China forward into future years and determine goals established in further Five Year Plans.

China’s 12th Five Year Plan –Pushes More Effective Pollution Data Collection

Of key importance to its environmental efforts is China’s intention to implement comprehensive data collection and monitoring systems, soon allowing it to follow a more data-driven approach to environmental policy. Yet, it is not clear how much of that data will ultimately be made available to either the public or the wider world. China’s political vulnerability because of environmental pollution is still a serious concern within a Chinese leadership that fears environmentally triggered “mass incidents” (a euphemism for protests or social unrest) and the resulting social instability. There is also concern that foreigners will use environmental data to interfere in China’s internal affairs.

For example, recent air quality monitoring by the US embassies in Beijing, and most recently Shanghai, has led to controversy as US reading  contradict Chinese official data. Increasing numbers of Chinese citizens, along with many in the expat community in China, are turning to US environmental data.  In 2011, for instance, Beijing health authorities insisted that air quality was perfectly safe 80% of the time while US statistics rated the air quality is good for about  4% of the time. The discrepancy in readings results from the fact that the US Embassy monitors small air particles known as  PM 2.5 which Beijing authorities have neglected to include in their data. Chinese authorities have work to quell increasing controversy by agreeing to measure the PM 2.5 particles as of 2015. They have also called into question the accuracy of the US readings. According to Wikileaks, in 2009, Chinese officials went as far as to request that the US Embassy stop tweeting its air pollution data because it said the conflicting data was “confusing” and could cause “social consequences”.  As of May 2012, the US Consulate in Shanghai has also begun issuing pollution statistics. The US Consulate alerted Shanghai officials in advance that it would be publishing pollution data. In its tweets, the US Consulate emphasizes that the pollution results are derived from monitoring equipment solely based at the US Consulate, and do not necessarily reflect the air pollution quality of the entire city. Again, US data conflicted with the official Shanghai statistics, with the US consulate finding the air quality as unhealthy, where the Chinese data finds the air quality good.  By June 2012, the Shanghai Environmental Protection Bureau will also release air quality data including PM 2.5 particulates.

Like the divergent air quality statistics, reports on provincial emissions often differ significantly from on-site data. Some suggest that this may be the result of China’s national carbon emission reduction targets, because businesses find it easier to meet their carbon goals if they overestimate them at the outset. To remedy this inconsistency, the Chinese Academy of Sciences has begun a year-long study to identify the largest carbon emission culprits and their numerical contribution to China’s carbon outlay.

Studies on the pollutants affecting China’s soil quality also remain scarce. Some of the more recent statistics indicate a large, but largely ignored problem. Pollution in 16% of all Chinese soil exceeded standards, and 19.4% of all arable land contained heavy metals, also above acceptable limits. Enough productive land has been affected that China may be risking a loss of food security and self-sufficiency should the decline in land quality continue. The 12th Five Year Plan does push for improved data collection, but China still has areas in the environmental sector that need improved data collection before resources are destroyed beyond repair.

China’s 12th Five Year Plan –Looking to the Market to Help Protect China’s Environment

In addition to new pollution targets and better data gathering, China 12th Five Year Plan articulates market-driven solutions to reduce pollution domestically, including: offering financial incentives to enterprises engaged in sewage treatment, sludge treatment, desulfurization, de-nitrification and waste disposal; strengthening the pollution charging system so that high-pollution production faces higher costs; encouraging lending to green projects; and increasing the portion of green products on government procurement lists.  Beijing is also considering evaluating party member performance on pollution mitigation as well as GDP growth targets. The plan also proposes an environment tax in order to deter pollution, promote clean technology and create funding for environmental clean-up. It is likely that the tax will be first introduced in China’s wealthier provinces, and then rolled out nationally. Cap-and-trade carbon pilots on the national scale are also being deliberated, as is an expansion of the 11th Five Year Plan “1000 Enterprises Program” to “10,000 Enterprises Program.” Regional carbon trading programs have already officially begun pilot testing in several provinces, with the ultimate goal of creating a unified carbon cap-and-trade system sometime around 2017. Going estimates place the size of this potential market at around RMB 100 billion by 2020.

In 2005, it was determined that the energy consumption of the top 1000 Energy Consuming Enterprises accounted for 33% of national and 47% of the dead industrial energy usage in 2004. Under the program, 2010 energy consumption targets were determined for each enterprise. High energy consumption enterprises include those competing in the iron and steel, petroleum and petrochemicals, chemicals, electric power generation, non-ferrous metals, coal mining, construction materials, textiles, and pulp and paper industries. While detailed information on program results is difficult to attain due to confidentiality, a 2010 study by Lynn Price, Xuejun Wang and Jiang Yun indicated that the Top 1000 Enterprises Plan was tracking positively to reach its goal of saving 100 metric tons carbon equivalent (Mtce) in 2010, could even surpass the figure by as much as 48 Mtce. When calculated in terms of reduced CO2 emissions, the effect of the Top-1000 program is enormous. Meeting the 2010 100 Mtce savings target will result in energy-related CO2 emissions reductions of 300 MtCO2, an amount equivalent to the 2005 annual emissions of Poland.

Indeed, improving energy efficiency is key to China’s new, “scientific outlook” on development. The scientific outlook most immediately focuses on technological solutions, notably through improved efficiency as the principle short term way to conserve resources. The program also promotes the idea of a “circular economy” where China actively reduces, reuses and recycles. It is by efficiency gains, the pursuit of the circular economy, the employment of alternative energies, and the embracing of new green technologies that Beijing believes that it can significantly grow GDP while ensuring sound ecological conditions.

Large Projected Investments in Green technologies

If all the measures proposed in the 12th five-year plan are implemented, China will be creating a huge market for clean technologies, with the potential to exceed $1 trillion. Beijing will be investing heavily in the sector. During the 12th five-year planning period, Beijing’s green sectors investments are expected to reach $468 billion, up from $211 billion over the previous plan. The bulk of the investment is slated for waste recycling and reutilization, green technologies such as alternative fuel vehicles, and renewable energy. This investment will drive projected annual growth in China’s environmental protection industries to an average of between 15% and 20% through 2020. World Watch Institute, a research institute devoted to the analysis of global environmental concerns, expects that China will create as many as 4.5 million new green jobs during that period.

With these and other investments, in the future, China hopes to lead the world in green technology, leapfrogging the developed world’s carbon-based economies. The transition costs to a less carbon-dependent economy will be less for China than for advanced economies, because it is not locked into a high-carbon model to the same degree. Also, green technology levels in the developed and developing worlds are on par, so that China also does not have to play catch-up to be competitive in the sector. Indeed, many in the international environmental movement have expressed hope that China may ultimately lead in climate change initiatives, particularly given its large and growing investments in the sector.

Other Factors Working to Reduce Environmental Degradation in China – Green Lending

In February 2012 the China Banking Regulatory Commission (CBRC), China’s top banking regulator, issued the Green Credit Guidelines to help facilitate China’s transition to a more environmentally friendly development model. The guidelines apply to domestic policy banks, commercial banks, rural cooperation banks and rural credit cooperatives, as well as village banks, loan companies, rural funding cooperatives and non-banking financial institutions. . The guidelines encourage lenders to reduce loans to industries with high levels of energy consumption and high levels of pollution, and to strengthen financial support for green industries and projects. Specifically, the guidelines require the financial institutions’ Board of Directors or Council to take charge of establishing a “green credit development strategy”, as well as to approve green credit loans, issue regular green credit reports, and supervise the institution’s green credit performance.  Senior management will be responsible for reporting annually to the Board of Directors and regulators about the progress of green credit practices. Additionally, banks will also be required to maintain a list of high-polluting clients, and urge these clients to take pollution mitigating measures. In the future, banks will also be expected to do more thorough environmental due diligence before lending, and restrict credit to highly polluting clients.

Even if credit has been granted, disbursement of the loan proceeds can be suspended or terminated if the client begins to engage in environmentally damaging practices. Post-lending, banks are required to report to regulators any behaviors by its borrowers which are resulting in environmental damage. For overseas projects, financial institutions must ensure their financing is for projects complying with local environmental regulation. Banks are also required to conduct internal audits of their green credit practices regularly; every two years, a comprehensive evaluation of its green credit practices are to be submitted to the CBRC. The CBRC is to conduct off-site and on-site inspections to ensure that financial institutions comply with its Green Credit Guidelines.

These regulations are designed to further develop what was already a growing trend in green lending in China. By end of 2011, China’s six largest banks – China Development Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications – had a total of $301.75 billion in green credit lending. In particular, in 2011, China Development Bank lent $104 billion to support environmental protection, energy saving and emissions reduction projects, accounting for 12.7% of the bank’s total outstanding loans. Even before the 2012 guidelines, green lending in China was growing because of rising demand by customers, and because government support for green projects has meant that many green loans have lower non-performance ratios. Ultimately, the future success of the guidelines will be dependent on the banking industry’s ability to collect accurate environmental data on its customers. Certainly, the government’s 12th Five-Year Plan indicates a greater commitment to environmental data gathering. Again, it still remains to be seen whether Beijing will then allow this information to be more widely circulated.

Other Factors Working to Reduce Environmental Degradation in China – Meeting ISO Standards

shutterstock_104036633China’s participation in standardization laws are also helping to drive pro-environmental business practices. ISO, an international organization headquartered in Geneva, issues two kinds of specification standards to which China strives to comply: those which facilitate commerce by normalizing product standards and those which standardize procedures. The IS0 14001 incorporates environmental policy into its framework by creating a standardization of management practices and implementation of environmental procedures. Since 2006, China has led the world in ISO 14001 certificate registrations. China’s ISO compliance efforts are driven by the fact that many of the markets into which China exports now request ISO 14001 observance.

Other Factors Working to Reduce Environmental Degradation in China – NGOs

Domestic and international NGOs are also becoming increasingly important to China’s environmental activism. The Academy for Green Culture, now called Friends of Nature, was the first environmental NGO formally registered in China in 1994. Since then, several hundred international and domestic NGOs engage in nature conservation, species protection, environmental education, policy advocacy, data collection, legal advocacy, environmental information exchange, wasteland reclamation and organic farming. Indeed, leaders of three Chinese NGOs were appointed as environmental advisers to the Beijing 2008 Olympic Bid Committee and were instrumental in helping China win its bid. These NGOs work both at a community and a national level. Examples of NGOs active in China include Green River, Global Village of Beijing, Institute of Environment and Development, the World Wildlife Fund, Green Earth Volunteers, Green-Web, the Natural Resources Defense Council, Greener Beijing, and the Center for Legal Assistance to Pollution Victims.

Despite their growing presence, NGOs face real challenges when working in China. NGOs often lack any real influence, particularly when faced with entrenched business interests. Domestic NGOs are often challenged by fund raising difficulties. On many occasions, new NGOs have been refused registration, thus denying them the benefits of NGO status. The government also closely scrutinizes the work of these NGOs in order to prevent environmentalism from evolving into a push for broader political reform. In general, domestic NGOs are reticent to criticize the central government publicly, and work hard instead to engage in cooperative relationships with local officials.

Other Factors Working to Reduce Environmental Degradation in China – Multinationals Making a Difference

Multinationals are also beginning to positively impact environmental protectionism in China. Given that China is often their factory, and given the growing environmental activism within China at the governmental, NGO, academic and social levels, multinational corporations are increasingly under pressure to ensure that their production, and the production of their suppliers, in is in compliance with local environmental standards. For example, in August 2011, Apple received bad press for ignoring its suppliers’ outstanding public pollution violations which had been brought to its attention by a consortium of five Chinese environmental NGOs. Within a month, Apple was working with its suppliers and the NGOs to improve environmental performance.

Multinationals are also increasing taking initiative in helping their Chinese suppliers use energy, water and materials more efficiently, and reduce emissions where possible. Shell China, for instance, one of the largest multinational companies operating in China, has been introducing better environmental practices and technologies. In 2009, in the Changbei Gas Field, where it works jointly with PetroChina, Shell increased gas production by 11% while decreasing energy intensity, resulting in annual savings of around 2500 tons of standard coal – enough to provide sufficient power to support 10,000 urban Chinese families for three and a half years.  The project also reduced the volume of its wastewater by 70%. These environmental practices are good business as they improve profitability. Yet, they are also introducing methods and technologies that are then absorbed more broadly. Multinational investors also drive environmental practice in China. Worried about environmental liability, they encourage multinationals to implement stricter environmental practices.

Trends

shutterstock_110013224Despite the many factors which will continue to perpetuate environmental degradation in China over the coming decades, and the magnitude of China’s environmental challenge, China’s environmental trends are not all grim. Indeed, many developments indicate that China will make increasing progress in the field of environmental protection.

One of the most important of these developments is the growing emphasis Beijing is placing on environmental protection. Indeed, not only is Beijing beginning to articulate a well thought out and increasingly detailed plan as to how China can begin to protect and restore its bio-capacity, but it is also backing that plan with an unprecedented level of short-term investment. This investment will soon allow China to take leading positions in many environmental sectors. For instance, by 2015, China will have more installed alternative fuel capacity than any other country.

This investment will create huge opportunities in China’s green technologies market. Investing heavily in green technologies may enable China to gain an advantage over developed countries with a heavy reliance on their carbon-intensive economies. For instance, China now has the largest solar water heater market in the world. Approximately 95% of patents for core solar water heating parts are owned by Chinese companies. These patents allow heaters to function even under grey skies and at temperatures well below freezing. It is estimated that at least 30 million Chinese households now heat their water with solar panels.

Indeed, leading the development and implementation of green technology is one of the ways China is creating the competitive edge it needs to remain an economic powerhouse in the future, especially as its rapidly aging and shrinking workforce means that it will not be able to indefinitely compete just on the basis of cheap, plentiful labor. As the impact of global warming is increasingly felt, and as growing fossil fuel demand continues to put upward pressure on fuel prices, demand for green technologies will rise. China will position itself to profit from these opportunities by first introducing green technologies at home before aggressively seeking to export them to foreign markets.

China will begin to lead the way in green architecture and urban development as 70% of its population settles into cities by 2030. It will increasingly introduce technologies which will avoid high electricity consumption in buildings. Specifically, we will see China install more energy-efficient lighting, appliances, heating, ventilation and air-conditioning systems, and better insulation in walls, windows and roofs. Similarly, it will also prioritize retrofitting its existing building stock with energy-saving features.

shutterstock_104036633China will also invest in the development of alternatives to internal combustion engine (ICE) transportation. This can already be seen in its growing commitment to the construction of rail and mass transit systems. China can also be expected to increasingly reduce emissions and increase fuel efficiency in the ICE cars that do reach its streets. It will also continue to invest heavily in alternatives to ICE cars. Specifically, China plans to push the full range of advanced battery technology for electric vehicles. Indeed, by exploiting its current pool of low-cost labor, along with its fast-growing domestic car market, its proven success in rechargeable battery technology, and its substantial investments in R&D, China has the potential to emerge as a global leader in electric vehicle technology in the coming decades. Indeed, its plans to create 10 million electric car charging parking spots by 2020 suggests that it the pursuit of affordable, high-performance electric vehicles will continue to be a priority. Currently, China has 16,000 AC charging spots in operation.

Despite China’s growing commitment to alternative fuels, its use of coal will still rise significantly in the future. Increasingly, China will work to offset its carbon emissions by investing in technology that sequesters carbon emissions for next-generation coal plants. Indeed, China wants its clean energy sectors and it clean energy technology to become 15% of its economy by 2020.

Also of note is China’s growing nuclear program, which has exhibited consistently high rates of growth over the last 15 years. Consumption in the sector is expected to increase by 15.4% for the next five years ending 2020, while renewable energy is projected to grow around 7.5%—though this is likely due to the high level of development that China has already achieved in its fairly mature renewable energy sector (which accounts for 9% of energy production in the nation, compared to the 1% share occupied by nuclear energy).

Furthermore, China currently produces a lot of industrial municipal waste that it does not recycle or properly manage. China will increasingly rectify this by employing technologies that will allow it to convert its waste into useful material. For instance, there’ll be a growing trend toward coal-bed methane recovery and recovery of blast furnace slag resulting from steel production. It will also seek to burn more of its municipal waste to generate electricity, instead of sending it all directly to landfill.

Green lending, ISO compliance, the influence of domestic and international NGOs and multinationals will also continue to drive positive environmental behavior in China. It can be expected that China will also be inviting more foreign investment in the green technologies sectors.

All that said, many of China’s dominant economic and political incentives have not changed. 129 million Chinese citizens still live on less than $1.25 a day, and 400 million earn $2 a day. China’s population will continue to grow through at least 2030, and inequality in China has increased significantly both within the population, between rural and urban residents, and between different regions within the country. Those Chinese moving into the middle classes will demand a better diet and consumer goods. China’s government will thus remain under enormous pressure to improve the standard of living of its people and to reduce inequality nationally.  Proponents of low carbon future for China thus face significant opposition by others who suggest that China should focus on unrestrained development until more of its population has reached a modest but dignified standard of living.  China’s 11th Five Year Plan also advocated a slower, more balanced GDP growth, yet China’s GDP growth exceeded 11% during the period. Local governments, in particular, have many incentives to keep to business as usual.

Still, within the international climate community, there is some hope that China may come to take a leadership role in climate change mitigation. They note that China has not stepped back from its 2009 voluntary Copenhagen commitments; instead it has translated them into binding domestic law. They also note China’s opportunity to leapfrog the carbon-based infrastructure installed in developed countries, partly because of its history of radical experimentation, but also because of the greater ability of its authoritarian government to dictate far-reaching environmental policy. China’s obvious desire to profit from the rapidly growing green technology sectors is, therefore, potentially good news for everyone.

Ultimately, Chinese leaders have an opportunity to follow a path of development that diverges from a Euro-American capitalist model that is no longer accepted as indefinitely sustainable; in the long run, the world does not have the bio-capacity to support billions of new people consuming like Americans and Europeans. The Chinese leaders seem to increasingly acknowledge this. In 2008, for instance, Ambassador Yu Qingtai noted that while he could not accept that as a Chinese, he was only entitled to one quarter of what western developed nations have enjoyed, he also recognized that it would be a nightmare for China if its 1.3 billion people had the same per capita emissions as the Americans. That representatives of the Chinese government are beginning to articulate that high Chinese per capita emissions would be a nightmare for the Chinese themselves is also grounds for optimism about the possibility of improved global environmental protection. The outlook continues to be positive. In November 2014, China announced plans to halt emissions increases by 2030. With these national efforts China will certainly see large changes, and perhaps the birth of entirely new markets, in the coming years.

How China is Tackling its Water Challenge

Introduction

TheChinaFile

China faces a severe water shortage. Its current water per capita is one quarter of the world average. This per capita water availability will decrease in the coming decades as China’s population peaks at between 1.4 and 1.5 billion people by 2030. China’s water usage per capita may be low by international standards, but it is expected to grow by between 40 and 50% by 2030. Factors such as higher living standards, increasing urbanization and further industrialization are driving water demand.

The water that China does have is often badly polluted. An estimated 70% of China’s rivers and lakes are currently contaminated and 300 million people drink water tainted with inorganic pollutants such as arsenic, excessive fluoride, untreated factory wastewater, agricultural chemicals, leaching landfill waste, and human sewage. China’s water is also inefficiently consumed, compounding its water challenges. 45% of water destined for agricultural use is lost before it even reaches crops. Only 40% of its industrially used water is recycled, compared with 75% to 85% in developed countries and water lost from urban plumbing leaks accounts for 18% of total urban water withdrawals.

Moreover, China’s water is unequally distributed throughout the country. The Yangtze River basin and areas to the south receive 80% of China’s naturally available water resources to support only 54% of its population, 35% of its arable land, and 55% of its GDP, while the north gets just 20% of China’s water. Deforestation, overgrazing and unsustainable agriculture have destroyed local ecology in many parts of China, affecting China’s overall rainfall, and exacerbating China’s age-old challenges of drought and flooding. To meet its growing water demands, especially in the north, China is depleting its underground aquifers, lakes and river systems at untenable rates. As water becomes scarcer, competition for water is increasing between agriculture and industry as well as among China’s growing cities and different regions of the country. This trend will only continue in the coming years; by 2009, surveys revealed that 58.3% of river water, 49.7% of lakes, 79.5% of reservoirs and 38.7% of wells were of quality necessary to be deemed adequate water sources. China remains particularly opaque and is reticent about releasing regular and up-to-date water statistics.

China has tried to solve its flooding, drought, and water scarcity problems through hydro-engineering projects such as the Three Gorges Dam and the South-North Water Diversion Project. Yet hydro-engineering alone will be unable to create sufficient water supplies to meet China’s future demand. China will need to improve the management of its water resources and the legislation governing its use. Perhaps most importantly, Beijing will need to increase the price of water to better reflect its scarcity value, allowing for the economic restructuring that this higher cost will cause. Repairing China’s ecology will also be essential. A healthy ecology will not only aid the prevention of desertification, with all the water loss that such environmental damage causes, but it will also help to maintain upstream eco-systems, which are essential for the long-term supply of good water sources. China will also need to upgrade the efficiency of its water delivery systems to agriculture and to its cities, and to improve the efficiency utilization rates in industry. Environmental protection will be essential in ensuring the water that China does have is potable. China must clarify its environmental protection laws, improve enforcement and increase fines. Without implementation of such measures, water scarcity risks limiting China’s future economic growth. Water scarcity could also challenge China’s political and social stability. Increasing illness caused by polluted water is driving up healthcare costs and generating more internal dissent. In 2005, the Chinese government acknowledged that 50,000 environmentally related “mass incidents” (a euphemism for protests) occurred, many of which were sparked by water degradation.

Interestingly, the Chinese Committee of Political and Legislative Affairs also acknowledged about the same amount of “mass incidents” (about 50,000) in 2013 as they did nearly a decade ago. The reality, however, is that environmental mass incidents have been steadily increasing: from 1996 to 2011, environmental protests increased at an average rate of 29% per year, spiking up nearly 120% in 2011 alone. The scale of the protests is also increasing, with around half of all “mass incidents” involving 10,000 or more people.

The South-North Water Diversion Project

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Historically, China has sought to solve its water scarcity problems through reliance on large infrastructure projects. Indeed, many of China’s top leaders are trained engineers, including Hu Jintao, who is a trained hydraulic engineer. Mao Zedong is reputed to have said in 1952, “the south has a lot of water, the north little. If possible, it is okay to lend a little water”, apparently acting as the spur for building what is now called the the South-North Water Diversion Project. When completed in 2050, the $62 billion mega-aqueduct is projected to divert 44.8 billion m³ of water yearly from the Yangtze to the north. The project will follow three routes. The eastern route will transfer 14.8 billion cubic meters of water yearly from the lower Yangtze, via the ancient 1800 km Hangzhou to Beijing canal, to Jiangsu, Anhui, Shandong and Hebei provinces as well as to the city of Tianjin. It is now projected to be completed in 2013 or 2014. The central route, begun in December 2003, will divert 13 billion m³ of water from the Danjiangkou reservoir on the Han River (a Yangtze tributary) to Beijing, Tianjin and other cities. It is scheduled to be completed in 2014. The western route would transfer water from the upper reaches of the Yangtze tributaries across the Qinghai-Tibet Plateau through the earthquake prone Kunlun Mountains via a network of tunnels into northwest China. Given its technical difficulty, the western route has not yet been given official approval and it is possible that it will be quietly shelved. It is expected that as many as 400,000 people might be displaced by the projects overall, though this would be fewer if the western route were scrapped.

Overall, the South-North Water Diversion Project faces many logistical challenges, the most important of which is ensuring that the water that does reach the north is sufficiently pollution-free to be usable. The eastern route, for instance, crosses 53 heavily polluted river sections. Clean-up efforts and water treatment facilities on this route alone will account for about 40% of the total aqueduct cost. If effectively implemented, it will be one of the most comprehensive water clean-up operations ever seen. 379 pollution control projects including wastewater treatment plants and wastewater recycling facilities are slated to be constructed, and major sources of industrial pollution such as paper mills are being shut down. Nevertheless, the clean-up process continues to be challenging.

Water Desalinization

China is also investing heavily in water desalinization in order to increase its water supplies. Research into water desalinization began in 1958 and more than 20 seawater desalination projects have been constructed which currently desalinate 600,000 m³ of water a day. China aims to produce as much as 3 million m³ of desalinated water daily by 2020, mainly for use in the north of the country. Desalination, however, is expensive and energy-intensive, and also requires water for its production. For these reasons, it cannot be considered to be a serious solution to China’s water shortages.

In 2012, the Chinese government outlined their policy goals for the next three years, ending at the conclusion of 2015. The government hopes to reach 2.2 to 2.6 million cubic meters or water per day, a far cry from the 660,000 cubic meters currently produced per day in China, but still possible given that plans exist to bring another 1.4 million cubic meters of water production online in large-scale desalination plants.

As of 2014, China had expanded its efforts in water desalinization with a total of 75 desalination plants, with nine more under construction. Though this technology may not be the most efficient at providing coastal cities with drinking water, these plants supply water that is used in coastal factories, sewage, and other wastewater management solutions, thereby allowing more drinking water from lakes, rivers, and reservoirs to be directed towards individual use. In the last decade alone, 60 desalination plants were built to run on seawater reverse-osmosis technology, producing 348,000 cubic meters of water per day, and an additional 11 plants were designed to utilize low temperature multi-effect distillation and produce a further 222,300 cubic meters per day.

Water Management

Ultimately, China will need to tackle its water scarcity issues not just by generating more supply, but by more efficiently managing and using its existing water resources. China’s water resource management system is highly fragmented. Multiple institutions have responsibility for China’s water resources, including data and information collection, hydro-infrastructure construction, environmental protection, and agricultural, urban and industrial development. There are frequent overlaps between these departments which raise administrative costs and exacerbate water’s “Tragedy of the Commons” problem. In other words, while China recognizes nationally the need for clean, well-managed water, it is in the interest of each user locally to consume water in whatever way will maximize their own short-term economic gain. This frequently gives China’s water management agencies conflicting priorities. Regional governments, for instance, often sacrifice water quality to protect local industries and jobs; they tend to focus on the water within their administrative areas, while failing to look at China’s water needs as a whole. Those considering water use in agriculture are often focused on accessing the water necessary to maintain agricultural yields. Those looking at the environmental protection of river basins try to limit the water drained from the river eco-systems. A failure to address the problem in a joined-up way persists.

This individualistic approach to the water supply in China, combined with local government corruption, has led to large-scale industrial dumping into lakes, rivers, and other aquifers. Often these waste products are, or are in large part, made up of heavy metals like cadmium or chromium that have been linked to increased risk of cancer. A recent scandal in 2011 involved the Lüliang Chemical Industry Company, which was found to be storing 288,400 tons of untreated chromium byproducts only a few feet from the Nanpan River, whose waters flow west and eventually join with those of the Pearl River. The company had been disposing of waste in this manner since 1989, and had gone as far as hiring divers to secretly dump metal into mountain reservoirs in order to reduce metal treatment and detoxification costs. Chromium levels in the river were 2,000 times China’s legally permissible standards. Effective progress in water management remains relatively slow due to ongoing and pervasive corruption that still sways local officials.

Water Legislation and Enforcement

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Not only are water governing authorities fragmented, but laws governing the management of China’s water resources are still being developed. Historically, China’s water laws have been ambiguous and lacking in effective enforcement mechanisms. They have had a bias toward decentralization, with local government agencies often having a determinative voice in water issues within their region. This has resulted in widely varying levels of water-law enforcement, corruption and confusing standards for industries. Indeed, some water legislation reformers have been advocating greater centralized regulation. They point to the success of centralized management in helping to restore at least some perennial flow in the Yellow River delta. In the late 1990s, its downstream flow disappeared annually for over 200 days, because upstream provinces were drawing on the river too heavily. Beijing began limiting water allocations to each of the provinces, so downstream provinces had sufficient water. Today, the entire length of the Yellow River is monitored in real-time by data collection from dozens of monitoring stations along the length of the river. The system is designed to check and manage pollution, drought and flood control, while enforcing fair distribution of scarce water resources among the nine provinces that share the waterway. Engineers can regulate the river’s flow by opening or closing a network of automated sluice gates and monitoring devices. This system is currently undergoing an upgrade which will make it the most advanced water rationing system in the world by the time of completion which is expected to be around 2015.

Indeed, recent water legislation stresses a greater move toward a unified management of water resources. This legislation emphasizes the importance of a balance between water resources, the still-growing population, economic development and the environment. It also focuses on improved efficiency in water use and it strives to set a foundation for greater transparency, equity and efficiency in the access of and payment for water by all levels of the economic spectrum. It advocates that allocation, distribution and regulation of water resources should be increasingly made through water-drawing permit systems where users are allocated and charged for water according to sector quotas, taking into account annual water-availability conditions and the sustainability of river basins, lakes and groundwater. The legislation also attempts to make clear distinctions as to who is responsible for the quality of water in each of China’s regions and to ensure that each of those responsible works to minimize pollution and improve overall water quality. To achieve improved water quality, recent legislation also specifies the need for setting up data and information systems at all levels, and to make data gathered available to stakeholders. Indeed, in 2007, Beijing’s Institute of Public and Environmental Affairs launched its online water database, allowing public access to water quality and pollution data, including corporate regulatory breaches. Yet, this move toward better information access has been tempered by Beijing’s conflicting and simultaneous instinct to prevent the independent gathering of information on China’s water, especially regarding its trans-boundary rivers, ostensibly to safeguard China’s national security.

The 2008 Law of the People’s Republic of China on Prevention and Control of Water Pollution ties the performance evaluation of public officials, at least in part, to their meeting of water and environmental targets. It also increased monetary sanctions against enterprises discharging wastewater illegally and specified the amount of chemical oxygen depletion caused by agricultural run-off allowed in waterways. In a significant legal development, it also allowed, for the first time, class action suits to be brought against polluters.

Several decisions made at the Third Plenum also show a greater commitment in dealing with corruption in local and village governments. Officials in environmentally damaged areas will no longer be expected to meet the same GDP targets as those in other provinces, and local government actions will be monitored in an attempt to reduce the prevalence of companies bribing towns to look the other way as they pollute rivers and water sources that ultimately make their way into China’s largest rivers.

Water Pricing, Water Rights and Efficiency

Ultimately, the most important step in solving China’s water scarcity will be raising the price of water. Water is highly subsidized by the central government, often making it effectively almost free for users, creating no incentive to save water. In 2009, the average price of water per cubic meter was $3.01 in Germany, $2.37 in the UK, $1.02 in South Africa and Canada, $0.74 in the US and $0.31 in China. Of 19 major economies, only India had cheaper water tariffs. Five years later, the price of water per cubic meter rose to $3.18 in Germany, $2.41 in the UK, $2.05 in Canada, $1.46 in the US, and $0.38 in China. Prices do not seem to be ending their upward trend anytime soon.

Higher water prices are likely to generate a significant restructuring in China’s economy. Higher water prices will encourage farmers to plant crops that are less water-intensive and will encourage more efficient irrigation. Indeed, growing urban and industrial water demands may eventually lead to the elimination of winter wheat in northern China as the higher cost of water forces the shift to higher-valued uses that produce more jobs and income per water unit. Currently, 1000 tons of water produce 1 ton of wheat worth $200, whereas industry yields $14,000 of economic output for the same amount of water. Reducing China’s grain production would reflect a significant shift in the decades-old policy of 95% self-reliant grain production, and would have a real impact on global grain markets. It would also spur urbanization as farmers migrate to cities in search of new employment.

Higher water prices would also encourage factories to recycle more of their water. In the special case of the North China Plain, it is likely to check the overexpansion of some high water consuming industries. Currently the region produces 20% of China’s steel, 10% of its power, and 14% of its paper, all industries which use water heavily and cause severe pollution. This would also make the cost of water treatment more feasible as it would become more economical to process and recycle water than to dump it untreated into the rivers. Higher water costs would also make living in water-scarce cities more expensive, potentially discouraging immigration into these areas. It would foster improved efficiency of its water delivery systems to agriculture and to cities.

Such a move may also check pressure on Beijing to tap new coal supplies, particularly the enormous coal reserves in the dry north. Without further water transfer schemes, such as the controversial – and possibly unachievable – western route of the South-North Water Diversion Project, there will not be enough water to mine the northern coal reserves and still develop the modern cities and manufacturing centers that China envisages for the region. The fresh water needed for mining, processing, and consuming coal accounts for the largest share of China’s industrial water use, over a fifth of all the water consumed nationally.

Higher water prices will also help control the scale of the South-North Diversion Scheme, serving to minimize the impact on the Yangtze River. Having the cost of the scheme added into the price of water for end-users will encourage them to use the water more sparingly. Ma Jun has estimated that the cost of cleaning up the northern Huai River system and of running its industry sustainably was greater than the total annual value in production that the industry within the Huai River system generated. Economic progress has brought more people to the river valleys, so that the area now supports 1.5 times the national average. After 1949, mainly for flood control, 5100 large and small-scale reservoirs were constructed along the upper reaches of the Huai waterway and more than 10 major flood control retention reservoirs were built. Without the huge hydro-engineering in the Huai River Basin, the area would not have been able to sustain so many people. Rapid development, however, made previous hydro-engineering projects inadequate. Beijing responded by building new hydro-projects to expand water supplies further. In what has become a vicious cycle, Beijing now faces the need to divert water from the southern Yangtze to support the people and the economy in the area. Ultimately, China’s desire for development is infinite, but its water resources are finite. Unless water pricing reflects its true scarcity value sooner rather than later, China’s lack of water will put the brakes on its rapid economic development.

Enforceable water rights will also be important to reducing China’s overall water wastage. Currently, even with the recent legislation, it is still not clear who holds many water rights and what benefits these rights provide. Ideally, China needs to establish a nationwide water rights program, leaving enough clean water so its eco-systems and aquifers are sustainable. Permits should be issued to each water user, with pricing at a level which encourages increased water productivity. Creating a market to sell or lease these water rights will advance water productivity further. Those who do more to protect the river and other water basins should have greater rights. This includes those provinces and regions near the waters’ sources. The provinces could then profit by selling rights, instead of wasting water on parched land and inefficient industrial projects. Appropriate incentives for water saving technologies and behaviors also need to be developed. For instance, a tariff system could be implemented in which people pay higher bills when they consume more than a set quota.

Authorities have been slow to raise water prices because of their fears about how the higher costs will affect China’s poor. Recent research has shown, however, that lower income Chinese often get little benefit from subsidies as, ultimately, low water costs mean that they frequently receive water that is highly polluted. Nevertheless, the government remains concerned with inflation, always a hot issue in China, and this adds to the pressure to maintain low water prices despite the arguments in favor of raising them; it is unlikely that the poorest in society would welcome a price increase even if it were in their own long-term benefit in terms of improving the quality of their water supply.

Pollution

TheChinaFile

Despite China’s efforts over the last three decades, water pollution has spread from the coastal to inland areas and from the surface to underground water resources. Essential to controlling China’s water pollution is the strengthening of law enforcement to improve compliance by industries and other polluters. Overall compliance with China’s environmental laws remains low. Yet, strengthening environmental protection is a multi-faceted process which not only requires raising water prices and establishing clearer water rights, but also necessitates the continued development of water protection legislation, the further advancement of China’s judicial system, greater financing and staffing of China’s Ministry of Environmental Protection (MEP), and making public a more rigorous collection and analysis of water data. Economic incentives such as pollution levies and fines have to be rigorously enforced. Overall, pollution fines should be increased. Lawsuits should be initiated against polluters and those most hurt by damaged public goods such as river basin ecosystems should have greater rights to demand compensation. State subsidies could be given to small towns and villages to help them to construct adequate water treatment facilities. Those waste-water treatment facilities that are constructed need to be continually monitored to ensure they remain operational and in compliance. China’s Tenth Five-Year Plan (2001–2005) mandated, for instance, the construction of thousands of new waste water treatment plants, yet a 2006 survey by SEPA (the State Environmental Protection Agency, the forerunner of the MEP) revealed that half of the new plants actually built were either not operating or were operating improperly. Corruption will also need to be tackled. Lax environmental codes are often rarely enforced and easily avoided by bribing officials. Tackling corruption will likely be done most effectively by linking compensation and performance figures to environmental protection as well as economic achievement. This would make it in the personal interests of officials to perform in the environmental arena, mitigating the “Tragedy of the Commons” conundrum, though this would also represent a significant shift in government behavior.

Future Trends

China’s water challenges are becoming too big for Beijing to ignore. China’s Twelfth Five Year Plan (2011-2015) projects record levels of water use, rising to 620 billion m³ by 2015, up from 599 billion m³ in 2010. Its traditional response to growing water demand – building large hydro-engineering projects in order to increase supply – will no longer be sufficient to meet the water demands of China’s agriculture, industry and cities in the coming decades. As a result, China will begin to implement new policies in order to better manage its water resources and to reach its 2015 goals of cutting water consumption per unit of value added industrial output by 30%, reducing arsenic, lead, cadmium, chromium and mercury levels by 15% from 2007 discharges, reducing ammonia nitrate fertilizer runoff by 10% and its corresponding chemical oxygen depletion by 8%. The plan also targets the construction of water conservation structures, improved irrigation, and commits to investing in the clean-up of rivers and lakes through the construction of wastewater treatment and recycling pipes.

At the heart of these new policies will be the gradual raising of the price of water throughout China. This trend is already in evidence in many cities across the country. Shanghai, for instance, increased residential water prices 25% in 2009, and another 22% in 2010. Beijing raised the price of commercially used water by 50% in 2010 and expects to raise its water charges to residential users by 24% in stages by 2013. China’s water users have not accepted the rises without discontent and some government officials fear that higher water prices could lead to social unrest, particularly as China is concurrently struggling with inflation. This unrest is due both to poor public education about the extent of China’s water challenges and to public skepticism that higher costs will translate into more effective water management.

Fixing the quality of China’s water will also be a growing priority for Beijing in the future. China needs to improve its water pollution record both by government investment and by encouraging private investment in the water treatment and management sectors. In 2011, for instance, China allocated $606 billion to clean up water and water infrastructure over the next decade. Larger, wealthier cities had already started investing in the water treatment sector, but without government support, smaller cities and rural areas have lacked the means and incentives to make much-needed investments.

Beijing is also explicitly encouraging foreign participation in China’s water markets. Foreign firms invested about $1.7 billion in China’s water sector between 2004 and 2009, with over $500 million being spent in 2009 alone. The investments were in waste-water treatment, municipal and industrial water supply sectors, and in direct investments in China’s water companies. This involvement will continue to expand in the near future.

China will also begin to move more aggressively against significant water polluters. In 2007, maximum fines to individuals or companies who discharge highly toxic pollutants into drinking water resources were raised fivefold to 500,000 RMB (approximately $80,000). Fines for companies who dump industrial residue urban waste into drinking water resources or who store solid waste or other pollutants below the water lines along rivers and reservoirs increased 20-fold to 200,000 RMB (around $32,000). While these are significant increases the fines remain relatively low and there is room for an expansion in this area. Increasingly, enterprises will also be responsible for bearing all costs to contain water pollution accidents and may face fines as high as 30% of the direct economic loss, according to the severity of the incident. Historically, pollution levies have been so low that it has been cheaper to pay penalties rather than to treat discharge. There is a growing realization that this cannot continue.

Litigation against water polluters will also increase, with rulings to progressively penalize those fouling China’s water systems. In 2009, for instance, an Asian Development Bank study determined the number of environmental lawsuits filed in China has increased an average of 25% annually since 1988. Since 2009, the Supreme People’s Court has been encouraging China’s maritime courts to adjudicate water pollution cases brought on behalf of a public interests. Additionally, three specialized environmental courts have been established in the provinces of Guizhou, Jiangsu and Yunnan.

China’s water challenges are daunting and urgent. The array of measures that are needed to more effectively manage its resources is huge. Still, China’s leadership is well aware of the importance of water to continued economic growth and to the health and well-being of its people. Poor water management has toppled many a Chinese government throughout the millennia, a risk to which the CCP is not immune. While progress toward solving China’s water challenges is likely to be uneven, overall it is expected that China’s water management will improve on most fronts over the next five to ten years.