One Lifeboat: Chapter 4

Published: September 22, 2008, 8:11 pm

Topics:

Environmental Economics (main) Sustainable Development (main) International Environmental Issues (main)

Ten Issues

China is gradually assuming the responsibilities of a leading producing and consuming nation. A nation that will be playing an ever-more significant role in global environmental affairs. In this section we explore 10 issues important for China in developing an internationally-satisfactory, domestically-productive environment and development relationship.

Issue 1 – Enhancing Domestic Performance on Environmental Regulation and Enforcement, Pricing, and Environmental Planning and Management within China

The reality for all nations is that effective domestic action is essential as the basis for solving regional and global issues. China is no exception. Better enforcement of existing laws and regulations, further implementation of taxation and pricing measures, and improvements in environmental governance and institutional coordination, are areas that everyone realizes have to be improved. The years ahead will bring the additional challenge of integrating provisions from a number of MEAs into domestic environmental management. This will require significant new measures related to many sectors such as energy, transportation, agriculture, industry and water resources.

As the case of compliance under the Montreal Protocol reveals, basic implementation of any major agreement will take a decade or more. The agreements tend to become more stringent over time, so that full implementation may well take 20 to 30 years or more. CITES is still not meeting its goals even after such a long time span. The hard issues associated with the Climate Change Convention are still in the future. We can presume that the period after 2010 will be exceedingly important for China to address a complex, highly interactive set of domestic and international environment and development implementation needs.

Increasingly, the world will view China as a major economic force and innovative leading industrial nation rather than as part of the developing world. There will be rising expectations concerning environmental stewardship in all of China’s actions.

Issue 2 – Reducing the Impact of China’s Activities on Global Resource and Environmental Conditions

The review of market supply chains in Case Study 1 reveals just how significant China is becoming in its draw upon natural resources from many parts of the world. There is little question that China will have a major impact on sustainable resource use. The impacts are not necessarily negative. If some lands can be turned into more productive use, there may be major benefits. But the pressure on tropical forests, coral reefs, ocean fisheries and some agricultural lands is likely to be severe, and biodiversity losses high. There are three key points:

1. How China can continue to access the resources needed for its high rate of growth, while strengthening its own domestic capacity for efficient use of raw materials and improving environmental protection.
2. How China can deal with individual supply sources to reduce supply chain environmental impacts created in meeting its domestic and export-oriented economic needs.
3. How global and regional environment and sustainable development efforts can be furthered through Chinese commitments and involvement.

These are big points, all relating back to China’s dual role of meeting the material needs of its own people and secondly, continuing to be “workshop to the world,” but perhaps under more stringent environmental conditions. It is inescapable that China these circumstances needs to pay particular attention to its ecological footprint—in considerably more detail than most other developing nations. Many of the issues described below relate back to particular aspects of the three points mentioned above.

Issue 3 – Avoiding Pathways Taken by High-consuming Nations

The unrestrained appetite for consumer goods in regions of North America, Europe and elsewhere is unsustainable. But applying the brakes at the present time on China’s role in supplying cheap goods would damage China’s economic engine, at least in the short run. It cannot be China’s burden or responsibility to ensure sustainable consumption patterns on the part of all trading partners. Arguably,China’s low production costs have abetted the continued growth of global consumerism by lowering the cost of goods. Certainly there is an accumulating environmental deficit growing inside China, regionally and even globally as a consequence of limited environmental management as export-oriented production escalated within China. Even if China were now to address these concerns satisfactorily, some other developing countries would take over and emulate the Chinese economic growth model of the last decades. Thus, while fullcost pricing and better trade and investment rules should help, if implemented fairly around the globe, these do not constitute a sufficient solution to unsustainable consumption. The responsibility should remain primarily with measures taken by the consuming nations.

And in this regard, China itself must find a virtuous path of sustainable domestic consumption that does not trace the unsustainable route taken by wealthier, high-consuming nations. This is likely to become more difficult over the coming decade, given the growing Chinese wealth and policy emphasis on expanding the size of domestic [[market]s]. However, China example for other countries, with its high savings rates, low per capita consumption patterns at present, and its considerable latitude to increase energy and material efficiency. The general notion of Xiaokang ^[1] promoted by current leaders is helpful, but this concept needs to be made as operational as possible with appropriate capacity to address situations where it is not working.

Issue 4 – Improving Market Access and Promoting Sustainable Trade

Improving market access will continue to be the concern of the Chinese government and businesses. In the past few years, Chinese exporters have sometimes been thwarted by higher environmental, health and safety standards in developed country markets. According to a 2003 MOFCOM (Ministry of Commerce) report on the Impacts of Foreign Technical Barriers to Trade on China’s Exports, the Chinese exports most commonly facing difficulties are those of animal origin such as poultry and marine products, vegetables and other plant products including tea, peanut and tobacco products. The countries that most commonly raise difficulties are the European countries, Japan and the United States ^[2]. According to the same report, major difficulties faced by Chinese exporters include: lack of information and awareness of rapidly changing requirements; lack of financial resources to undertake renovation or to obtain international certification; lack of information on potential technological solutions for meeting the requirements of importing countries; and difficulties in meeting the supply chain requirements that involve compliance of many different manufacturers and actors of a product life cycle.

Despite the difficulties that foreign environmental measures present to Chinese exporters, these measures may represent trade and development opportunities as well. They can, for example, provide an incentive to accelerate the development of green products, the introduction of cleaner production technology or the expansion of environmental services. They can prompt domestic enterprises to strengthen their environment management, to adopt new technologies and processes and to lower energy and raw material consumption. This will ultimately increase the competitiveness of their products. It is not only conducive to overcoming green barriers to trade, but is also compatible with China’s sustainable development strategy.

There is a need in China to accelerate trade in green products, environmental technology and environmental services. Indeed, some enterprises in China have realized that there are green opportunities in overseas [[market]s] and have committed to cleaner production through foreign-funded projects. However, these enterprises suffer from lack of information relating to foreign environmental requirements and relevant World Trade Organization (WTO) rules. They have identified the need for practical guidance on environmentally-related WTO requirements and on existing or planned national environmental requirements related to their export products.

There is also a need to assist China’s own effort to improve market access in response to increasingly stringent health and environmental standards and increased demand for environmentally friendly products in developed countries’ markets, and to address actual and perceived difficulties faced by Chinese exporters wishing to get greater access to developed country markets. This could be accomplished through creating the basis for sustainable trade, including supporting access to information on foreign environmental and health safety standards; establishing local networks to disseminate information and organizing training for promoting sustainable trade; and establishing an international network to facilitate international certification and standard conformity. It could also be accomplished through supporting Chinese export-oriented enterprises in acquiring technical information on technological solutions for meeting chain supply requirements and information on possible foreign financial assistance to promote sustainable trade, and to promote corporate social responsibility in China.

Issue 5 – Aligning Production and Manufacturing with International Environment, Health and Safety Approaches, Standards and Performance

There is a real need to improve access to information on environmental, health and safety standards of countries that are the target of Chinese exports, and to provide technical assistance to address real and perceived difficulties of Chinese exporters. The examples provided below demonstrate that it is possible to make progress through a combination of government efforts and business initiative. While the initiatives described should have environmental benefits, they have been promoted for pragmatic reasons—market access, and in some cases, to avoid import competition.

Environmental Management Systems

In 1997, China adopted five ISO 14000 standards that were first published by the International Organization for Standardization. The State Council approved the establishment of the National Accreditation Committee for Environmental Management Systems to oversee China’s authentication work of ISO 14000. As of late 2004, Chinese enterprises and organizations accounted for some 70 per cent of the world’s 74,000 ISO 14001 registered facilities ^[3]. This is quite a remarkable achievement, which demonstrates responsiveness on the part of both a national government to a useful tool for improving environmental performance. The ISO 14001 effort has laid groundwork for other types of environmental certification involving Chinese products and processes.

FSC and MSC Certification

Perhaps the most stringent of various environmental process and product certifications is the Forest Stewardship Council (FSC), which has been active since 1993 at the international level, and now is moving into domestic [[market]s] as well. Both aspects are relevant, since Chinese exporters source their raw wood materials from such a variety of sources. Both Chinese domestic purchasers of wood products and purchasers abroad have an interest in knowing that these products are derived from sustainably grown and harvested sources. Both chain of custody certification and forest management certifications are important. Since 2003 these two types of certifications have been introduced within China through the FSC China National Initiative. Currently there are 150 enterprises holding chain of custody certification, including a number of furniture manufacturers, and four wood producers hold the forest management certificates for domestic natural and plantation forests totaling some 400,000 hectares (ha). The huge challenge is to convert these beginnings into more widespread efforts domestically, and to ensure that the majority of wood imported into China is internationally certified either through FSC or through equivalently-stringent certifications.

A similar certification process operates internationally for seafood via the Marine Stewardship Council (MSC). No Chinese fishery or processor has been certified by this Council. This would be a complex process for wild fisheries since seafood is sourced from many locations for processing in China and re-exported to many international markets, sometimes with final processing in third countries such as Canada before export to final destinations such as the U.S. It might be a somewhat easier effort for China’s massive and diversified aquaculture industry.

Ecolabelled Products and “Green Food”

Up to June of 1996, there were only 12 categories of products that had been awarded the China Environment Label, and there were 43 products being certified with the environmental label. Now there are some 21,000 products produced by 1,300 enterprises that have obtained China’s Environmental Label certificates. Since 1997, “green food” has been gradually popularized, industrialized, commercialized and exported widely. It has now become one of the major export products actively promoted by China Import and Export Company of Cereal and Edible Oil Products. In December 2006, the Ministry of Finance and SEPA announced plans to begin green government procurement, first at national and provincial levels, and, in 2008 by all levels of government. This will be a major incentive for shifting into “greener production” if implemented fully ^[4].

Issue 6 – Alignment with International SHE Standards

As China’s new industrial base matures, and as more domestic and international attention is focused on issues such as safer production and use of coal, the many issues related to safety, health and environment (SHE) in China will receive greater international scrutiny. Success with economic growth strategies focuses attention on China as a competitor, as the cause of lost jobs in Europe, North America and elsewhere, as well as the source of environmental problems such as mercury or other distantly-transported pollutants. Labour activists, environmental lobbies and industrial interests abroad will place considerably more pressures than at present for SHE improvements, while leaving China vulnerable to international claims that its economic growth leads to undercutting of hard-won social and environmental benefits elsewhere.

These concerns will not be addressed by simply adopting international standards, or better; the emphasis will be on verifiable performance and transparency in dealing with problems. And this issue is, of course not restricted to strictly domestic operations, but also to performance of Chinese multinational companies in their operations in other developing or industrial countries. China is certainly engaged on SHE concerns at present, but not at a level of effort commensurate with the scale and range of problems. It is an area where the large body of experience in other countries can be of direct value, also of WBCSD and other international business organizations, international nongovernmental organizations (NGOs) and international organizations such as the (OECD), ILO and UNEP.

Issue 7 – Dealing with New Types of Environmental Problems

Each decade brings with it new environmental and sustainable development issues and surprises. We can presume that more will emerge (see Box 8 for examples that are highly relevant to China): some associated with new technology development such as biotechnology and nanotechnology; the push for novel forms of resource extraction such as oil sands, frozen ocean methane deposits, deep ocean drilling for oil and gas; various biosafety issues, including bioterrorism, zoonoses that may create epidemiological crises and alien invasive species (Alien species); and, of course, the unknowns associated with climate change. In addition, with new knowledge, chemicals and industrial processes formerly thought to be safe may need new regulatory and phaseout measures. In all the cases cited, there are likely to be significant international considerations. As the case with ozone depleting substances demonstrates, managing the transition on any one issue is complex, likely played out over decades.

On most new issues, it may be presumed that China will be directly affected and involved in the solutions. Even for development issues such as oil sands located in North America, China will have a stake since it invests in these new energy sources. It is an important outcome of globalization that problems become shared. And certainly China will face some critical regional concerns such as the changing moisture conditions associated with the loss of glaciers and snow melt in the shared “rooftop of the world.”

Some of the strategies to deal with novel concerns and their implications within China and in China’s international relationships are: proactive measures to anticipate and take early action on emerging problems; incorporation of environmental assessment (Environmental Impact Assessment) into R&D efforts and commercialization of new technologies, both nationally and cooperatively with international organizations; alignment of Chinese and international regulatory efforts for new technologies and environmental monitoring; promotion of corporate social responsibility on the part of Chinese business and investors; and participation in major international assessments conducted by organizations such as UNEP and OECD.

Issue 8 – Fast-track of Innovations for Sustainable Development

China is building its future around innovation, with an investment in scientific development and R&D that already exceeds that of Japan, and many countries of Western Europe. But innovation does not automatically lead to pathways of sustainable development. The time frame for innovations moving from concept to widespread practice has been on the order of 15 to 30 years. With needs such as coal gasification, alternative fuels for transportation, improved plants able to thrive under changed soil moisture conditions, etc., this time frame must be significantly shortened. China’s call for technology leapfrogging, concessional arrangements for new technology and partnerships to address issues such as carbon sequestration, are being answered, but not yet at the level of activity required.

Innovation of many sorts is required, in addition to introduction of new technologies, for example, changes in governance, management, public engagement and financing. These are matters that can be addressed domestically and internationally. China’s constructive engagement with innovation almost certainly can be enhanced during the 11th Five-Year Plan and beyond. It is a bright light both domestically and for the world.

Issue 9 – Information Quality

Knowledge needed for global environment and development decisions depends on the quality of national-level data and information. The quality of information from China suffers in a number of ways: declining quality of monitoring in recent years; misleading information “manufactured” at local levels to meet expectations; and inadequate analysis, a need for more timely reporting of problems and a lack of transparency. These problems are certainly not restricted to China, but no other nation faces such rapid development changes, where accurate information plays an exceedingly important role. At times, these national-level problems have created global-level issues, for example in relation to world fisheries statistics, SARS and other public health concerns, and specific environmental matters such as traffic in illegally harvested goods sent from other countries to China, including timber and wildlife. In addition, since China has not developed a reliable, internationally-compatible system of national environmental accounts, comparability of performance with other nations is limited.

It is very difficult to assess China’s actual contribution to cleaning up global and regional pollution concerns such as GHG production; mercury contamination; POPs in the Arctic and elsewhere; and various other long-range transboundary pollutants without accurate assessments of environmental loading, behaviour of pollutants in the environment and the effectiveness of control measures. Each of these aspects requires good data collection, proper analysis and sharing of information— all matters where international cooperation is important.

While there may well be justified concerns that data improvement will create problems for China, especially if it is discovered that China’s contributions continue to rise, without such information China will be vulnerable to assertions by others around the world about its contributions to problems elsewhere. An example is the assertion that some 50 per cent of mercury contamination in U.S. lakes and rivers arises from Chinese sources. At a grander scale still are the information quality and quantity needs required to refute concerns that China may turn into the world’s largest pollution haven. Whether this hypothesis will take hold is a significant matter for China’s trade relationships as well as domestic perceptions. It will not be persuasive enough to point out the major investments in pollution control and other environmental management initiatives. Credible and independently verifiable signs of actual progress will be needed.

Issue 10 – Capacity to Share China’s Environment and Development Solutions Globally

China’s expertise for solving many domestic environment and development problems, and for addressing international-level resource and environment matters, including those associated with market supply chains and other trade matters, will be in high demand. The three most significant sources of this demand are likely to be:

1. developing nations, especially those with significant natural resource and other trade ties to China;
2. nations adjacent to China; and
3. nations in partnership with China on specific environment and development problems or other alliances.

While arrangements will be dictated by specific circumstances, all will require financial, scientific and managerial support, perhaps at levels above and beyond China’s current commitments and capabilities.

The benefits to China may be considerable, although longer-term. There should be benefits to China’s rapidly developing environmental industry sector. Quite likely, China will be a net recipient of other benefits, including a number of intangibles such as international goodwill towards Chinese environmental problem-solving approaches; more rapid and cost-effective sharing of advanced technology and management between other parts of the world and China; and, perhaps, favourable terms for resource access or other benefits sought by China.

Notes

This is a chapter from One Lifeboat: China and the World's Environment and Development (e-book). Previous: Chapter 3: Case Studies (One Lifeboat: Chapter 4)|Table of Contents|Next: Chapter 5: Conclusions (One Lifeboat: Chapter 4)

Citation

Development, I., Hanson, A., & Martin, C. (2008). One Lifeboat: Chapter 4. Retrieved from http://editors.eol.org/eoearth/wiki/One_Lifeboat:_Chapter_4