China’s Economic-Environmental Balancing Act

October 8, 2010 § Leave a comment

Beijing is caught in a balancing act.  The leadership is determined to maintain at least an 8% annual growth in GDP, because, as they see it, economic prosperity is the underpinning of social stability.   But this same leadership also appears to be genuinely concerned with the range of environmental problems the country faces.  The official Chinese press, including the English-language China Daily, People’s Daily, Xinhua, and Global Times, reports everyday on the devastating effects of greenhouse gas emissions, climate change, water contamination, coal-produced energy, and deforestation, and on the steps being taken–or under consideration—to rein these problems in.

Consider the case of the automobile.  Measures taken by the Beijing government to reduce the damage done by the automobile to the environment include: providing rebates to consumers for the purchase of more fuel-efficient cars (approximately $400); creating a plan to invest $15 billion in a 16-company alliance whose mission is to research and develop standards for electric and hybrid vehicles; requiring that every car in Beijing be kept off the streets on one specified day of the week (determined by the last digit of the license plate); and encouraging public transit use in the major cities by maintaining rider-friendly rates (about 30 cents).

Still, in big cities the streets are choked with cars and the air is choked with carbon emissions—and matters are getting worse, much worse, daily.  Why not impose a congestion tax, which requires drives to pay a fee to use the city roads at peak hours?  Why not charge $4000 for a license plate in Beijing and Chongqing and Tianjin and other cities, as is the case in Shanghai, to limit the number cars and to raise necessary revenue to expand the public transit system?  Why not impose a hefty sales tax on large, fuel-inefficient cars?   In other words, why not do still more to protect the environment?

The answer comes down to this: even as officials take steps to curb the ravaging effects of the growing dependence on the automobile, they are, nonetheless, counting on the car industry to strengthen China’s economy.  China is pinning its future economic development, in part, on car manufacturing, hoping to become a major producer of automobiles as well as a major consumer.  (This year it surpassed the U.S. as the world’s largest automobile market.  And just this Wednesday the Wall Street Journal blog reported that “China’s top 30 auto groups are expected to have combined capacity to build 31.24 million vehicles a year by the end of 2015, up from 13.95 million at the end of 2009.”)  In short, the auto industry is regarded as essential to China’s future economic prosperity—and it’s this economic prosperity that will promote the government’s much talked about  “harmonious society.”

The example of the car makes a larger point: the Chinese government is, no doubt, becoming environmentally more aware, taking aggressive steps to promote clean air.  But, given the choice, the insistence on the almost sacred 8% GDP figure will, at least for the time being, trump environmental goals.


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