Schwarzman Scholars worked together to create an academic journal, reflecting their ability to think critically about the Middle Kingdom and the implications of its rise. These collections of thoughts come together to form “Xinmin Pinglun,” our Journal dedicated to the publication of the informative and analytical essays of our scholars. As the application deadline for the class of 2019 is approaching and the arrival of the incoming class is on its way, we are sharing pieces from Ximin Pinglun to give insight into the critical thinking and scholarship taking place at Schwarzman College. Here, Jason Heo, (Class of 2017) discusses the air pollution issue in Beijing and a potential program for improvement.
The speed and scope of China’s “economic miracle” has come at the expense of its environment, and Beijing’s struggle with air pollution is one of the most visible examples of its environmental
degradation. In early January 2017, smog levels in China reached historic levels with 32 cities under “red alert.” In Beijing, the average AQI of the week from December 29, 2016 to January 5, 2017 was 334, the worst week on record for the capital. This “airpocalypse,” a term coined in 2013 in response to Beijing’s air, followed two previous red alerts earlier in December 2016. These events shut down schools and canceled flights. These toxic air events persist despite China’s campaign to reduce air pollution in recent years.
The main causes of pollution in Beijing are vehicle emissions from Beijing’s more than five million motor vehicles, coal burning in the surrounding regions, dust storms from the north, and local construction dust. According to the Berkeley Earth Group, air pollution contributes to over 1.5 million deaths in China each year, or about 4,400 people a day and 17% of all deaths in China. The most dangerous of the pollutants is PM2.5, which can pass through the lungs into the bloodstream causing asthma, strokes, lung cancer, and heart attacks. About three-eighths of the Chinese population breathes air that is rated “unhealthy” by the United States, and 90% of all monitored cities in China failed to meet national standards in 2015. According to the Organization for Economic Cooperation and Development, air pollution, if unchecked, will cause a 2.5% decrease in GDP by 2060 due to sick days, medical bills, and ecosystem harm.
The current policy environment
China developed its first environmental regulations in the 1980s, and after a 10-year trial period, the Environmental Protection Law (EPL) was codified in 1989. In its 47 provisions, the EPL lays out the principles for environmental protection and describes methods for environmental management. Environmental protection duties are divided between national and local bureaus, and any individual or company has the right to report violations. Since 1989, over 24 laws and 500 standards addressing pollution and resource usage have been passed by the National People’s Congress. Since 2013, Beijing has strengthened efforts to reduce rampant air pollution, yet toxic-air events persist. The Beijing Municipal Government has introduced a variety of measures to tackle air pollution. In 2012, the Beijing Municipal Government issued the “Air Pollution Prevention and Control Measures 2012-2020” plan, specifying air quality goals and actions to be taken in various policy areas. Following the State Council’s publication of the “Action Plan for Air Pollution Prevention and Control” in September 2013, the Beijing Municipal Government further introduced a series of important action plans and regulations.
The multitude of policy measures rolled out can largely be categorized as follows: targeting the four main local sources of PM2.5 emissions; promoting enhanced regional coordination; and other support such as increased investment in research and development, enhanced transparency and data release, and strengthening law enforcement. According to a comprehensive study released by the Beijing Municipal Environmental Protection Bureau in 2014, the top four local sources of Beijing’s PM2.5 emissions are automobiles (31.1%), coal combustion (22.4%), industrial production (18.1%), and dust (14.3%). Policy measures aimed at reducing each of the four sources of pollution and developing viable alternatives have been introduced.
- Reduce automobile emissions and develop green transportation. Examples of specific measures include: controlling the total number of automobiles in Beijing; implementing the most stringent fuel standards in the nation; continued road space rationing (automobiles with car plate numbers ending in certain digits not allowed on the road during peak hours on workdays); increasing the operating length of rail transportation to at least 900 km by 2020; and promoting cycling as a mode of transportation.
- Reduce coal pollution and promote green energy. Some main measures include: reducing coal combustion by 11 million tons from 2013-2016; closing down four major state-owned coal fired power plants; increasing supply of natural gas to Beijing and constructing more natural gas pipelines; and seeking
- Reduce industrial pollution and push ahead with industrial restructuring. Examples of specific measures include: compiling exit list for heavy-polluting industries inconsistent with the capital’s strategic positioning; banning the construction of new heavy-polluting factories such as oil refining, cement, and steel factories; and encouraging industries to cluster together in green industrial parks.
- Reduce dust pollution and promote green construction. Examples of specific measures include introduction of construction dust pollution fees since March 2015; requiring construction sites to be fully enclosed within 5th Ring Road and construction debris to be transported in fully sealed vehicles; vacuuming and improved cleaning for all roads; and encouraging use of dust-reducing technologies.
The 2014 study on PM2.5 released by the Beijing Municipal Environmental Protection Bureau also found that 28-36% of Beijing’s PM2.5 pollution comes from regional transmission, most notably from Hebei province, which is home to large numbers of iron and steel factories. Since 2013, efforts to involve Hebei in Beijing’s battle against air pollution have become more fruitful, mostly because of the introduction of the concept of “Jing-Jin-Ji coordinated development” (encompassing Beijing, Hebei and Tianjin, and aiming to build a new model of sustainable regional development) by President Xi Jinping. Examples of specific policy measures taken under the Jing- Jin-Ji Coordinated Development Plan so far include standardized air pollution alert classification systems (implemented in October 2016), joint law enforcement action between Beijing and Tianjin, and massive reduction of iron and steel production capacities in Hebei.
Measuring the results
In addition to the previously mentioned action plans and measures, the Environmental Protection Law of 1989 was amended for the first time in 2014, after two years of debate, to be enforced beginning in early 2015. Premier Li Keqiang marked this occasion by stating that the government will “resolutely declare war against pollution as we declared war against poverty.” Though many analysts are hopeful, there are doubts as to whether the policies will be implemented and enforced any more than policies in the past. Three of the most significant additions to the EPL are the role of civil society in environmental protection, the level of regulatory specificity, and the extent of regulatory specificity.
In 2015, Beijing reported that air quality was better than the year before despite the city’s first two red alerts since the four-tier warning system was put into place. The city’s average concentration of PM2.5 dropped 6% from 2014 to 81 micrograms per cubic meter, which is 10% lower than 2013, when Beijing first started publishing PM2.5 concentration data. Sulfur dioxide and nitrogen dioxide levels fell by 38% and 12% respectively, which is attributed to the phasing out of coal-fired heating systems by the environmental protection bureau. In 2016, the PM2.5 concentration fell by another 9.9% to 73 micrograms per cubic meter, which still exceeds the national standard. That year saw 12 more “blue sky days” than the year before, while coal consumption had been cut, along with the number of polluting factories and high-emitting cars.
Failure to execute its environmental protection policies is a major cause of air pollution in China. In 2014, 90% of the 161 monitored cities in China failed to meet the air quality standards and 90% of 500 planned pollution-prevention projects failed. This implementation gap comes from incomplete or inadequate laws, non-compliance, and lax enforcement. China’s environmental laws are broad, overly ambitious, and not fully established. Unlike the Clean Air Act enacted by the United States, China’s Air Pollution Action Plan lays down principles and broad mandates without any regulatory mechanisms, leaving much room for interpretation. As China’s legal system is still relatively incomplete and not well-established, enterprises often base their environmental practices on perceptions of regulators rather than the legal code itself. Local officials have called for more guidance and funding concerning environmental issues, claiming that they are ill-equipped to handle such tasks. In 2014 and 2015, Beijing announced more ambitious targets that many local officials feel unable to meet. Without better guidance and more reasonable laws, local officials will be unable to execute the legislation from Beijing well.
Even if environmental laws were well-crafted by Beijing, they may not be executed due to non-compliance from local officials responsible for enforcement. This non-compliance by local officials is caused primarily by misaligned incentives, inadequate resources, and lack of cultural pressure. In terms of incentives, local officials tend to prioritize economic growth over environmental protection as their performance evaluations focus on local GDP. In a step of progress, environmental targets were added to bureaucratic evaluations in 2014. However, the environment targets are not yet important enough to motivate much real change.
Similarly, the punishments for enterprises that flout environmental laws are not harsh enough to motivate compliance. Even if a firm is caught and charged, the fines are frequently negotiated down and the collection of fines is low, estimated at less than 50% of the collection rate. Bribing regulators is not an uncommon practice either. Despite recent increases, pollution fines are still significantly lower than the cost of reducing pollution. Thus, rational firms may well choose to pollute and pay the fine. Fortunately, fines have been increasing, and in 2014, Beijing fined more than 7,000 companies a total of $14 million, more than ten times the amount from the prior year. In 2016, the Ministry of Environmental Protection was given the power to perform unannounced inspections, an important step forward in achieving compliance.
Even if officials are motivated to enforce regulations, many localities lack the resources, like monitoring equipment and inspectors, to do so. As Beijing announced another set of ambitious targets in 2014, some villages took desperate measures to reduce emissions, such as shutting off electricity to entire villages and closing hospitals every four days. When electricity was cut to enterprises in Hebei, they turned to diesel-powered generators to continue production, worsening the pollution problem. To give environmental regulations a chance, Beijing must provide better resources in line with its mandates.
With recent policies and laws put into place, large enterprises have seen sharp emissions declines. They represent the easiest targets for the government to go after because of the level of visibility with which they operate and continuously pollute. However, an unfortunate consequence of these major crackdowns is often an ‘exporting’ of pollution from big cities to smaller ones, and eventually to the towns. A strict regulation set for trucks in Beijing could easily result in their being sold to more remote areas. Small and medium-sized enterprises have a major role to play in pollution. A 2012 report by the investment arm of the World Bank Group found that Chinese SMEs consume 2.5 times as much energy as large-scale manufacturers do to produce the same goods. Inspectors sent by the Ministry of Environmental Protection and local governments regularly discover small factories in Hebei, Henan, and Shandong provinces that continue to ignore restrictions.
While reliable data on smaller factories in China is lacking, there is reason for optimism. In recent years, an increasing number of smaller factories have adopted energy-efficient practices, closing the gap with the industry leaders. Given that China has more than 70 million such enterprises, they could grow into the clean leaders of tomorrow if the right incentives are provided.
The need for coordinated development
While Beijing, Hebei and Tianjin are making headway on environmental cooperation under the Jing-Jin-Ji Coordinated Development Plan, some fundamental issues regarding the incentives and capabilities of the three parties involved, especially Hebei, need to be resolved for cooperation to deepen. In the Jing-Jin-Ji region, there is an imbalance between the environmental responsibilities that the three parties are asked to assume and the benefits they stand to gain. Broadly speaking, Beijing and Tianjin shoulder lighter responsibilities compared to Hebei on reducing environmental pollution, yet stand to benefit at least as much as Hebei from the reduced pollution. The current mode of cooperation may not be win-win, but a net win for Beijing and Tianjin and a net loss for Hebei.
More specifically, the many actions that Hebei has been asked to take to clean up pollution have been extremely costly for the province. Take the case of Shijiazhuang, which is Hebei’s provincial capital. According to Xing Guohui, current party secretary of Shijiazhuang, work undertaken to address air pollution in 2015 reduced Shijiazhuang’s industrial output by 20.2 billion RMB and cost the government 800 million RMB of fiscal revenue. The large numbers of factories closed down are also associated with significant unemployment problems. From 2012 to 2017, Hebei is expected to cut steel production capacity by 60 million tons, which could affect close to one million jobs. On the other hand, Hebei has received relatively meager support from Beijing and Tianjin in its environmental cleanup work and industrial upgrades. New economic growth spots have been slow to form. Now that the province’s heavy industrial base has significantly weakened in part due to regional environmental needs, it is unclear what will take its place.
The way forward
In Beijing and across China, poor air quality has caused outrage and received more attention in the past few years. In response, the government has stepped up environmental actions by updating regulations, increasing punishments for polluters, cracking down on large offenders, creating broader regional coordination zones, and experimenting with other innovations like carbon markets and electric vehicles. Some progress has been made, but the continued reality of pollution-filled life in Beijing requires more action from the government and the people.
To improve policy execution, Beijing must ensure that the laws are transparent and achievable, align incentives with harsher punishment for polluters, and provide local officials with more resources such as trained inspectors and monitoring equipment. To address SME-pollution, Beijing should implement more remote monitoring technology and consider crafting policies that provide greater support to SMEs so as to level their playing field with SOEs. To improve regional coordination, Beijing and Tianjin should funnel more funds to Hebei via horizontal compensation, and establish a regional green development fund. Continued environmental degradation could have hugely destabilizing consequences for China, but with strong, widespread action, China can clean up its air and improve living standards for its hundreds of millions of people.
Jason Heo (Class of 2017) is from the United States of America, and graduated from Swarthmore.