In the article “China Asks Companies to Mind Environment When Investing Overseas” from bloomberg news, it is clear that China is beginning to realize the impact that their growing economy is having on the global environment. This has come after recent criticism of China for neglecting the Environment and allowing pollution to spiral out of control. Bie Tao is quoted in saying “No side will win if the environment is neglected, and we have many lessons in this regard.” He brings up an interesting economic dilemma because gdp growth more or less requires the expansion of industry in cities, however there are proven to be many negative externalities that end up hurting the economy that comes along with this expansion. For example, more polluted air will result in less healthy crops which results in lowered GDP growth. It is a positive sign to see that the Chinese government is beginning to take this issue seriously and is sending a stern message to companies. It will be interesting to see how all of this pans out in the future.
Let me be a devil’s advocate: talk is cheap. If China can’t get firms to obey environmental laws domestically, then why should we think their rhetoric on Chinese firms operating overseas represents more than an attempt to “spin” in advance of adverse press on what these firms actually do.
Another recent post discussed China’s government’s decision to implement a carbon tax on domestic companies. I wonder if this tax would also apply to Chinese companies working overseas? If so, this could represent a real effort to curb pollution across all of China’s sphere of influence. Maybe China is finally getting serious about its pollution problems.
Talk is cheap. So what steps can the Chinese government truly take both domestically and abroad to enforce these laws? Does the fact that domestic firms are not obeying indicate that the government really isn’t serious?
As per the SSA keynote speaker today, a carbon tax levied at source (coal mines, wells or refineries, ports) would involve a small number of physical locations and hence be cheap to collect and something that the central government could realistically enforce. That would only get at CO2 emissions, one slice of the problem, but more expensive inputs would encourage better operational practices, which would help: carbon up the smokestack is carbon not used to produce energy. That doesn’t get at organics, heavy metals and so on, but would favor (cleaner and more energy efficient) natural gas over coal.