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The Rivers Run Red: what can we learn from the recent spate of environmental accidents in China?

Alex Wang

Posted August 3, 2010

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It has been a horrible month for China’s environment.  Last week while workers in northeast China pulled more than 3,000 barrels - each containing 170 kilograms (374 lbs.) of flammable chemicals - out of the Songhua River, a plastics factory in Nanjing burned, China’s largest-ever oil spill engulfed the waters of Dalian, and acid overflowing a mine poisoned the Ting River in the southern province of Fujian, killing nearly two million kilograms of fish and putting local populations at severe risk.  It has not been any better in the U.S., as the BP oil spill worked through its fourth month, a Michigan pipeline spilled more than 840,000 gallons of oil, and U.S. climate legislation collapsed (for now) in a cloud of recriminations.

Many policymakers and environmentalists are seeing the current spate of environmental disasters as only the latest sign that the chickens are finally coming home to roost for China’s environment.  These and the series of heavy metal poisonings of more than 4,000 people last year are the predictable consequence of three decades of unsustainable development.  These accidents strongly support the notion that, as China’s senior leadership has already stated, China must change its development model to a more sustainable one.  They also point to the urgent need to lay an effective foundation for environmental transparency and stronger enforcement in China.

China’s “Minamata Moment?”

Will the current round of environmental disasters trigger China’s “Minamata moment,” driving real reforms that put an end to China’s environmental decline?  Too often these environmental “incidents” have been viewed by some as just the cost of China’s economic rise.  China needs to focus on economic development now, the argument goes, and will naturally be able to do more on the environment once it has become a wealthier country.  This viewpoint has been surprisingly durable, even as China is beset by environmental disasters on all sides.  But the argument has become increasingly difficult to sustain as the costs of China’s environmental degradation mount.

Lessons Learned

Two particular aspects of these accidents have not received adequate attention in the public debate and the media.

You can only solve the problems you know about

One of the more egregious aspects of the July 3rd Zijin Mining accident in Shanghang County, Fujian Province was the failure of Zijin to report its massive acid spill for nine days.  The failure to disclose such a dangerous spill put lives at risk, exacerbated losses to local fishermen, and cost investors dearly.  This was only the latest in more than a decade of accidents and cover-ups for Zijin.  This is also indicative of broader problems in China with environmental information disclosure.  Data on factory emissions of pollutants are still largely unavailable to the public and companies are not required to publicly disclose the types and amounts of dangerous chemicals they store and use on premises. 

Two weeks ago, 11 Chinese environmental groups called for the Hong Kong, China and Shanghai Stock Exchanges to investigate Zijin for its information disclosure practices (NRDC has also supported this call) and it is good to see that the China Securities Regulatory Commission (CSRC) is investigating Zijin’s nine-day delay in going public.  We have seen positive trends in disclosure from China’s central-level environmental regulators.  Earlier this year, MEP announced perhaps for the first time in its history that China’s environment overall was getting worse, not better.  Moreover, it revised its 2007 water pollution numbers to show that water pollution for that year was 2.5 times worse than previously announced.[1]  This trend towards disclosing the true state of affairs is a very good sign, since acknowledgment of a problem is the first step to recovery.  Nonetheless, the tendency to hide bad news is still strong.  Many enterprises and cities in China still are not disclosing pollution information at the level required by Chinese law.  Moreover, too frequent revision of past data will decrease public trust in Chinese data overall.

MEP has for several years been a leader among Chinese ministries in promoting greater transparency.  However, Chinese environmental disclosure requirements still require less disclosure than is seen in many other countries.  For example, the vast majority of Chinese enterprises are not required to publicly disclose their pollutant emissions or their use and storage of toxic chemicals, no matter how potentially harmful to the public.  The Zijin Mining incident presents an opportunity to step up disclosure requirements with an aim to deterring violations, protecting public health and bringing Chinese requirements into line with those of peer countries.

Social stability comes from fixing the problem

If you followed the sordid Zijin saga closely last month, you also saw a noteworthy bit of back-tracking from the company.  Zijin initially took the indefensible position that “the lack of a prompt announcement about the accident was for the purpose of maintaining stability, as to not arouse the local people’s panic and fear.”[2]  In other words, Zijin wanted us to believe that it failed to disclose its accident, not to hide its own malfeasance, but rather to protect the public.  A week later, Zijin admitted that the accident had been caused by weak management and inadequate emergency procedures, and that "the mishandling of the release of public information has led to financial loss for downstream fish farmers and harmful social consequences."  This exploded the myth, held by too many local enterprises and not a few officials, that stability can be enhanced by hiding the truth from Chinese citizens, higher-level government authorities, and the international investment community.  The Zijin incident laid bare how the goal of “social stability” could be used as a excuse to cover-up malfeasance.  But what is now clear is that China’s environmental challenges are far too great to be hidden from view.  As Ma Jun, one of China’s leading environmentalists, has said, “[i]f China doesn't address the environmental issues when the economy is growing fast, it might become a destabilizing factor in the society.”

The most effective way to maintain social stability - a top Chinese priority - is actually to solve the environmental problems that are now costing China so dearly.  And the solution to these environmental challenges must include real consequences for those responsible.  This starts with real environmental transparency, and includes stronger penalties for violations that take away the economic benefit companies gain by flouting environmental laws.  Furthermore, environmental officials must be granted more resources both to carry out enforcement and to help companies learn how to comply with the law.  Multi-national companies that purchase products from Chinese companies can also play an important role in ensuring that the local companies they do business with are not violating China’s environmental laws.  In cases, like with Zijin, where a company is seeking global capital on international stock exchanges, there must be an even higher level of accountability, and the stock exchanges, securities regulators, purchasers and the international investment community can all play a role in making sure that “business as usual” no longer involves poisoning China and its people.

We have seen some heads begin to roll in the Zijin case, but this is only a start.  Over the last year, China has rightfully received credit for taking a leadership role in the search for clean energy.  In this area, China has mobilized massive resources and policy support to work towards achieving ambitious energy and renewable energy targets.  Let’s hope that the recent spate of environmental incidents truly does become a “Minamata moment” that leads to the same kind of decisive change that will make China a leader in environmental protection.

Thanks to Jane Li for research assistance for this post.

[1] Complete results of the MEP national pollution census from which this water pollution data was drawn have not been publicly disclosed as of this writing.

[2] Zijin Mining Group Executive Said Delayed Information Disclosure Was for Maintaining Stability; Feared Disclosure Might Arouse Panic and Fear, China Youth On Line-China Youth Daily, July 15, 2010.  紫金矿业高管称为维稳迟报事故信息 担心引恐慌,中青在线-中国青年报,2010-07-15

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Cindy J LinAug 4 2010 07:36 PM

It shouldn't be surprising that the Chinese government is reacting as it usually does to all the environmental slip ups that has been years in the making. China is investing large amount of resources towards renewable energy. But, the continuouse avoidance of pervasive pollutant discharges all over the country is truly a sign of the central and local governments"missing the mark". One wonders how many environmental disasters will it take to make China rise up and notice the foul waters ahead?

PerryAug 5 2010 01:25 PM

You make some really important points and it is interesting that the argument to wait to address the environment until the country is wealthier still persists. It also ignores two other well known facts: 1) it is always 1000 times less expensive to avoid polluting than to later pay the cost of cleanup and/or healthcare; and 2) when the economic cycle slows down there is even less appetite for enforcing environmental laws.

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