Where Poor Is A Poor Excuse

The first report on the nation's Green GDP was issued in 2006 by what was then the State Environmental Protection Agency and the National Bureau of Statistics (NBS). It quantified the economic losses resulting from environmental abuses in 2004 at 3 percent of GDP, but due to a lack of data the actual damage was thought to be higher. Almost as soon as the report came out, the two agencies began bickering over methodology, funding and, of course, political frictions—especially as top Communist Party officials vied for promotion ahead of the 17th Party Congress that autumn. Green GDP team leader Wang Jinnan blamed foot-dragging local governments. Shortly thereafter, representatives of the National Bureau of Statistics, notorious for underreporting growth figures to undercut fears of economic overheating, stopped attending Green GDP meetings. Without any numbers to crunch, the initiative languished. The next year's report was postponed indefinitely.

The Green GDP fiasco put the bureaucratic resistance to reforms and the need for coordination among government ministries into focus. Currently there's a ministry-level unit handling climate change; another for oceans; yet another tackling sandstorms and deforestation, and three ministries responsible for soil and groundwater, villages and farmland, and lakes and rivers, respectively. When the toxic-algae crisis erupted in 2007, devastating fish farms in eastern China's Taihu Lake, provincial authorities wanted to release water upstream to clear out the algae clogging the lake, but first had to navigate a bureaucratic maze. They appealed to the Agriculture Ministry, which is in charge of fish farms; the Construction Ministry, which controls water-treatment plants; the Science and Technology Ministry, and the State Development and Reform Commission, before pleading with the Ministry of Water Resources, which opened the floodgates.

In an effort at streamlining, in March Beijing elevated the former State Environmental Protection Agency to full ministry status, giving Vice Minister Pan more clout to coordinate environmental policy. The new Ministry of Environmental Protection is now lobbying other ministries to share pollution data, a key to enforcement. It has hopes of a breakthrough in lakes, rivers and streams. Pan is also sponsoring ambitious surveillance projects such as a nationwide "Water Pollution Map" and taking a high profile in battling pollution emergencies such as the Taihu algae crisis. His latest initiative is a "green economics" program that would provide preferential access to insurance, credit and IPOs for businesses that meet certain green criteria. Later this year the MEP expects to co-launch trials, together with banking, insurance and securities regulators.

The MEP still has to compete with other chunks of China's vast bureaucracy. For instance, so far the ministry is having a tough time persuading China's business ministries—such as Commerce, Finance and the Tax Bureau—to push forward emission taxes for car buyers and pollution taxes for enterprises. But Pan is regarded as a charismatic leader and skillful lobbyist. "He can do things others can't," says a source who requested anonymity because he isn't cleared to talk with foreign media.

The Green GDP project did succeed in galvanizing some like-minded provincial leaders, particularly mayors of modest-size cities where green industries have been taking root. In Changshu, for instance, local plants have recently launched recycling projects and a carbon-credit scheme. Green advocates also took heart that the final political work report at last autumn's Party Congress placed greater emphasis on sustainable development and environmental protection than ever before. But China is a victim of its own success. One reason it ranks last in its income decile—sabotaging its "we're too poor to be green" argument—is its addiction to rapid growth. Party leaders fear that going too green too fast will hurt their business partners and their people, who are already feeling the pain of inflation and rising production costs. Beijing must forge incentives within its own bureaucracy before it can convince the rest of the country that the price of going green is worth paying.

© 2008