|Environmental Technologies Industries
|China Environmental Export Market Plan|
|Chapter 1 - The Market for Environmental Technologies|
|Box 1. Industries Find Efficiency Through Green Business|
Sinopec Corporation and the Shanghai Baosteel Group (Baosteel), although not the only Chinese industries to do so, are finding that smart business simultaneously generates revenues and protects the environment. Both companies have strong internal health, safety, and environment (HSE) departments that establish and enforce standards that often exceed those of the state. Ultimately, their efforts pay off in revenues and offer positive public relations as they enter the international market.
|Box 2. Investing in the West: Hype Versus Reality|
The 10 western provinces of Shaanxi, Sichuan, Guizhou, Yunnan, Gansu, Ningxia, Inner Mongolia, Qinghai, Xinjiang, and Tibet are the focus of China's western development plan. The region covers 57 percent of the country's landmass, is home to 23 percent of the population, and claims over half of all the country's verified natural resources. Yet 90 percent of the country's poorest people live in the region, registering a per capita GDP of only 60 percent of the national average. Much of the region is mountainous, and agricultural land is of poor quality. Infrastructure and transportation capacities are lacking, as are education and a supply of qualified industrial managers and administrators. Direct investment is scant, the region is disconnected from international and even domestic markets, the environment is deteriorating, and the poverty-stricken population, without the proper resources and know-how, continues to stress the local ecosystem. Additionally, the potential for social unrest resulting from inequitable development across the country is something the government can no longer ignore.
The development plan's intended focuses are infrastructure development; the fostering of industries that maximize local comparative advantage; capacity building for science, technology, and education; a vastly improved investment climate; and environmental protection. Official support for the initiative has been overwhelming, with many emphasizing that development in the region is long overdue. Promises of increased direct investment, preferential tax rates, eased restrictions on foreign investment, simple solutions to complicated foreign exchange issues, and other incentives to draw both foreign and domestic investment to the region have been made.
However, beneath the rhetoric run concerns that foreign investors must consider:
Many foreign investors have investigated business prospects in China's western regions, but as a result of some or all of the above factors, most have left empty handed. The prognosis is not that China's west will never yield quality opportunities, but investors should consider how much progressive change is required before venturing in.
|Box 3. Town and Village Industrial Enterprise: The Little Big Polluters |
Town and village industrial enterprises (TVIEs), which are economically significant small private and collectively owned enterprises, are slipping through the enforcement web of China's environmental protection. Very few, if any, of these facilities are up to state standards.
Unlike SOEs, TVIEs are weakly linked to the government, and pressures upon them to meet environmental standards are quite low. This may be a result of practical and logistical problems associated with enforcement of protection policies, or it may reflect the significant economic performance of the sector, which some are reluctant to restrain.
Pollution statistics relevant to TVIEs are far from complete. Nevertheless, there are strong indications that TVIE pollution is a significant contributor to total pollution discharges and that emissions target rates for the sector are in fact increasing. Year 2000 chemical oxygen demand targets for TVIEs increased 36 percent over 1995, while those targets remained generally unchanged for SOEs. The Ninth Five Year Plan target levels for TVIE SO2 emissions were nearly 50 percent higher than the actual 1995 levels, while the target levels for SOEs were reduced.
The United Nations Industrial Development Organization (UNIDO), with funding from the Global Environmental Facility, has initiated a program to bring energy-efficient technologies to TVIEs by strengthening capacity to govern the clean development of TVIEs and by stimulating demand for clean technologies through regulatory and market reforms, as well as the development of financing mechanisms. Exporters that offer goods potentially of benefit to TVIEs, but that have avoided the market due to TVIE financial constraints or market instability resulting from sporadic government cleanup campaigns, may find the UNIDO program instrumental in facilitating market entry.
|Box 4. Environment and Social Stability Face Off Across the Country|
As 2000 drew to a close, goals set by the Ninth Five Year Plan to bring all polluting industries in the country into compliance with state pollution standards by year's end had companies scrambling to clean up and governments closing down operations.
The SEPA and other related departments intensified inspection processes during the period; proud claims of high compliance rates were heard, as were troubling stories of closing enterprises and distraught laborers. The tricky balancing act of shutting down heavy industrial polluters and preventing unemployment from skyrocketing further out of control was underway. Enterprise closure is a stiff threat used to pressure polluters into compliance, and under new air and water laws, it will likely continue to play a strong role. But some enterprises, particularly the antiquated industrial behemoths of China's fabled - rust belt,- simply cannot cover the costs of upgrading and protecting. Closures, on the other hand, bring the burden of unemployment and potential social unrest. As an insurance policy, most closures have taken place in dispersed smaller enterprises rather than in large operations.
Meanwhile, despite initial successes in pollution reduction among those industries still in operation, inconsistent monitoring and enforcement strategies may, in the long term, undermine what has been accomplished. Intermittent and poorly executed inspections in many parts of the country may not be sufficient to prevent enterprises from lapsing back into old habits after the pressures of the campaign subside.
The economically more dynamic eastern and southern regions of the country have been most successful in bringing about compliance that is likely to hold, particularly through improved production processes and the development of cleaner technologies. Those regions heavily burdened with decrepit industrial facilities, however, are left balancing concerns of environment and social stability.