China: major polluter or ahead of the curve?

As the Olympic games near, the media has focused recently on China’s attempts to clean up for the upcoming Olympics. Heavily polluting plants are being shuttered, personal cars are being banned from the roads, and officials have recently opened up a new mass transit line to the Olympic sites. Obviously, these kinds of changes are welcome in a country known internationally for its environmental pollution. But the irony is that China actually excels in some areas environmentally when compared to the United States.

Does that seem like a blasphemous statement when you consider the frequent pictures of smoggy skies in Beijing, or polluted waterways in China that are regularly featured in newspapers? Perhaps, but it is clear that China has some bright spots that often go overlooked. .

For instance, this year China’s fuel economy requirements increased to 38 mpg for every individual car and light truck sold in China. After more than 20 years of haggling, the US Congress just passed an increase in fuel economy standards from 27.5 mpg to 35 mpg by 2020 for the fleet average of cars and trucks combined. The change was a long-awaited victory, but it is harder to celebrate when other countries like China adopt even stricter laws at the same time. America’s weaker standards increase our reliance on foreign oil, and make the US automobile industry less competitive in the face of higher fuel prices and public demand for more efficient vehicles.

Here’s another example. China requires disclosure of emissions for major pollutants and inspection approvals before a firm raises money on the Chinese stock exchange. In the United States, we have been slow to connect financial performance and environmental due diligence. Recently, state officials, including Oregon’s State Treasurer, investors and environmental groups have petitioned the SEC to require disclosure of corporate risks due to pollution emissions. 

China and the United States share the problems associated with enforcement, but we can learn a lesson or two there as well. China’s environmental agency is developing some innovative approaches to enforcement, including denying access to private capital or export permits for repeat offenders. Citizens can bring forward complaints about environmental pollution which may result in, not only fines and restrictions of the offending firm, but Chinese bosses may lose half of their salary if their firm causes severe water pollution, a stark contrast to our treatment of corporate negligence. Imagine if Exxon executives lost half their salary for the Exxon Valdez oil spill?

While China’s pollution problems are well-known and a serious cause for concern, China’s innovative efforts offer some lessons and examples for the US as well. At the very least, it is harder see the environmental problems in China as black and white.