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The Big Story

China finally gets serious about cleaning up

World's biggest polluter turns would-be environmental protector with green tech investments

DOMINIC FAULDER, Associate editor, Nikkei Asian Review | China

BANGKOK/NAIROBI -- Business is booming for Max Craipeau. The Hong Kong-based entrepreneur has seen his company transform over the past 18 months: His number of employees has increased sixfold, and he expects his 2019 revenue to "easily double" from last year. His good fortune is largely thanks to China's decision in January 2018 to ban the import of most types of solid waste for recycling.

China's disruptive move led Craipeau, founder and CEO of Maxco Industries, to shift from trading rubber and metal scrap to running plastic-waste recycling plants in Indonesia and Poland -- with one more on the way, possibly in Japan. China's ban, according to the France-born Craipeau, created "a new order" in the global plastic-waste business and was a "huge opportunity" for him.

Established players in the industry who simply bought plastic scrap overseas and shipped it straight to China were suddenly "lost." But Craipeau, familiar with the more complicated logistics of processing rubber and metal, had a network of contacts that allowed him to establish centers to refine plastic waste. His biggest customer for the plastic pellets they produce? China.

Craipeau's business success is a silver lining in China's waste ban, and it may not be the only one. At first, the ban caused the filthiest business on earth to migrate elsewhere, resulting in an influx of trash into less-developed Southeast Asian countries such as Vietnam, Malaysia, Thailand and Myanmar -- helped by unscrupulous companies, smugglers and corrupt officials. But Craipeau said this inflow has forced most of these countries to develop their own regulations, and that apart from a few "cowboys," their waste-processing industries are now cleaner than before the ban; in fact, Thailand, like China, plans to end its imports of plastic waste from 2021.

Workers at a recycling factory in Thailand: Like China, the country plans to ban the import of plastic waste from 2021. (Photo by Akira Kodaka)

Kakuko Nagatani-Yoshida, the United Nations Environment Program's regional coordinator in Bangkok for chemicals, waste and air quality, said: "I am really happy that China did this -- it is wonderful. This has been a wake-up call to the entire recycling industry, not just China's."

Indeed, the ban may be just one more way in which China's efforts to go green are setting an example for other countries. After 40 years of unbridled economic growth, it is making great strides cleaning up its environment and has taken a global leadership role on climate change: Since the U.S. walked out, Chinese President Xi Jinping has become the de facto protector of the Paris Agreement to reduce greenhouse-gas emissions and accelerate efforts toward a low-carbon future. It is also the world's biggest investor in renewable energy technology. Some believe this once confirmed sinner on the environment could yet emerge as a savior, to counter the existential risks it has created for itself at home -- including the danger of political unrest -- and partly in a play for greater soft power.

"China is leading on a number of environmental issues," said Joyce Msuya, acting executive director of U.N. Environment Program, who played a lead role at its fourth assembly in Nairobi, Kenya, in March, where plastic waste was a key issue on the agenda. "They've made unparalleled steps to combat climate change and air and water pollution ... and accelerated the global uptake of renewable energy," Msuya told the Nikkei Asian Review. "When countries as large and as influential as China move on an issue like the environment, others take note and follow."

When it comes to what China is doing well, experts also point to its model afforestation, and soil and water improvement projects. Beijing and its environs are touted as a particular success story in terms of improved air quality. China is also in the vanguard developing electric vehicles and battery technology. Indeed, Greenpeace, a nongovernmental environmental organization, reported in March that only five of the 30 most air-polluted cities in the world are in China, while 22 are in India -- the worst being Gurugram, which is 30 km southwest of the capital, Delhi. Bangladesh and Pakistan are also gagging on urbanization and the downside of old-fashioned economic development.

Cuts both ways

But China also remains the world's biggest polluter in terms of carbon dioxide emissions, and increased both coal power generation and coal mining capacity last year; its plastic-waste ban has played havoc in some less-developed nations; and its Belt and Road Initiative is a double-edged sword. The massive infrastructure project, launched by President Xi in 2013, aims to create a modern-day Silk Road that links Asia with Europe, Africa and beyond. The program has helped to spread green technology, but China has also attracted censure from abroad, partly because of environmental damage in Africa and elsewhere.

Its damming of the Mekong, and a proposal to blow up the great river's rapids to ease navigation, have been widely condemned. Chinese hydropower projects in Cambodia have overestimated water flows, prompting regular blackouts in Phnom Penh -- a problem only exacerbated by heavy power demand from Chinese construction projects. And renewed Chinese pressure to complete the $3.6 billion Myitsone hydropower project on a stretch of the Irrawaddy River in Myanmar's Kachin state has caused demonstrations and widespread resentment, particularly as most of the power produced by the project would be for export to China; work begun in 2009 was suspended in 2011. In Thailand, a proposed 800-megawatt Thai-Chinese coal-fired power project in the southern province of Krabi along a relatively pristine stretch of coast has been stalled by strong public opposition.

Along the Mekong River in Cambodia, Sam In and his family are among the villagers displaced by the China-financed Lower Sesan 2 Dam. (Photo by Ken Kobayashi)

But there are some pluses on the BRI balance sheet. "Top of the list undoubtedly is the way China has rolled out renewable energy," said Paul Ekins, professor of resources and environmental policy at University College London, speaking at the U.N. Environment Assembly in Nairobi. "The Chinese deployment of renewable energy has meant that Africa is getting solar power at a tiny fraction of the cost that it would have been 10 years ago," he said.

Indeed, some economists believe Africa could virtually rid itself of fossil fuels and yet have more clean energy than it needs in the foreseeable future. China leads the world in renewable energy and is the biggest producer, exporter and installer of solar panels and wind turbines. The benefits of its dive into the green economy go well beyond Africa, with its inexpensive solar panels and lighting sold across Southeast Asia, Japan and the Middle East.

Officials at the environment conference in Nairobi were often positive on redemptive possibilities. "When we talk about economic growth, it usually means more pressure on the environment and more use of natural resources," said Siim Kiisler, Estonia's minister of the environment and president of the fourth U.N. Environment Assembly. "But it doesn't have to be that way. We can change the economics by using innovation and honest, comparable economic data, and we can decouple economic growth from resource use and environmental degradation."

"The difference with China is that it has a leadership role by dint of being the biggest polluter," Leo Horn-Phathanothai, director for international cooperation at the World Resources Institute, a global research organization, told the Nikkei Asian Review. "I think the Chinese are very aware that all eyes are upon them. There is intense scrutiny, and I would say that is a good thing."

Meanwhile, many peg China's de facto assumption of a global environmental leadership role to Jan. 17, 2017, when President Xi attended the World Economic Forum in Davos -- the first Chinese president to do so. His appearance came three days ahead of the presidential inauguration in Washington of Donald Trump, whose climate-change denials had already been well-flagged. (Trump pulled out of the Paris Agreement five months into his presidency.)

Speaking to the forum, Xi memorably alluded to Charles Dickens' "A Tale of Two Cities," his famous novel about "the best of times [and] the worst of times," set in late 18th century France and England around the time of the First Industrial Revolution and the French Revolution. Xi's main points covered global trade, growth, multilateralism and leadership, but he also touched firmly on the environment four times. "The Paris Agreement is a hard-won achievement which is in keeping with the underlying trend of global development. All signatories should stick to it instead of walking away from it, as this is a responsibility we must assume for future generations," Xi said.

But in the same speech, Xi promised to send 700 million Chinese tourists abroad in the next five years, making no mention of the staggering carbon footprint this would involve. Indeed, tourism provides evidence that virtually whatever China does has significant economic and environmental impact. A quarter of all visitors to Thailand arrive by air from China, generating an estimated 4% of the kingdom's gross domestic product.

However, Chinese arrivals in Thailand fell more than 12% year on year in February and nearly 2% in March. Ironically, one reason is thought to be exceptionally severe air pollution, particularly in the north, where Chiang Mai has recorded some of the highest readings of PM2.5 -- or fine-particle air pollution -- in the world this year. A significant contributor to the pollution has been the unregulated burning of forest floors to facilitate the collection of wild mushrooms, demand for which is insatiable among China's increasingly affluent middle class. Major suppliers in Yunnan Province cannot meet demand from inside the country, where there are fines for lighting forest fires, and pay cash for imported black market forest products. As a result, Thailand's environment is damaged along with its tourism prospects -- and China figures on both sides of the equation.

Tough love

At home, China is taking the issue of a clean environment seriously. In March, Premier Li Keqiang addressed the 13th National People's Congress in Beijing on the continuing struggle to build China into "a great and modern socialist country." He outlined 10 "weighty" priorities for 2019, the seventh of which was to "strengthen pollution prevention and control, enhance ecological improvement, and make big advances in green development."

Li spoke of reducing sulfur dioxide and nitrogen oxide emissions by 3%; cutting PM2.5 concentrations in key areas, including the Beijing-Tianjin-Hebei region and the Yangtze River delta; and tackling the three major sources of pollution: industrial production, coal used as fuel, and motor vehicles. Soil, water, and all aspects of waste management were also on the agenda. "We will intensify efforts to achieve major scientific and technological breakthroughs in pollution prevention and control," he promised.

A solar panel-lined expressway in Jinan, Shandong Province, in December 2017. China has committed to investing 2.5 trillion yuan in renewable power sources by 2020.   © Reuters

When officials fail to meet these aspirations, there are increasingly grim consequences. In April, the Ministry of Ecology and Environment reported that more than 12,000 people had been punished for environmental violations and shortcomings since 2015. In the latest round, 1,035 officials from eight provincial regions were called to account. The party chief of Liaoyuan was fired outright for the polluted state of the city's river.

"They have unleashed the court system onto the issue," said the World Resources Institute's Horn-Phathanothai. "The central government ... cannot possibly enforce all the regulations that have been passed down. ... They are using the judiciary to prosecute environmental offenders in a bottom-up fashion. There have been hundreds of these courts set up to address environmental offenses."

In this way, environmental awareness, effectively, is being dictated to the masses, who have no way of having any say. Maya Wang, senior China researcher with U.S.-based Human Rights Watch, said that environmental activists still seem to have a little room to operate, compared with others. "However, the bar is really low in China under President Xi Jinping, who has severely limited the space for civil society ... through enacting draconian laws ... and through imprisoning and harassing activists."

While the Chinese may feel their voices are constrained, outside environmental organizations say they have good access to officials. "It is interesting that on this issue the door remains very much open; they want to remain engaged in dialogue, in learning," said one foreign observer, adding, "It is through constructive engagement that we are going to help them ramp up their action ... not by shaming them for where they are falling short."

Despite its authoritarian nature, the Chinese government does face an element of accountability: Underlying popular sentiment can never be safely ignored. African swine fever has in recent months swept across China, largely through small unregulated and unsanitary pig farms. The Chinese are the world's most voracious pork eaters, and while the fever does not affect human health directly, it kills pigs without fail and carries significant political risk in terms of possible unrest.

"They see environmental pollution now as a political risk," said Nagatani-Yoshida, the U.N. Environment Program regional coordinator in Bangkok. "Contamination affects everyone, but often the less-developed [groups] are affected more and they can become very discontented. You would never have had high-level officials ... saying this so openly 10 years ago. They say it now, no hesitation: Environmental contamination affects political contamination."

Nikkei staff writer CK Tan in Shanghai contributed to this report.

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