Written by ZHANG Jing.

In November 2012, Beijing Health Bureau announced that the lung cancer rate had increased by 60 per cent from 2001 to 2010, even though the smoking rate during the period had not seen an obvious increase. In addition to smoking and passive smoking, particulate matter in the air has been a top risk factor for various respiratory disease including lung infection and cancer.

On 1^st April The New York Times announced that outdoor air pollution contributed to 1.2 million premature deaths in China in 2010, about 40% of the global total, according to a study conducted by University of Washington, the WHO and several other universities. This figure was four times higher than the World Bank’s estimation in 2004 and three times higher than that of 2007.

Water pollution has also been a source of public anger after a series of scandals, including a leak of chemical aniline into a river in Shanxi Province, over 20,000 dead pigs (and thousands of ducks) in Huangpu River near Shanghai, and the red well water event in Hebei Province.

Health costs due to air and water pollution accounted for 4.3 per cent of China’s national GDP and the total cost of pollution was about 5.8 per cent of GDP, according to a joint study by the World Bank and the Chinese government in 2003. This means that over half of China’s GDP growth has been meaningless after offsetting pollution related losses, such as damages to natural resources, associated heath problems, damages to agriculture and industry, and other negative impacts to the economy and society.

Heavily reliance on burning fossil fuels in industrial production and transportation has been the major source of air pollution in China, while industrial production and household usage have contributed to water pollution. Changes in the industrial structure are required to reduce  pollution emissions.

The theory of an environmental Kuznets curve (EKC) suggests an inverted-U shaped relationship between pollution and economic growth, indicating that along with income increases, pollution initially grows, reaches a peak and then falls. Does it mean that the turning point of pollution will be achieved automatically if China simply focuses on economic development and without paying special attention to the environment itself? The answer is an unequivocal ‘no’. Policy intervention at an earlier stage of development is crucial as it could make the turning point appear in advance and at lower level of accumulated environmental cost.

China has established a comprehensive and complex legal framework on environmental protection since 1978. However, the enforcement of environmental regulations has been relatively weak and environmental stringency varies across regions. The reasons for weak environmental regulations include the limited power of environmental authorities, ineffective coordination between governmental departments, the light punishment and drawbacks of the legal framework, and the failure of local government. Since pollution levies are actually decided and collected by local government agencies, people usually point out that local governments put economic growth as priority and protect polluting companies for economic interests. That is to say, some local governments themselves violate the environmental laws. Therefore, intensive pollution in China is not simply an environmental or economic problem, it also relates to corruption and dereliction of duty.

Corruption has been a ‘social pollution’ in China. The power of approval in many areas of economic activities leads the head officials of various departments to become the target of lobby groups offering bribes in order to secure approval for inefficient, low-tech and high polluting projects. However, once these projects have resulted in negative consequences, such as pollution and production accidents, responsibility is rarely taken by the officials who approved these projects. The lack of accountability and light punishment have made corruption a high-return but low-risk activity.

China’s new leader Xi Jinping has vowed to fight corruption as one of his highest priorities. Effective anti-corruption measures would improve the efficiency and effectiveness of policies and hence would lead to more stringent environmental regulations and improved environmental quality. In my forthcoming book, “Foreign Direct Investment (FDI), Governance and the Environment in China” published by McMillan Palgrave, I examine the impact of FDI, anti-corruption efforts, GDP, industrialisation and urbanisation on regional differences in environmental regulations which were measured by investment in environmental protection and pollution emission charges, using data for 29 provinces from 1999 to 2005. I find that an increase in anti-corruption efforts would lead to higher investment in environmental protection and higher charges levied on polluting enterprises.

I also find a robust negative relationship between environmental regulations and FDI, using different models. FDI is more likely to be drawn to provinces with relatively weak environmental regulations. These results support the so-called pollution haven hypothesis that suggests that developed countries relocate their dirty industries to developing countries to take the advantage of the less stringent environmental regulations. Even though foreign firms have brought capital, technology and advanced management skills to China, they are not always an unalloyed blessing. Although it is widely believed that foreign firms are cleaner than domestic Chinese firms, Ma Jun, director of the nongovernmental Institute of Public and Environmental Affairs (IPE), announced in 2008 that over 300 multinational corporations were punished by the government for their violation of the environmental laws and regulations in terms of water and air pollution from 2004.

Anti-corruption, again, is a possible solution to address the negative environmental impact of FDI. I find that the negative impact of FDI would become positive when more effort is put into fighting against corruption. Anti-corruption efforts are an important factor in attracting FDI, particularly more environmental friendly FDI. However, the current average anti-corruption effort in China is too low to compensate the negative environmental impact of FDI.

To alleviate the pressure on the natural environment, political and judicial reforms are needed to improve the efficiency of environmental protection and enhance the legal force of environmental laws. These require independent environmental authorities and the participation and supervision of the public. Economic reforms are necessary to promote the development of less polluting industries. These reforms cannot work effectively without effectively tackling corruption.

In the fight against corruption there will be many obstacles, because it will shake the interest of corrupt groups. In a CPC disciplinary watchdog meeting in January, Xi Jinping stressed that fighting against corruption is a long-term, complicated and arduous task. Anti-corruption must be consistent and never slacken. Time will tell us how he will crack down on the “tigers” and “flies” – corrupt powerful leaders and lower bureaucrats – and how his anti-corruption effort will strengthen environmental regulations and hence improve environmental quality in China.

Dr Jing Zhang is a Lecturer in the School of Contemporary Chinese Studies, University of Nottingham.