China "Going Out"

Shouldering China’s toxic burden

(March 23, 2011) Four years ago a World Bank report landed on the desk of the Chinese health ministry containing shocking statistics on pollution-related deaths in the country, so much so that Beijing promptly engineered the removal of a third of it over fears that the findings, if they went public, could spark “social unrest”.

Around 750,000 people die each year of pollution-related illnesses, the report said, many of whom fall victim to China’s distinction as the world’s leading coal consumer. The findings were smothered for years, with the final report, “Cost of Pollution in China”, resorting to abstract gauges such as the economic burden of premature deaths, rather than the cold, hard figures.

Fast forward to now and this burden has taken on a new form: China has begun to fear that the by-products of rapid industrialisation and surging growth rates are now “a serious obstacle to social and economic development”, as environmental minister Zhou Shengxian said last month, and has positioned the battle against pollution as a key priority in the government’s five-year plan. On the surface this will come as welcome news to many, with Beijing acknowledging the need to look for slower, more sustainable forms of growth, but beneath lurks a different reality.

The inconvenient truth is that China’s swelling middle class and its soaring demands for energy, rising at nine percent each year, are an impediment to Zhou’s ambitions and, further down the line, the progress of the country. If energy consumption continues to increase at current rates, by 2020 China will require twice as many dams, coal-fired power stations, nuclear plants and other power sources. Factor in rapidly depleting natural resources, and a conundrum forms for the rising superpower: can it continue with its aggressive expansion of its domestic energy industry, to the detriment of its environment and people, or does it look for alternatives?

The alternatives may not be the sustainable measures mooted by Zhou, but something more sinister: China has been increasingly out-sourcing its pollutive and ecologically destructive industries to regional neighbours, relying on their flimsy environmental regulations and suppression of public disquiet on which to lump the burden. This co-opting of resource-rich smaller states like Laos and Burma has been aggressive, and shows little sign of abating; instead, the alarm bells recently sounded by Zhou could give it a further prod as Beijing looks to shift the by-products of its growth elsewhere.

Already the China National Heavy Machinery Corporation Company (CHMC) is the main economic thrust behind Burma’s largest open-pit coal mine and coal-fired power plant in Tigyit, Shan state, that a report in January said had triggered skin infections among half of the 12,000-strong local population and caused the forcible displacement of more than 320 households; people that receive no benefits from the project, given that the energy produced from the 2000 tonnes of highly pollutive lignite mined each day is shipped to a nearby cement factory for use in dam construction. A 600 megawatt coal-fired power plant, part-operated by the China Guodian Corporation, is also under construction in Sagaing division, with the power slated to be sent to Burma’s largest copper mine in nearby Monywa, operated by Chinese weapons giant Norinco. The output from Monywa will go to feed China’s booming electronics manufacturing sector, with a statement last year on the Norinco website tellingly boasting that the deal would “enhance the influence of our country in Myanmar [Burma]”. A similar agreement will also see China’s Taiyuan Iron and Steel (Group) Company, the largest steel manufacturer in the world, mine Sagaing division for nickel.

That’s just the tip of the iceberg for the pariah, pockmarked as it is by Chinese dams, mines and pipelines, and whose dependency on its northern neighbour for capital risks further subservience to Beijing’s needs. In 2009 Burma was added to a special ‘watch list’ of resource-rich countries drawn up by Beijing’s Ministry of Land and Resources, no doubt acutely aware of the convenient combination of vast natural resource capabilities and zero environmental regulations in the military-ruled country.

It has also watched as the ruling junta spent decades lining its own pockets through sales of energy to neighbouring countries whilst the majority of its population suffers regular blackouts. Environmental experts from the Burma Rivers Network warned in January that China will take nearly half of the electricity produced by planned hydropower projects in Burma, with Thailand and India accounting for the majority of the remaining output. Around 10 percent will go to the Burmese military, largely for the construction of ventures like the Shwe dual pipeline project to transport Burmese gas and Middle Eastern oil offloaded on Burma’s western coast to China, while one percent will be used for domestic consumption. This is despite the fact that only one-fifth of the Burmese population have regular access to electricity.

This pattern is becoming increasingly common across Southeast Asia and indeed the world, with China behind more than 100 large dam projects in nearly 40 countries. Beijing’s heavy upstream damming of the Mekong River is seen as largely responsible for record low water levels last year in downstream nations, with Laotian capital Vientiane reporting major shortages and Burma, Thailand and Cambodia all suffering droughts. This did little to aid China’s projection of a brotherly relationship with its smaller siblings and threatened a public relations disaster, yet still Beijing is planning six more dams along the river, and has pumped significant capital into several projects mooted for Laos and Cambodia; overall, it is estimated that Chinese companies will be behind the development of 40 percent of hydropower projects along the Mekong, outside of China. Environmental groups in Cambodia, whose fledgling economy is dependent on the Mekong, have reacted strongly to the prospect of the 3,300 megwatt Sambor dam, which a 1994 study estimated would displace over 5,000 people (although that figure has surely risen by now) and tie another knot to the country’s drip feed.

Yet as environmentalist Steve Green, who has monitored the impact of Chinese expansion on Southeast Asia, points out, the exporting of its mega-projects sees China “simply out-competing with the Western countries that established the model of unsustainable consumerist growth in the first place”. Industrialising Britain set the trend for emerging economies as it farmed out industry to the Orient, where cheap labour and a lax regulatory system made it an attractive, and obvious, platform on which to drive its own growth. Indeed this kind of exploitative practice continues today, with a recent investigation uncovering toxic levels of water pollution in Baotou, Inner Mongolia, where the world’s largest source of rare-earth metals is being mined by Chinese companies to make magnets for, ironically, the wind turbines now ubiquitous along Britain’s ‘green’ coasts.

This quasi neo-colonialist venture being undertaken by Beijing is reflective of two things: one, that China simply won’t be able to support its population if current growth rates continue, or more ominously, that the hidden costs of growth are paradoxically spelling the end for a sizeable chunk of its population; and two, that China sees the strengthening of its presence in strategically important regional countries like Burma as crucial to its rise. The two issues overlap considerably, with China’s increasing dependence on foreign energy reserves providing a pretext for its encroachment over Southeast Asia, which brings with it the political and economic stranglehold on a region so integral to an emerging superpower. The trans-Burma Shwe pipeline is perhaps the most obvious example of where these two necessities align, providing as it does a means to avoid the Malacca Straits beneath Singapore and thus the potential for patrolling US warships to cut China’s main sea route to key oil-producing nations in the event that Beijing and Washington fall out.

But as Zhou referenced, there is a strategic importance to promoting environmental regulation, which China half acknowledged when it drew up domestic laws requiring Environmental Impact Assessments (EIA) for potentially damaging projects inside the country; these however are less well defined when applied to overseas ventures, and to date nothing has been made binding. This has meant that when, for instance, logging was banned in Yunnan province in the late 1990s following heavy erosion and flooding, the sourcing shifted south to Kachin state in Burma, where the junta has long turned a blind eye to the threat faced by the world’s last natural teak forest.

With a key mantra of Chinese investors to make previously inaccessible resources accessible, China has exploited remote and politically sensitive areas, while its blanket governmental policy of not interfering in domestic affairs of other countries has, like the majority of other Asia-Pacific countries, provided one excuse for it to continue business in pariah states like Burma. The EIAs that Beijing asks of its companies are cosmetic at best, with fines capped at a maximum of only around $US25,000 if the developer ignores this, and more importantly, no demand that they withdraw from the area once the project has begun.

So with growing disquiet at home about China’s environmental crisis – 16 of 20 most polluted cities are in China, while environmental authorities receive around 630,000 letters each year seeking environmental redress – China needs to act quickly to avoid the social unrest it has forewarned. While Zhou’s fears show that public opposition has made an impact on energy policy, elsewhere in countries like Burma, citizen voices are not heard. This, combined with a void in state-directed environmental regulations, makes industrial out-sourcing an all-too convenient solution for a country and a business sector caught in such a critical dilemma.

Francis Wade,Democratic Voice of Burma, March 23, 2011

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