Take Cover Everyone, New Regulations Are on The Way.

Sunday, April 11, 2010 14:25

Going into the weekend, Zhang Xiaoqiang (NDRC Vice Chairman) made an announcement at the Boao forum that leaves little doubt that a series of new regulations are on the way. Regulations that are going to discourage resource intensive and environmentally degrading industries, while supporting those that are going to help China strike a balance between teh economy and ecology.

Or as his boss, Vice President Xi Jinping, put it in his opening address to the forum:

We need to commit ourselves to the Scientific Outlook on Development that puts the people first and focuses on comprehensive, balanced and sustainable development. We need to handle the issue of environment and development extremely seriously and with a historic sense of mission, and need to adhere to the path of sustainable development. We need to implement the strategy of reinvigorating the nation through science and education, make strategic adjustment to the economic structure, and actively promote development through innovation. We need to develop the economy mainly by relying on the domestic market, and attach great importance to domestic demand, consumer demand in particular, in driving economic development. We need to pursue a sound approach to development aimed at expanding production and improving people’s lives and the environment. We need to explore a new path to industrialization with Chinese characteristics, a path that features high scientific and technological content, good economic returns, low resource consumption, less pollution to the environment, and one that allows a full display of advantages of human resources. We need to take resource conservation as a basic national policy, develop circular economy, protect the environment, accelerate the pace to build a resource-conserving and environment-friendly society, and achieve economic growth in line with the realities concerning the population, resources and the environment. We need to take good care of Planet Earth, our common home, promote a conservation culture, develop an industrial structure, a growth mode and a consumption pattern that is energy- and resource-efficient and environment-friendly, and raise the awareness of every family and every organization for resource conservation and environmental protection. We need to act in the spirit of being highly responsible for the long-term development of the Chinese nation and the whole mankind, strengthen overall capacity building to address climate change, and make unremitting efforts for the sustainable development of China and the world. We should be more soberly aware of the urgency to speed up transformation of economic development mode, and make transformation and development mutually reinforcing.

Now, before everyone gets up out of their chairs and applauds the VP, or allows their eyes to roll into the back of their heads, I would like to remind everyone that what you are about to see is not only a continuation of previous efforts to encourage green growth, and discourage brown, but is likely to carry a little more weight than it used to.

I say this, with bias, as the climate itself in China has changed dramatically over the last several years, and in ways that have highlighted in a very tangible way the environmental costs of development. That while many in the west are focused on polar bears, ice caps, and island nations, China is tackling a sever drought in both the north and southwest of China.  A drought that has grown sever enough that dams are no longer producing energy, crops are failing, and entire water systems have failed to the point where water trucks are the only source of water for large numbers of people.  At the same time, you have a consistent flow of reports on the environmental costs of heavy metal contamination in food, water, and air.

Conditions that the central party is looking for answers too, and conditions that are going to drive real change going forward.

Of course, as we all know, local enforcement of any regulations will be critical to any programs success (particularly in the areas of factory audits, fines, and closures), but where I see this getting interesting over the short term is how (through incentives) Beijing will be able to not only draw in new investments to help them support their environmental goals, but to what lengths they will go to begin removing the dirtiest areas of the economy.

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3 Responses to “Take Cover Everyone, New Regulations Are on The Way.”

  1. Anders says:

    April 12th, 2010 at 7:38 am

    Still the mayor reason for pollution is price control. As long as the price of electricity and water are held artificially low (inflation fears), then there is no real incentive for environmental solutions non what so ever. The investments in tech or R&D will always be too little too late, not to say that one cannot make money out of it, but it will not help the Chinese environmenal problems. The State Grid and the water companies are running deficits, so they are surely not implementing the clean tech installed. Sorry I don’t share your optimism, but I share your fears.

  2. Rich says:

    April 12th, 2010 at 7:52 am

    Anders

    I agree with your thoughts on pricing, and the fact that resources are heavily subsidized here (I have written about this issue more on CGC – see here and here).

    That being said, any changes in pricing need to be matched with other incentives that move manufacturing away from old inefficiencies as well.

    R

  3. Clara Muriel Ruano says:

    April 16th, 2010 at 1:01 am

    I’ve written a couple of posts on this news story, latest one:

    http://www.foreignentrepreneursinchina.com/2010/04/foreign-investment-new-regulations-now-issued/

    .. but I’ve only found the xinhua press releases…. Have you come across a detailed English translation of the actual new regulations?

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