Can China move to a greener path?

When big multinational companies take steps to deal with environmental issues—Wal-Mart’s far-reaching sustainability campaign, Sony’s e-cycling commitment, Coke’s recent investments in recycling–there’s reason to cheer. None of that, unfortunately, will mean much on a global scale unless China figures out a way to grow its economy without fouling its air and water and spewing ever-increasing amounts of greenhouse gases into the air.

The environmental news out of China is grim, as I was reminded last week during a phone call with Elizabeth Economy, the author of an excellent new article called The Great Leap Backward in the current issue of Foreign Affairs, available here. I met Liz, who wrote a book called The River Runs Black: The Environmental Challenge to China’s Future, a couple of years ago at a FORTUNE conference in Beijing, and I’m looking forward to seeing her again at next month at the FORTUNE Global Forum in New Delhi.

Because most readers of this blog are familiar with China’s environmental woes, I’ll spare you a long litany. Suffice it to say that China is home to 16 of the world’s 20 most polluted cities in terms of air quality, that one in five China’s 660 biggest cities have severe shortages of clean water and that China may soon surpass the U.S., if it hasn’t already, as the world’s No. 1 emitter of carbon dioxide.

How, then, can China move to a greener path? Economy argues that China’s environmental problems are unlikely to be solved without more fundamental political reforms. Pressures to clean up the mess, she says, can only be brought to bear by citizens able to hold government officials accountable, an independent media, environmental NGOs and a functioning legal system. “For me to be truly optimistic,” she says, “it would require Beijing to loosen the reins and let those people come to the fore.”

The problem, fundamentally, is that while the central government in Beijing sets the agenda—and says lots of encouraging things about cleaning up the environment—local officials rarely heed the central government’s mandates, preferring instead to pursue economic growth at any price. While China has laws designed to protect its water and air,  provincial officials don’t enforce them and factory owners don’t obey them, in part because they know it will be cheaper to pay a fine than to install anti-pollution equipment. Recently, Premier Wen Jiabo urged local officials to shut down inefficient polluting plants and promote green technologies. But, as Economy writes…

The goals are laudable—even breathtaking in some respects—but history suggests that only limited optimism is warranted; achieving such targets has proved elusive in the past. In 2001, the Chinese government pledged to cut sulfur dioxide emissions by 10 percent between 2002 and 2005. Instead, emissions rose by 27 percent.

Later, she notes…

Local officials and business leaders routinely—and with impunity—ignore environmental laws and regulations, abscond with environmental protection funds, and silence those who challenge them.

So, as Lenin once asked, what is to be done?

Multinationals can play a constructive role, Economy suggests. Coca Cola recently pledged to become a net-zero consumer of water in China, and Wal-Mart is educating customers about energy efficiency. U.S. firms that source goods from China can take a closer look at the environmental impact of their suppliers, much as they now monitor labor practices in their supply chain. They could reward those suppliers who embrace green technologies. They could also work more closely with NGOs like Conservation International, Environmental Defense and the NRDC, all of which are engaged in China. With the right incentives, China’s growing entrepreneurial class could come up with low-cost, low-carbon technologies to attack problems like climate change.

Beyond that, we (meaning Americans) need to get our own house in order. As a developing country, China will be understandably unwilling to shoulder the burden of fixing problems we’ve created as the world’s biggest consumers. On a per capita basis, Americans today emit far more greenhouse gases than the Chinese or Europeans; until that changes, our ability to influence China will be minimal. “We have no credibility, frankly,” Economy says. “If we need to get more out of China, we have to do a better job ourselves.”

Ultimately, though, China will have to reform itself. It’s entirely possible that environmental disasters could threaten public health and become a catalyst for change, by undermining popular support for the Communist Party. Social unrest around environmental issues is already rising. And the nation’s environmental failures will come under a spotlight next year during the Beijing Olympics.
“Really improving the environment in China,” Economy writes, “will require bottom-up political and economic reforms.”