China's Eco-Challenge

CHINA, USA, INDIA – 1995 vs. 2005
Energy Graph between the United States, India, and China
China’s economy has grown by nearly
14 times in the last ten years

Editor’s Note: Back in early 2001, using 1995 data, we published an analysis of global energy production trends entitled “The Good, the Bad, & the BTUs,” where we calculated if everyone on earth were to require 100 million BTUs of energy per year, on average, energy production on earth would have to double to nearly 700 million BTUs. And with global energy production topping 500 BTUs last year, we are well on our way.

Something else happened over the past decade, however, something difficult to explain, which may provide an encouraging note as we struggle to find enough energy to complete the industrialization of the world. Referring to the chart that accompanied our 2001 story (BTUs & GNP by Nation), we noted that in 1995 the major developing nations were far less efficient at turning energy into wealth than the developed ones. In 1995, for example, China required 46,666 BTUs to generate one dollar of GNP, and India required 30,759 BTUs to do the same. In the USA back then, by contrast, only 12,583 BTUs were needed to generate one dollar of national wealth.

The table “CHINA, USA, INDIA – 1995 vs. 2005″ tells a dramatic and encouraging story: In the last decade, the energy intensity – the efficiency with which a nation turns energy into wealth – has flipped-flopped, and China and India are now able to turn energy into wealth more efficiently than the USA. While the USA has logged a commendable achievement in the last ten years, improving its energy intensity by 44%, China has improved its energy intensity by 86%, and India’s national energy intensity has improved by 85%. The numbers are almost unbelievable: China’s BTU’s per GNP has plummeted from 46,666 to 6,608, and India’s have dropped from 30,759 to 4,541. This incredible achievement should encourage anyone who hopes global energy production can level off quickly enough to allow clean energy technologies to catch up.

Yet challenges are remain daunting as these massive nations transform themselves at breathtaking speed. With a real growth rate of over 11% per year, China, whose GNP has increased nearly 14x in the last ten years, is poised to have a larger economy than the USA by 2009! And with a population nearly four times larger than the USA, China’s economy is going to keep on growing well beyond parity with the USA.

This article by Gordon Feller explores some of the tradeoffs China faces as they wrestle with issues of economic growth, environmental protection, and sustainability in both areas. Increasingly, it is evident in China that environmental protection is a prerequisite for ongoing economic growth – it is not always one at the expense of the other. That realization is encouraging as well, as the Middle Kingdom awakens.

- Ed “Redwood” Ring

China’s Eco-Crisis – Could it be that continued economic growth requires greater environmental protection?
by Gordon Feller, October 24, 2007
Yangtzee River, China
Nowhere is the environmental impact of China’s
modernization more evident than in the Three Gorges
section of the Yangtze River.

The standard discussion of environmental challenges treats them as more socio-political, in the short-term, and a threat to economic development, but only in the long-term.

The May 2007 suspension of construction on a paraxylene plant in Fujian, for instance, was widely characterized as a gain for local interest groups at the expense of jobs. The primary force behind the suspension was indeed local and political rather than environmental, since far more damaging projects are underway all across the country.

Moreover, the Communist Party obviously sees a short-run trade-off between economic and environmental gains. The October 2005 Party plenum denounced the blind pursuit of economic growth at the expense of, among other things, pollution control. More recently, the 2007 National People’s Congress reasserted growth as the top priority, explicitly of more importance than environmental objectives.

It is certainly true that environmental degradation – especially of the water supply – threatens long-term growth. But there are also short-term dangers, exacerbated by sustained and ill-advised policies.

Carbon emissions and the long-term question of climate change are the pollution issues that receive the most publicity. But there is also the short-term cost of respiratory ailments from conventional air pollution. The last World Bank report on the topic puts the majority of the world’s most (air) polluted cities on the mainland. A generation of urban children has grown up under conditions of poor to abysmal air quality, which will affect their participation in the labor force just as the PRC begins a demographic shift to labor shortage.

Wen Jiabao Portrait
Chinese Premier Wen Jiabao

In carbon emissions the present debate over whether China has passed the US as the worst offender is immaterial. If it hasn’t already it will do shortly; shortly after that it will lead the world by a huge amount. Rapid growth in heavy industry ensures this outcome and the last four years are irrefutable evidence the central government will not undermine the industrial boom. Only four of 32 provinces met emissions targets in 2006.

Beijing is correct that much offending output is in high demand by the same trade partners objecting to carbon emissions. In the current setting, though, this argument might chiefly turn out to be ammunition for foreign protectionists. Dismissing overseas environmental concerns could contribute to an economic shock as access to export markets is inhibited Energy constraints.

Closely connected to emissions is energy use. The State Environmental Protection Administration happily projects cuts in the discharges of major pollutants and, thus, a decline in chemical oxygen demand by 2010. This is difficult to reconcile with the objective of a 20% drop in energy consumption per unit of GDP, as the latter implies a considerable increase in absolute energy consumption from GDP growth.

As an illustration, demand for oil products is so high that improvement in the quality of gasoline has stagnated, delaying implementation of tougher auto emissions standards.

Since energy use is rising, chemical oxygen demand will only decline if the energy mix changes significantly. Yet efforts to change the energy mix for environmental and other reasons are being aborted due to environmental and economic consequences.

A mad flight to divert corn stocks to ethanol production, encouraged by central government incentives, has boosted corn prices at a time when food costs are driving inflation. The State Council has thus been forced to halt corn-for-ethanol production. The State Development and Reform Commission is now discouraging once popular coal-to-oil liquefaction projects in light of the power and water these projects require.

Hu Jintao Portrait
Chinese President Hu Jintao

Water shortages and their economic implications are being recognized in Beijing. By 2010 there is supposed to be a dramatic 30% cut in water per unit of industrial value added. Coincident with this announcement, though, the State Statistical Bureau stopped making industrial production totals public, so that progress cannot be monitored. In May deteriorating conditions in some agricultural areas, in particular lack of clean water, contributed to the spread of Porcine Reproductive and Respiratory Syndrome (blue ear disease). According to the Ministry of Agriculture, this is the main factor pushing up the cost of pork, another notable contributor to food costs.

Over a longer timeframe low water inflow has inhibited the anticipated expansion of hydropower use for at least a decade. This partly explains increased reliance on coal and has contributed to power shortages. Now the Ministry of Water Resources is worried, not just about water flow on the Yangtze but that large sections of the river are so polluted that the damage might be irreversible. This would obviously be a death-blow to regional agriculture. International development banks are being asked to ease the scarcity of clean water and multinationals corporations are stepping into remaining gaps. In June alone the World Bank approved a $170m loan for water supply and waste disposal in Liaoning and the Asian Development Bank lent $150m to treat wastewater in Anhui.

France’s Veolia Environnement is the principal private-sector operator. It won a 30-year, $1bn water management contract for Haikou, Hainan in June, one of many for Veolia. Desalinization may not be sensible except in desert countries, but China’s problems are such that is becoming so. Israeli water company IDE will build a $120m desalinization plant serving Beijing and Tianjin.

About the Author: Gordon Feller is the CEO of Urban Age Institute ( During the past twenty years he has authored more than 500 magazine articles, journal articles or newspaper articles on the profound changes underway in politics, economics, and ecology – with a special emphasis on sustainable development. Gordon is the editor of Urban Age Magazine, a unique quarterly which serves as a global resource and which was founded in 1990. He can be reached at and he is available for speaking to your organization about the issues raised in this and his other numerous articles published in EcoWorld.

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