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Q&A with Leading China Expert, Asia Foundation Trustee Elizabeth Economy

October 29, 2014

ElizabethEconomyIn Asia editor Alma Freeman recently sat down with new Asia Foundation trustee Elizabeth Economy, Council on Foreign Relations’ C.V. Starr Senior Fellow and director for Asia Studies, to discuss China’s environmental challenges, the country’s role as a donor, and her new book co-authored with Michael Levi, By All Means Necessary: How China’s Resource Quest is Changing the World.

By 2030, more than 55 percent of the population of Asia will be urban. Another 1.1 billion people will live in the region’s cities in the next 20 years. What are the implications of this urbanization?

Clearly in China there is an enormous push to continue to urbanize the population – urbanization is viewed as one of the most important elements contributing to the growth of the middle class. The question that remains is what form will this urbanization take? Will China be able to build sustainable cities? Currently China’s urban residents consume three and a half times more energy and two and half times more water than rural residents do; so when you’re talking about taking China from 50 percent urban to 70 percent urban by 2030, that is going to be a substantial challenge to what is already a very resource-stressed environment. As China urbanizes, the hope is that it will begin to adopt best practices in improving energy and water efficiency and conservation. The problem is that urbanization takes place so rapidly – half of all new buildings being built now are being built in China and it is very difficult to enforce implementation of best environmental practices in the process.

You traveled extensively for the research of your new book, By All Means Necessary, in which you explore the expansion of the Chinese economy and the global effects of its growth. What surprised you most in your research?

What wasn’t a surprise was the uniform admiration for what the Chinese have accomplished in the past few decades in terms of their economic growth. What did surprise me was the extent to which there was concern about how the Chinese do business overseas. Many Chinese companies have not yet incorporated principles of corporate social responsibility into their overseas development projects. As a result, they struggle with environmental and labor practices, as well as general issues of governance and transparency. Of course, these are significant problems at home in China as well, and when China goes abroad, they simply export these problems. From one country to the next, I heard a lot of concern about this issue. It wasn’t simply “we welcome Chinese investment no matter what” or “we recognize that China is an important engine of our economic growth” – both of which are certainly true in some cases. Instead they really wanted multinationals from other countries to come in and compete with the Chinese to help raise standards.

A second thing that surprised me in my research was that there were many cases in which the Chinese companies are trying to get it right. There is a new understanding in China right now that in fact their methods have provoked significant discontent – that the Chinese way of doing business by going in and dealing with the governments and thinking that they don’t need to engage with the people of the country where they are doing business isn’t working well. If you look at countries in Africa and in Myanmar for example, contracts have been abrogated under new governments because people protested that deals were signed that benefited the previous government officials and the Chinese companies but didn’t benefit the people of the country.

The last thing that I had not fully appreciated was the fact that so much of what the Chinese do overseas is not controlled by the Chinese government. In some sectors, such as the mining sector, the vast majority of investment overseas comes from the private sector. Some of the problems that China encounters might not be from state-owned enterprises but from 4 or 5,000 gold miners, say, that came from a few villages in Guangdong and went to Ghana and eventually the Ghanaian government kicked them out because their environmental practices were poor. Much of the negative image developing around how China does business is the result of private investment, and the Chinese government has virtually no control over that.

Do you see potential benefits that China can bring as a new donor?

The possibility certainly exists. We’ve seen some good examples of China’s aid effectiveness in Africa already. For example, China has been very active in developing early stage technologies like solar water heaters in Africa. Parts of China are still considered to be like a developing country, so there is a closeness in terms of development level and experience between China and the developing world that is difficult for industrialized countries like the US, the EU, and even Japan to appreciate in the same way. Just recognizing opportunities for simpler, lower-end technologies that can be easily adapted by other developing country landscapes is something that the Chinese can do quite effectively.

I think we’ve also seen this to some extent in the agriculture sector where the Chinese will not only do short-term training stints, but will also send agricultural experts to live with African farmers for a few years to work with them. That doesn’t necessarily differ from the way that many Western NGOs would operate, but it’s all value added, and if there’s one thing that the Chinese can provide with relative ease, it is farmers with agricultural expertise.

What role do you see China’s environmental NGOs playing?

It has been two decades since the establishment of the first environment NGO in China, Friends of Nature. The NGO sector has probably been one of the most exciting spaces to watch in terms of what has been going on in the environment realm. These NGOs began as simply an effort to educate people on the environment and to advance biodiversity protection. Now there are thousands of environmental NGOs that work on everything from anti-dam protests and recycling initiatives, to promoting more transparency and better local governance. They are still involved in education and biodiversity protection, but they now tackle the full range of environmental issues, including environmental lawsuits. It’s very exciting. But the challenge is that that they are always operating in a little bit of a grey area. Funding is scarce – China is still developing its philanthropic base, so most environmental NGOs overwhelmingly rely on the international community for funding. And there’s a sense that there’s a little bit of a tighter political environment, which means that communication, including via the internet, becomes a little more fraught. The space for an environment NGO has narrowed a bit in the past year and a half. But over the last decade the environment has attracted a wonderfully talented group of young Chinese, which has been incredibly inspiring.

While it seems most headlines on China and the environment are pretty gloomy, at the same time, we’re seeing health concerns related to pollution spur changes in environmental law and policy. What are your thoughts on this?

That is another really exciting and important area of environmental politics in China right now. China has not done many epidemiological studies over the past few decades, though over the past five to seven years, many more Chinese scientists are studying the relationship between population and health. Tracking this relationship is not that easy in any case, and the Chinese are just a little bit late to the game. But I think the former minister of public health was quite interested in the link between the environment and public health. And certainly from the perspective of the Chinese people, there is nothing more important than thinking about the health of your children, your family, and how the environment impacts that. Of course that has contributed in good measure to the social unrest that surrounds the environment. The environmental linkages to health are by far the largest source of recent social unrest. Either pollution has already damaged people’s health and they’ve tried to get legal recourse and can’t and protest, or they’re fearful that a new factory is going to be placed too close to where they live and work and there won’t be the proper safeguards to keep that factory from polluting neighborhood and making them sick. That linkage is probably the number one force driving action on the environment.

The views and opinions expressed here are those of the interviewee and not those of The Asia Foundation.


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