Chinese walker

Although China`s assistant minister of foreign affairs, Hu Zhengyue, has said that “China does not have an Arctic strategy”, the country does appear to have a clear agenda. Hu made his statement while attending an Arctic forum organised by the Norwegian Government on the Arctic archipelago of Svalbard in June 2009. His speech at the forum, along with his comments to Chinese journalists afterwards, forms the most up-to-date and comprehensive official articulation of China`s thinking on the geopolitics of the Arctic and resulting sovereignty issues.

In line with the country`s oft-stated governing principles in international affairs, Hu emphasised China`s wish to see disputes related to sovereignty resolved peacefully through dialogue. He expressed China`s support for Arctic countries` sovereign and judicial rights, endowed by international legislation, but said these laws should to be refined and developed due to new circumstances arising from the melting of the ice.

Hu has also stressed the need for cooperation between Arctic and non-Arctic states. In his speech at Svalbard, he acknowledged that the Arctic is primarily a regional issue but said concerns over climate change and international shipping gave it inter-regional dimensions. He did not mention energy and other natural resources.

Unsurprisingly, China would like to see the Arctic states recognise the interests of non-Arctic states. In Hu`s words: “When determining the delimitation of outer-continental shelves, the Arctic states not only need to handle relationships between themselves properly, but must also consider the relationship between the outer-continental shelf and the international submarine area that is the common human heritage, to ensure a balance of coastal countries` interests and the common interests of the international community.”

After the publication of the original SIPRI report, admiral Yin Zhuo of the People`s Liberation Army Navy made a stronger assertion of Chinese rights in the region in comments carried by official media on March 5. Yin is reported to have stated that, “Under the provisions of the UN Convention of the Law of the Sea (UNCLOS), the Arctic does not belong to any particular nation and is rather the property of all the world`s people” and that “China must play an indispensable role in Arctic exploration as it has one-fifth of the world`s population.”

Associate professor Guo Peiqing of the Ocean University of China has said: “Circumpolar nations have to understand that Arctic affairs are not only regional issues but also international ones.” Guo has estimated that about 88% of the Arctic seabed would be under the control of the Arctic littoral states if the United Nations Commission on the Limits of the Continental Shelf were to approve all the existing or expected claims to the Arctic Ocean continental shelf. However, when considering the concerns of China and other non-Arctic states, it is worth bearing in mind that the vast majority of known but untapped energy resources lie in undisputed areas, that is within the legitimate exclusive economic zones (EEZs) of the Arctic littoral states.

Canada and Norway are the only countries to have thus far engaged with China in a formal bilateral dialogue on Arctic issues. At the first China-Norway dialogue meeting in June 2009, climate change and polar research were identified as the issues of strongest common interest, although the two sides also exchanged views on Arctic policies, energy issues and sea routes. The two countries have agreed to hold follow-up talks in 2010.

It is unclear if and when China will issue a more formal Arctic strategy. The precise targets for polar expeditions and polar research projects of the 12th Five-Year Plan, which will cover the period from 2011 to 2015, were set to be finalised following the China`s 26th Antarctic expedition, which completed in March. In October 2009, on the eve of the expedition, Chen Lianzeng, deputy director of the State Oceanic Administration (SOA), shed some light on the next Five-Year Plan`s general targets. These will be: to deepen China`s knowledge of the impact of climate change on the two polar regions, expand China`s scientific exploration activities and “take an active part in polar affairs and establish China`s strategic position”. To accomplish these goals, the SOA intends to build both “soft power and hard power”.

Several Chinese academics are encouraging their government to “Grasp this historical opportunity and recognise the political, economic and military value of the Arctic and then re-evaluate China`s rights in the Arctic region and adjust its strategic plan.” Chinese decision makers, on the other hand, advocate cautious Arctic policies for fear of causing alarm and provoking countermeasures among the Arctic states. Professor Guo Peiqing has even raised the alarmist possibility of an alliance of Arctic states.

China is aware that its size and rise to major-power status evoke jitters but at the same time it is striving to position itself so that it will not be excluded from access to the Arctic. China appears to be particularly wary of Russia`s intentions in the Arctic. Chinese observers made note of Russia`s decision in August 2007 to resume long-distance bomber flights over the Arctic and the planting of a Russian flag on the Arctic seabed that same month.

China and the rest of the world would be at a disadvantage if Russia`s claims over the underwater terrain between the Lomonosov and Mendeleev ridges were legitimised, giving Russia alone rights to the resources in that area. It is important to note, however, that Arctic issues have thus far been approached in a “spirit of cooperation, with outstanding disputes managed peacefully”. Media reports of competition in an ice-free Arctic that emphasise potential disputes and a scramble for the Arctic`s resources give rise to scenarios of armed conflict breaking out in the region, especially a conflict involving Russia. However, there is no evidence that Russia is failing to play by the rules or that it would not want to find multilateral solutions to disputes regarding sovereignty.

While the melting of the Arctic ice could create tension in China-Russia relations, the new opportunities that will arise from an ice-free Arctic could deepen cooperation between east Asian states. As non-Arctic states, China, Japan, North Korea and South Korea are all in the same boat. Each of them stands to benefit enormously from shorter commercial shipping routes and possible access to new fishing grounds and other natural resources. A unified Arctic strategy would be in their mutual interest. Finding ways to use an ice-free Arctic jointly has the potential to create a genuine win-win situation for both China and Japan, the two east Asian powers that, in so many other areas, find it difficult to find common ground.

From China`s viewpoint, an ice-free Arctic will increase the value of strong ties with the Nordic countries that otherwise struggle to be noticed by the rising power. China already has the largest foreign embassy in Reykjavik, in anticipation of Iceland becoming a major shipping hub. By actively engaging Chinese officials and academics on Arctic issues – ranging from climate change and polar research to commercial shipping routes and maritime rescue operations – Nordic countries can start laying the foundations for a special Arctic-orientated relationship with China.

Norway, with its deep-sea drilling expertise, has an advantage in this regard. Finding ways for Chinese and Norwegian companies to cooperate in Arctic energy resource extraction – in, for example, the ongoing project in the Shtokman field – would be of great interest to Chinese companies and would undoubtedly strengthen China-Norway relations. The notion that China has rights in the Arctic can be expected to be repeated in articles by Chinese academics and in comments by Chinese officials until it gradually begins to be perceived as an accepted state of affairs.

However, under international law, China`s rights in the Arctic are limited. Moreover, China`s insistence that respect for state sovereignty be a guiding principle of international relations makes it difficult for the country to question the Arctic states` sovereignty rights. There is some irony in the statements by Chinese officials calling on the Arctic states to consider the interests of man-kind so that all states can share the Arctic. These statements appear to be contrary to China`s long-standing principles of respect for sovereignty and the internal affairs of other states. Based on official statements by the Chinese government and the open-source literature written by Chinese Arctic scholars, China can be expected to continue to persistently, yet quietly and unobtrusively, push for the Arctic, in spirit, being accessible to all.

Linda Jakobson is the director of the Stockholm International Peace Research Institute (SIPRI) China and Global Security Programme.

An earlier version of this article was published as “China prepares for an ice-free Arctic”, SIPRI Insights on Peace and Security, No. 2010/2, March 2010. It is used here with permission.

Homepage image from NASA

Part one: China’s growing interest in the thawing north

Part two: The commercial lure of melting ice

As China`s economy is reliant on foreign trade, there are substantial commercial implications if shipping routes are to shorten during the summer months each year. Nearly half of China`s gross domestic product (GDP) is thought to depend on shipping. The trip from Shanghai to Hamburg via the Northeast Passage – which runs along the north coast of Russia from the Bering Strait in the east to Novaya Zemlya in the west – is 6,400 kilometres shorter than the route via the Strait of Malacca, a strip of water between Malaysia and Sumatra, and the Egypt`s Suez Canal.

Moreover, due to piracy, the cost of insurance for ships travelling via the Gulf of Aden, in the Arabian Sea, towards the Suez Canal increased more than tenfold between September 2008 and March 2009, according to a new report, to be published by Martinus Nijhoff later this year.

Chinese research remains primarily focused on how the melting Arctic will affect China`s continental and oceanic environment and how, in turn, such changes could affect domestic agricultural and economic development. However, a small number of Chinese researchers are publicly encouraging the government to prepare for the commercial and strategic opportunities that a melting Arctic presents.

Li Zhenfu, associate professor at Dalian Maritime University, together with a team of specialists, has assessed China`s advantages and disadvantages when the Arctic-sea routes open up. “Whoever has control over the Arctic route will control the new passage of world economics and international strategies,” writes Li, referring both to the shortened shipping routes between East Asia and Europe or North America and to the abundant oil, gas, mineral and fishery resources presumed to be in the Arctic.

Commenting on the successful test voyages from South Korea to the Netherlands via the Northeast Passage by two German commercial vessels in the summer of 2009, Chen Xulong of the China Institute of International Studies writes that “the opening of the Arctic route will advance the development of China`s north-east region and eastern coastal area . . . It is of importance to East Asian cooperation as well.” Chen also says that China should have a long-term vision regarding Arctic shipping.

Li Zhenfu has criticised the fact that Chinese research on the Arctic-shipping route has not been planned and conducted in a comprehensive manner to enable China to protect its interests. According to Li, China`s research “fails to provide fundamental information and scientific references for China to map out its Arctic strategy” and, therefore, limits China`s power to speak out and protect its rights in the international arena.

Li`s article, which was published in a national journal administered by the prestigious China Association for Science and Technology (CAST), points out that the Arctic also “has significant military value, a fact recognised by other countries”. And, in a rare open-source article about the Arctic by an officer of the People`s Liberation Army, senior colonel Han Xudong warns that the possibility of military force cannot be ruled out in the Arctic due to complex sovereignty disputes.

The increasing military importance of an ice-free Arctic is, indeed, reflected in recent decisions by all five littoral states to strengthen their military capabilities in the Arctic. In August 2007, Canada announced that it was setting up an Arctic military-training centre in Resolute Bay; in March, 2009, Russia announced that it would establish a military force to protect its interests in the region; and, in July 2009, the Danish parliament approved a plan to set up an Arctic military command and task force by 2014, to take just three examples.

Another Chinese researcher on Arctic politics, Guo Peiqing of the Ocean University of China, has also voiced disapproval of China`s natural sciences-oriented Arctic research and said it is not in China`s interests to remain neutral. Guo has said that China, which is transitioning from a regional to a global power, should be more active in international Arctic affairs. He notes that “any country that lacks comprehensive research on polar politics will be excluded from being a decisive power in the management of the Arctic and, therefore, be forced into a passive position.”

Chinese Arctic specialists acknowledge the same uncertainties as many of their western counterparts when contemplating how lucrative the Arctic routes would ultimately be in comparison to the current routes through the Suez and Panama canals. Although passing along the Northeast Passage from eastern China to western Europe would substantially shorten the journey, high insurance premiums, lack of infrastructure and harsh conditions may make the Arctic routes commercially unviable, at least in the short term.

Drift ice will continue to be a problem for ships, even when the Arctic passages are officially deemed ice-free. As Greenland`s ice cap melts, the number of icebergs is also expected to increase, forcing ships to proceed slowly and make detours. Furthermore, the shallow depth of some of the passages along the shipping routes (in particular the Bering Strait) makes the Arctic unsuitable for big cargo ships.

The opening up of the Arctic will also provide access to new reserves of energy and other natural resources on which China`s economic growth increasingly relies. The US Geological Survey estimates that the Arctic contains up to 30% of the world`s undiscovered gas and 13% of the world`s undiscovered oil. Additionally, the region contains vast amounts of coal, nickel, copper, tungsten, lead, zinc, gold, silver, diamonds, manganese, chromium and titanium.

The technological challenges associated with extracting energy and mineral deposits in the Arctic have been noted by both Chinese and Western observers and China will need to partner with foreign companies in order to exploit the Arctic`s resources. As one Chinese scholar notes, “There is a rather large gap between Chinese and advanced foreign deep-sea oil extracting technology.” Russia, which controls many of the resources in Arctic waters, lacks both the technology and the capital needed to extract them – opening the way for tri-lateral joint ventures in Russian waters using Chinese capital and western or Brazilian technology. For example, when in late 2009 Russia`s state-owned oil company Rosneft announced plans to apply for the operating licences to develop 30 offshore sites on Russia`s Arctic continental shelf, industry experts predicted that it would not be able to develop these deposits on its own.

Another potential multilateral joint venture in which China`s capital could be used in exchange for the opportunity to gain the experience it seeks in deep-water drilling is the ongoing cooperation between Statoil, Total and Gazprom to develop the first phase of the Shtokman gas fields in the Barents Sea, a section of the Arctic Ocean north of Norway and Russia. This is regarded not only as a huge commercial opportunity but also a formidable technological challenge.

Linda Jakobson is the director of the Stockholm International Peace Research Institute (SIPRI) China and Global Security Programme.

An earlier version of this article was published as “China prepares for an ice-free Arctic”, SIPRI Insights on Peace and Security, No. 2010/2, March 2010. It is used here with permission.

NEXT: Charting political waters

Part one: China’s growing interest in the thawing north

Homepage image from Combat Camera shows a Canadian military training exercise in Resolute Bay.

China is paying increasing attention to the melting of the ice in the Arctic Ocean as a result of climate change. The prospect of the Arctic being navigable during summer months, leading to both shorter shipping routes and access to untapped energy resources, has impelled the government to allocate more resources to Arctic research. Chinese officials have also started to think about what kind of policies would help the country to benefit from an ice-free Arctic environment.

China is at a disadvantage because it is neither an Arctic littoral state – it has no Arctic coast and so no sovereign rights to underwater continental shelves – nor an Arctic Council member state with the right to participate in the discussion of regional policies. Despite its seemingly weak position, China can be expected to seek a role in determining the political framework and legal foundation for future Arctic activities.

The formerly ice-covered Arctic is undergoing an extraordinary transformation as a result of the unprecedented rate at which the ice is diminishing. According to one report, the annual average extent of Arctic Ocean ice has shrunk by 2.7% per decade, with a decrease of 7.4% per decade during the summer months since 1979. Estimates about when the Arctic Ocean could be consistently ice-free during the summer season vary greatly, ranging from 2013 to 2060.

The melting of the Arctic ice poses economic, military and environmental challenges to the governance of the region. In 2008 the five littoral states, Canada, Denmark, Norway, Russia and the United States, committed themselves to the existing legal framework of the Arctic and the “orderly settlement of possible overlapping claims”. Despite these assurances, the evolving situation in the Arctic could potentially lead to new geopolitical disputes, also involving non-littoral states, especially regarding issues related to free passage and resource-extraction rights. Consequently, policymakers – not only in China but across Asia, Europe and North America – are turning their attention to the region in order to assess this transformation and its economic, territorial and geopolitical implications.

To date, China has adopted a wait-and-see approach to Arctic developments, wary that active overtures would cause alarm in other countries due to its size and status as a rising global power. Chinese officials and researchers have told me privately that they are very cautious when formulating their views on the country`s interests in the Arctic. They stress that China`s Arctic research activities remain primarily focused on the climatic and environmental consequences of the ice melting. However, in recent years, the academic and policymaking communities have also started to assess the commercial, political and security implications of a seasonally ice-free Arctic region.

China has one of the world`s strongest polar research capabilities. Since 1984, the country has organised 26 expeditions and established three research stations in the Antarctic. The Arctic became a focus from 1995, when a group of Chinese scientists and journalists travelled to the North Pole on foot and conducted research on the Arctic Ocean`s ice cover, climate and environment. China`s first Arctic research expedition by sea took place in 1999 and, since then, it has carried out two more expeditions, in 2003 and 2008, with a fourth planned for the summer of 2010.

China`s first Arctic research station, Huanghe (Yellow River), was founded at Ny-%26Aring;lesund in Norway`s Svalbard archipelago in July, 2004. Since 1994, China has conducted polar exploration onboard the research vessel Xue Long (Snow Dragon), which was purchased from Ukraine in 1993.

The 163-metre-long vessel, with a displacement of 21,000 tonnes, is the world`s largest, non-nuclear icebreaker. However, in October 2009, the State Council (the Chinese cabinet) decided that Xue Long alone no longer met the demand of the country`s expanding polar research activities and needed “brothers and sisters”. After months of deliberating between purchasing a second-hand foreign vessel and building a Chinese one, the government approved the building of a new high-tech ice-breaker. Preliminary plans to order a Chinese-built ice-breaker at a cost of 2 billion yuan (US$300 million) had been under way within the Chinese Arctic and Antarctic Administration (CAA) since at least early 2009. The new vessel, expected to become operational in 2013, will be co-designed by Chinese and foreign partners and built in China. It will be smaller than Xue Long, with a displacement of only 8000 tonnes.

Besides its own scientific expeditions, China has collaborated with international partners to monitor the Arctic`s environmental changes. In 1997, China joined the International Arctic Science Committee (IASC), a nongovernmental organisation that aims to facilitate multidisciplinary research on the Arctic region and its role in the earth system. At the 2005 Arctic Science Summit Week, held at Kunming, in China`s south-western Yunnan Province, China was also invited to join the Ny-%26Aring;lesund Science Managers Committee, which was established in 1994 to enhance cooperation among the research centres at Ny-%26Aring;lesund.

China has several Arctic-focused research institutions of its own. The primary ones are: the Shanghai-based Polar Research Institute of China (PRIC), which is in charge of polar expeditions on Xue Long and conducts comprehensive studies of the polar regions; the China Institute for Marine Affairs, the research department within the State Oceanic Administration (SOA) in Beijing, which concentrates on international maritime law and China`s ocean-development strategy; and the Institute of Oceanology, a multidisciplinary marine science research and development institute within the Chinese Academy of Sciences. Other organisations conducting Arctic-related research include: the Ocean University of China, Dalian Maritime University, Xiamen University, Tongji University, the Chinese Antarctic Centre of Surveying and Mapping and the Research Centre for Marine Developments of China.

Although there is no Chinese institution devoted specifically to research on Arctic politics, there are a handful of individuals who have published articles and book chapters that focus on Arctic strategies and geopolitics. Since the mid-2000s, Chinese researchers and officials have expanded their participation in international seminars focusing on commercial, legal and geopolitical Arctic issues.

In a major step to enhance China`s understanding of the political, legal and military dimensions of the Arctic, in September 2007 the Chinese government launched a project entitled Arctic Issues Research, which involved scholars and officials from around China and included such research topics as “Arctic resources and their exploitation”, “Arctic scientific research”, “Arctic transportation”, “Arctic law” and “military factors in the Arctic”. The research project, organised by the CAA, was completed by 2009, but the reports were not made public.

Linda Jakobson is the director of the Stockholm International Peace Research Institute (SIPRI) China and Global Security Programme.

An earlier version of this article was published as “China prepares for an ice-free Arctic”, SIPRI Insights on Peace and Security, No. 2010/2, March 2010. It is used here with permission.

NEXT: The commercial lure of melting ice

Part 3: Charting political waters

Homepage image from Xilin Gol Meteorological Bureau

The protection of wild plants and animals is an important part of humanity`s work to safeguard and improve the environment. Of particular concern is the preservation and reasonable use of these resources in regard to the production of Chinese medicine. We place great importance on the sustainable use of sources of Chinese medicine, on the physical and intellectual-property protection of our national cultural heritage, and on how Chinese medicine can better serve humanity. In switching away from the use of less sustainable wild resources, artificial cultivation is a proven, reliable method.

The protection of wild flora and fauna and the development of Chinese medicine are closely related: the medicine relies heavily on wild sources of pharmaceutical ingredients, substances which come from animals, plants and minerals. The principles of Chinese medicine are applied to make these ingredients into a unique medical system which has made an irreplaceable contribution to population growth and disease control for the Chinese people. With people again coming to respect nature, Chinese medicine as a natural system of health care is attracting more attention. We should ensure that the medicinal culture we pass on is authentic and true to its roots.

I describe myself these days as an escaped diplomat who has been recaptured. I was enjoying life outside government running an independent organisation when the call came. It was an offer I had to take very seriously. So I am recaptured by government, but actually happily recaptured because it is a tremendous privilege to have this role.

There`s one force, whether you are Chinese or African or European or American, which, more than any other is shaping the world that we live in, and that is the rapid growth of interdependence. It means that there is very little now that we can sensibly deal with, very few actions that we can take, that we can take in isolation from everybody else.

One of the scary things about the modern world is the sudden appearance of increasingly nasty epidemics. We have learned the hard way that the choices that are made by the institutions and governments in the places where they first appear have enormous importance all over the world. Such choices might make the difference between a local epidemic and a rampant global pandemic that wreaks enormous havoc.

And that`s just an example of the reality of interdependence. There really are no borders. Interdependence forces us to understand that today`s challenges represent not just a dilemma for us, but a shared dilemma for everybody. The environment brings that into a very tangible focus: there`s no such thing as a stable climate for one country or one continent unless the climate is stable for everybody. Climate security is a global public good. It is not a typical public good because if it is not there then governments will find it increasingly difficult to deliver the other public goods.

There is interdependence, too, in natural resources. Most markets are global, which means that a sudden change in market conditions or a sudden increase in demand in one part of the world, there are immediately consequences for everybody else who needs those resources.

The very enlightened decision, for instance, that the Chinese government took in 1998 to ban logging domestically was very successful in its own terms. In fact it was one of the most successful interventions that any government has made to deal with illegal logging. But I doubt that the people who took that decision anticipated that another consequence of it would be to prolong the civil war in Liberia, or to enrich the Russian mafia, or to have any of the knock on effects that resulted from the fact that, while it was possible to switch off the domestic supply of timber in China, it was not possible to switch off the Chinese demand for timber from the world market.

The result was an intensification of, mostly illegal, logging in Siberia, southeast Asia and west Africa – in other words, lots of unintended consequences.

It`s an illustration of the fact that one of the features of this more interdependent world is that somehow we need to build a broader politics of accountability. We need to understand the consequences of our actions outside the domain in which we have a natural understanding, and we need to work out how to take responsibility for those consequences.

The rise of China sharpens that shared dilemma. It sharpens it because of the sheer scale and the pace of what is happening in China. China is building infrastructure and deploying resources faster than any society ever has in human history. The migration that is taking place between the countryside in China and its rapidly growing cities is probably the biggest mass migration in human history.

That means two things: firstly that along with all that change, enormous stresses are being created and felt in China. These stresses are social and economic, and environmental. They are also very well recognised by Chinese leaders, who understand that unless they can contain them, then they will be hugely destabilising. You just have to read more or less any speech by members of the Chinese leadership in recent years and that theme emerges in one way or another. So there`s a very strong sense internally that there`s a shared dilemma.

But there`s also an external dimension: the decisions that China takes, at all levels, including for instance anyone whose decisions affect China`s carbon footprint, have enormous consequences for everybody in the world.

Similarly the decisions that we take in Europe, North America and Japan, have enormous consequences for China. We shape the limits of the possible for China in ways we don`t fully understand. But it is important to realise that this is a set of opportunities as well as a set of threats.

One of the propositions that I`m working on in my current role is to challenge our colleagues in Europe to say to China that we have very similar interests when it comes to energy. We are all increasingly dependent on imported oil and gas from potentially unstable sources. We both have some of the world`s most aggressive policies on energy efficiency and renewable energy, driven not only by climate change but also by a more old-fashioned desire for energy security. So why don`t we get together and see whether we can build a single market in low carbon technologies between the world`s largest single market and the world`s fastest growing economy? Let`s just look across and see whether we can remove all of the tariff barriers in order to grow the market, and to bring down the price of technologies that we say we want to promote.

That`s an example of an opportunity arising from interdependence. I don`t know whether we will take it. When I discuss this with senior Chinese officials they immediately understand the attraction, but they are also sceptical about whether the European Union is capable of responding with the ambition and the coherence necessary to bring that proposition to life.

In any case what matters in responding to the shared dilemma is that we have debates that are as open and transparent and as inclusive as possible. All of us, in Europe, in China and elsewhere, depend on systems in which institutions have a tendency to disappear within their silos. We, for very understandable historical reasons, have had silo-based governments. The big challenge in dealing with interdependence is to get out of silos. To break down the barriers of communication between cultures, between sectors, between societies, and try and build a common language for dealing with interdependence. Because if we don`t have a common language we won`t come up with shared solutions.

In short we need to build a global politics of interdependence. That`s the biggest political challenge we that have and arguably the biggest political challenge that humanity has ever faced. China is an enormously important piece of that jig-saw.

Breaking down the barriers between different voices inside and outside China is a crucial job: there are barriers between people outside China who need to understand what is going on there and need to have a dialogue about the reciprocal consequences of the decisions that are being taken, and those inside China who are taking them. Breaking those barriers is as important as is breaking down the barriers within China.

We need to do that with all the means at our disposal. Fortunately the internet provides us some very powerful new tools. I am delighted that the vision and determination of chinadialogue.net has taken shape because I think that this is a major intervention in the politics of interdependence. It brings enormous value to us as we struggle with these problems, each in our own small silo. I`m delighted to have a chance to be here on this auspicious day and to extend my very best wishes and my congratulations for what I think is a hugely important venture. Its importance is probably not yet as widely understood as it deserves to be, but will rapidly become much more widely understood.

Thank you very much and congratulations.

Last week the Peruvian government hosted a delegation of Chinese businesspeople with the hope of attracting investment in this Andean country. But one topic that both the hosts and guests would have preferred to avoid is that of the town of San Juan de Marcona, in Ica Region, 525 kilometres south of the capital, Lima, where China`s Beijing Shougang Group has operated an iron ore mine since 1993.

Shougang is China`s fourth-largest steel maker, and has been widely criticised within China for its contribution to Beijing`s air pollution. In 2001, the Chinese government ordered Shougang to move its dirtiest plants out of the capital`s western suburbs – part of an effort to tackle Beijing`s notorious smog in the run-up to the 2008 Olympic Games. Shougang has since announced it will move all of its polluting plants out to neighbouring provinces by 2010.

Shougang`s purchase of Hierro Peru, the Peruvian state-owned mine and steel mill, for US$311 million remains the largest Chinese investment of its kind in South America, but critics say it is not a model to follow. In its nearly 14 years of operations in Peru, Shougang has been criticised by the regional and congressional government, NGOs and its own workers` union for repeated violations of environmental standards, disregard of labour rights and breach of contract.

Shougang has received four fines for environmental infractions. The most serious of these, according to local activists, is Shougang`s pumping of waste water into the nearby San Nicolas Bay, where its deepwater port is located. In March 2006, the Ica regional government declared a state of “environmental emergency” in San Juan de Marcona, a largely-symbolic measure enacted to protest Shougang`s activities.

Carlos Chavez, a regional council member, said the decision to declare the environmental emergency did not come as a surprise. He said there was not only ample evidence of environmental pollution, but also Shougang showed a complete disregard for the problem.

“The Ica Regional Council has repeatedly addressed the social and environmental impact of Shougang, calling to their attention problems that needed to be resolved. Nothing ever happened,” said Chavez.

Shougang appealed the council`s declaration of a “state of emergency”, but in April the regional council upheld the company`s appeal. Shougang have since announced they would pursue the matter in Peru`s court system. The company was unavailable to comment, despite repeated attempts to contact them.

Jorge Silva, an engineer who works for the Research Centre for Development and Participation, who prepared a report on extractive industries operating in Ica, said: “Shougang is undoubtedly important to the economic wellbeing of the Ica region, but it has to be held accountable to its original commitments and additional agreements it has reached over the years. Beginning next year, the regional government will hopefully be able to enforce norms the central government has not been interested in enforcing.”

Silva said Shougang`s approach to the environment is mirrored in its relations with workers and the local community, to which the company has very few ties.

“Shougang is a Chinese enclave that has no relationship with its social or physical environment,” said Silva.

As a result of the company`s approach, Shougang`s 720-member labour union has called several strikes in the past few years, as have contracted workers. There have been four strikes so far this year, each of which forced the company to close operations but did not hurt the bottom line too much because of Shougang`s huge inventories. Although they extracted some concessions, Shougang`s workers are still among the lowest paid in Peru`s mining sector.

The labour union`s eight-day strike in June, which cost the company US$4 million in losses, was called to demand a daily wage increase of US$1.70. The company countered with an offer of US$0.58 daily. The two sides settled on US$1 and a US$300 one-time bonus. Shougang workers now earn US$14 for a 12 hour shift, although the company points out when all benefits are included, Shougang workers receive the equivalent of US$28 a day.

Union leader Julio Ortiz said the situation remains tense because the company`s profit margins continue to increase, while workers continue to receive little in terms of better wages and benefits.

Production in the first six months of this year was 2,520 fine tonnes, which is near full capacity. While production has remained more or less steady, international prices have risen. A fine tonne fetched an average of US$27.70 in the first six months of 2005, and US$35.70 in the same period this year. Export earnings in 2005 were US$215.5 million, up 249.4% over the 2004 figure. A similar trend is expected this year.

According to government sources, Shougang`s reserves are around 830 million tonnes, and the company is exploring additional sites. It has identified copper and gold deposits, and other international companies are prospecting for similar metals around San Juan de Marcona.

Apart from their partially-satisfied salary demands, the union also received a promise from the company to carry out environmental remediation projects, particularly cleaning up oxidation ponds; although this has yet to be carried out.

While politicians at the local level and in Peru`s unicameral congress have expressed concern about environmental and labour problems, they have focused much more of their attention on legal issues, specifically Shougang`s failure to meet its original contract.

Shougang won the bid for Hierro Peru in September 1992, and began operating in January of the following year. In addition to the US$118 million it paid to acquire the company, it also promised to invest US$150 million in the next three years, or by the end of 1995. That did not happen and Shougang was fined US$14 million, less than 10% of what it initially promised to invest. Overall, Shougang has invested around US$130 million since moving into Marcona, most of it on improving its facilities to raise production.

A special congressional commission investigated the sale and Shougang`s failure to meet its commitments throughout most of 2003, but nothing came of the investigation and voluminous report, which concluded that the company had failed to abide by its contract.

Jorge Silva holds that Shougang`s investment needs to be analysed more closely, because there is evidence that even this investment may be better on paper than it is in reality.

“Part of the investment was to purchase machinery, but all they did was bring in second-hand machinery from the parent company in China that pollutes just as much as the old machines. They have done whatever necessary to make a profit while not complying with environmental or labour standards,” said Silva.

Lucien O. Chauvin is a freelance journalist based in Lima

In China, environmental protection is an increasingly pressing issue. Not only are pollution and ecological degradation becoming ever more serious, but also people are more and more unsatisfied about the situation. The speed with which we are polluting the environment far outstrips our efforts to clean it up. Why is this? China has a large population but few resources, and our production and consumption methods are too out of date. But at the root of the problem lies a more significant cause — the lack of public participation in China.

The initial motivation for the world environmental protection movement came from the public, without their participation it would not exist.

In 1962, the US marine biologist Rachel Carson published her landmark book, Silent Spring, which focused on the environmental and human costs of pesticide use. This was a starting point in the development of environmental protection. On April 22, 1970, 20 million Americans took part in environmental demonstrations across the US. “Earth Day” is still celebrated on that date, and was a major event in the development of modern environmental participation.

Take Japan as an example; although the country faces a greater pressure on resources than China, it is a world leader in protecting the environment. Visitors to Japan in recent years are invariably impressed by the country`s clean environment. But Japan also experienced the serious social consequences of pollution midway through the last century, when it underwent large-scale industrialisation. In the 1960s, Japanese victims of pollution first brought lawsuits against the companies responsible for environmental degradation. Japan`s media began to investigate and report on environmental accidents. In many places, grass-roots environmental groups were founded to combat polluting industries. By 1970, 45% of Japanese citizens opposed economic development that did not take environmental protection into account, overwhelming the 33% who polled in favour of unrestricted economic growth. Electoral support for Japan`s Liberal Democratic Party (LDP) declined from 58% to 48% as a result.

Broad public participation forced both the LDP and the Diet to take notice of the environmental and social effects of pollution. In 1967, Japan issued the Basic Law for Environmental Pollution Control, and enacted the Law for the Compensation of Pollution-Related Health Injuries in 1973. A series of other environmental rules and regulations were put into place in the following years. In particular, the Basic Law for the Recycling-based Society employs the concept of “environmental culture” to promote public awareness of environmental protection and its moral value. The law promotes the use of new energy sources and compulsory limits on the consumption of natural resources. It not only regulates waste output but also encourages recycling and the safe disposal of non-recyclable waste. In the past 10 years, Japan has become a recycling-based society which strikes a balance between environmental protection and economic growth. Their example can show us that resolving the problems of pollution needs both governmental and citizen engagement, and that public participation and a democratic legal system are important factors in environmental protection.

In China, the major problem is that environmental protection laws are not strictly observed and implemented due to a lack of democratic legal mechanisms for public participation. As early as 1978, the government stated clearly that where serious pollution is occurring, if no measures are put in place to improve this for a long time, it will be established who is personally responsible, and the enterprise in question will be shut down. Financial penalties are also to be applied and legal action taken in serious cases. But in the past 20 years, how many polluters — businesspeople or officials — have ever been penalised? How many government policies that have caused pollution and ecological damage have ever been corrected? And to what extent are we following the sustainable development strategy that was put forward in 1992?

Guided by a traditional model of development, many in government and business are devoted to short-term profit, and officials are solely motivated by the prospect of an increase in GDP. None of them pay adequate attention to environmental protection. Frequently we hear people say that Chinese living standards are too low and that the most urgent thing is to develop the economy. They hold that environmental protection should be an issue of secondary importance. But in fact, China is the last country that can hold this view. The country has too many people and few natural resources; China does not have the capacity to take on this burden. The sustainable development model is the only model of development for China. We must set in place a series of practical policies and regulations, call on citizens to participate in the environmental protection movement and strengthen our democratic and legal systems. Otherwise, sustainable development will become a mere slogan.

But how can we promote public participation in environmental protection?

First of all, we must understand clearly that public participation is the right and interest of the people endowed by law. The government has the obligation to respond to and to protect this right. Public participation is not a charitable measure offered to the public by the government. Nor is it the old model of a mass movement driven by the government. During wartime, the Party needed to mobilise the masses to fight for their rights. But nowadays, the Party has an administrative role, to govern the country by means of the law. Any country governed by law has to recognise and protect the rights of the people. Involving public participation in environmental protection should be an aspect by which to evaluate political performance; and should be based on the principles of the Party serving the public and the administration serving the people. It is a useful trial for the construction of socialist democracy and a demonstration of the advantages of the socialist system.

Secondly, environmental information must be made freely available. Disclosure is a tool for environmental management. We should recognise the public`s right to be informed about and to criticise environmental issues. By increasing the transparency of environmental information, the force of public opinion can put pressure on those who destroy the environment. In 1998, 35 countries from Europe and central Asia signed the Aarhus Convention in Demark, which ensure the public`s right to be informed about environmental issues. Now 40 countries have joined the Convention. China`s government has made many efforts to promote the disclosure of environmental information, including the publication of an annual environment report, a monthly report on the water quality of major rivers and a daily report on air quality. The mass media are also working hard on reporting environmental incidents. But the problem remains that it is very difficult for individuals to obtain environmental information from businesses or government. Where should the public turn for such information? Who can provide it? There is a lack of communication between the government and the public. Regulations on the disclosure of environmental information are the way to ensure the public`s right to be informed.

Thirdly, we must democratise decision-making on environmental issues. China`s Environmental Protection Law of 1989 states: “All units and individuals shall have the obligation to protect the environment and shall have the right to report on or file charges against units or individuals that cause pollution or damage to the environment.” The Law on Evaluation of Environmental Effects, implemented on September 1 2003, is of great significance. It stipulates that before approving any project that may affect the environment, the authorities must hold consultative meetings and public hearings to collect opinions from relevant organisations, experts and the public. The “environment interests” of Chinese citizens have, for the first time, been enshrined in law. The people have the right to know, to understand and to supervise public policy related to their environment. It also means that anyone preventing people from taking part in the decision-making process is breaking the law. But despite this, details of the conditions and procedures for public participation have not yet been clearly stipulated. That is to say, faced with a specific problem, the public still does not know how to participate. For example, some of the plans for China`s dam projects have raised many people`s concerns. But the expression of this concern is has been limited to a few articles published on the internet and meetings among experts. The public cannot find a way to participate. In the end, they have to turn their worries and complaints into legal appeals. We must, therefore, produce clear procedures for public participation in decision-making about large environmental projects.

The fourth key is public-interest environment litigation. This would mean that all citizens, communities, and government offices could bring a lawsuit to the national judiciary in their own name, on behalf of the wider public. Our current environmental law states that only the victims of environmental incidents have the right to bring such a lawsuit, and the case is regarded as a civil action. Since environmental rights do not only relate to individuals but also are the concern of wider society, they should be regarded as in the public interest, as they are in European and US environmental law. Because environmental lawsuits often involve very technical issues, those countries have put measures in place that help reduce the cost of environmental lawsuits for the public, and can help with technical knowledge. In order to strengthen China`s environmental law, we must enlarge the scope of those who can bring environmental lawsuits to include government environmental bodies, environmental protection organisations and the public.

Finally, we must strengthen our cooperation with environmental NGOs. The majority of China`s environmental NGOs, except for a very small number who take an extreme western environmentalist line without considering the country`s special characteristics, are positive and healthy, especially the youth groups who are volunteering for the environment. They love their country and are eager to make a contribution to society. They are promoting conservation out of concern for the environment. The government should give direction and support to these organisations. For example, the government can provide groups with professional training; build platforms for communication with the public; organise activities that involve environmental groups and public figures; and make arrangements to collect opinions on particular policies.

China`s increasing public environmental awareness, especially among the younger generation, is a reflection of the progress of our socialist democracy and political civilisation. It is the success of the concept of sustainable scientific development, and the hope for the future of the Chinese nation. This requires us to recognise and support the public`s right to be informed, to supervise and to take part in decision-making on environmental issues. Chinese people who have a sense of responsibility should actively participate in the cause of environmental protection and facilitate its development. The environmental cause is the most selfless cause promoted by the most selfless people. It needs more and more selfless people to make a contribution.

Pan Yue is deputy director of China’s State Environmental Protection Administration (SEPA). Part of a new generation of outspoken Chinese senior officials, Pan has given rise to a tide of environmental debate, attracting enormous attention and controversy. This is an edited extract of Pan’s essay Environmental Protection and Public Participation (2004).

Also by Pan Yue on chinadialogue: “The rich consume and the poor suffer the pollution”

Homepage photo by Mark Hobbs

The first sandstorm of autumn 2006 blew up in Alashan`s Left Banner, an administrative division of Inner Mongolia, on August 27. Alashan (or Alxa), in the far west of this autonomous Mongol region of China, has been the focus of considerable attention in recent years for just that reason: it is one of the sources of Asia`s sandstorms.

Official data show that Alashan`s desert area expanded from 92.71% of its total land in 1996 to 93.14% in 2004, an increase of 0.43 percentage points — and every tenth of a point represents another 200 square kilometres of infertile land. Alashan`s three deserts — the Badain Jaran, the Tengger and the Ulan Buh – are gradually merging, already meeting in three places in Left Banner and four in the Right Banner locality.

“Increasing numbers of both people and livestock, and over-development of agriculture, are at the root of Alashan`s environmental degradation,” says Tsang Buch, chief of the Alashan League Forestry and Desert-Control Bureau.

Historical data put Alashan`s population during the early years of the People`s Republic (founded in 1949) at a little less than 35,000. Now, it is 212,000 – a six-fold leap (in contrast to a 2.4-fold population increase nationally over the same period).

Due in large part to pre-1949 conscription by warlords in Ningxia and the famines of the 1950s and `60s, an influx of outsiders — of different ethnicity — moved into Alashan. They had an unprecedented impact on Alashan`s grassland culture, and the population growth led to an increase in the number of livestock.

Currently, the ideal livestock population for the league`s grasslands would be the equivalent of 700,000 sheep, but figures from July 2006 show that the actual figure is equivalent to two million sheep. And yet the herdspeople believe even that figure is an underestimate. In the 1990s, the village of Helan in Left Banner raised 30,000 sheep, but government statistics showed only a third of that number.

To relieve pressure on the grasslands and allow the environment to recover, Alashan launched a succession of large-scale relocations of its inhabitants to the newly founded towns of Xitan and Manshuitan in Left Banner in 1989. The keeping of livestock was banned in the areas from which the people were moved.

In January 1995, the league`s then-party secretary, Fu Laiwang, put forward a “relocation strategy” consisting of moving herders from their pastures to oases and towns to work in the private sector. Official reports show that, to the end of 2005, the league had relocated 19,082 people, and plans for 2006-10 will see a further 21,754 moved. That means that by 2010, 40,836 people — 20% of the 2005 population of 212,000 and 80% of the herding population – will have been relocated.

But solving the environmental issues has given rise to new social problems. The relocations have left large numbers of former herders in poverty.

In 1999, the Left Banner government decided to reforest pastures in the Helan Mountain Nature Reserve and relocate the local population. Some 6,000 locals were moved, 230,000 head of livestock disposed of and 230 acres of land converted.

Each relocated person received an RMB 500 resettlement allowance, with compensation of RMB 1,000 for each sheep pen demolished, RMB 140 per square metre for brick houses and RMB 100 per square meter for mud houses. (The RMB is now valued at roughly 7.8 to the US dollar.) Those in the first two rounds of relocation received RMB 4.95 per mu (one-fifteenth of a hectare) of land per year, for five years. In the third round, in 2001, that RMB 4.95 was replaced with 5.5 kilograms of past-its-best grain. After relocation, the herders – now farmers – made most of their income from planting crops, but (including compensation) only earned one third of their original incomes.

When I visited Sumurtuu Gacha, former herder Tumurbaatar was tending to the chickens in his yard. He said that, on leaving the grasslands in 2005, his family had sold 400 head of sheep and has relied since then on government subsidies to survive. His family of seven will receive over RMB 100,000 in compensation annually, for a five-year period.

Tumurbaatar worries about the future. “What happens in five years? We`re not allowed to herd, and we`ve no land to farm. The government hasn`t arranged any work for us. All we can do is raise a few chickens and ducks. The village is full of people like us.”

Yang Mudan, deputy professor of economics at Alashan`s communist party school, stressed the problem of herders returning, or even becoming vagrants. A 2004 Environmental Quality Evaluation in Alashan found 34,000 herders living below the poverty line, with 4,700 in absolute poverty. Many areas were no longer able to support either man or livestock, and 20,000 herders had moved away, become environmental refugees.

The deputy governor of Alashan, Gong Jiadong, admits that “ensuring work for the herders is essential for successful relocation. Simply handing out compensation doesn`t work.”

Alashan`s administrative office decided to focus on encouraging private businesses to absorb those who are relocated. In early 2006, the “relocation strategy” was adjusted, with the focus shifting from oases to towns and cities. At the same time, Alashan`s drive towards urbanisation and industrialisation become more apparent.

“Economic growth in Alashan is quite fast, 30% a year on average,” according to the head of Alashan`s Environmental Testing Station, Taao Gerrela. “Most of that growth comes from industry.” A further 21,754 people are to be moved for environmental reasons between 2006 and 2010, but Yang Mudan believes it is still not certain that Alashan`s economy can absorb them.

Meanwhile, rapid industrialisation is causing more pollution and damaging the environment. Severe pollution has lead to Alashan`s industrial centers – the towns of Lantai and Wusitai in Left Banner – being placed under strict supervision by the State Environmental Protection Administration and the Ministry of Land and Resources. The 600-kilometre journey from Bayan to Ejina Banner runs almost entirely through desolate gravel and sand desert.

How should the successes and failures of environmental policy in Alashan be explained?

Grasslands expert Liu Shurun is firmly opposed to enclosures and relocations, believing that it is not beneficial to the grass, to the people or the livestock – it is simply moving from one extreme to another. “Livestock, in appropriate numbers, are good for the grasslands – you can`t have grasslands without them,” he says.

Sheep eat 700 types of grass, and livestock eating and walking on the grass both stimulates growth and controls it. It is not harmful, and without animal activity, the grass grows out of control. Also, after enclosure, grasslands are no longer fertilised by livestock excrement and over time only one or two species of grass will survive, homogenising that population.

Liu points out that inappropriate environmental policies are a result of a farming nation`s failure to appreciate herding culture — an unthinking application of Han Chinese experience. The enforced practice in Alashan can only be ascribed to government ignorance and an unchecked spread of the popular view of development. Liu goes as far as to say that herding has been the natural choice in Alashan for thousands of years, and that grassland society should be restructured around a nomadic system.

“For years now,” said the Alashan SEE Ecology Association`s deputy secretary, Deng Yi, “the government has been doing its utmost to protect the environment, but you can see that when separating people and the environment in order to allow the environment to recover is very effective. When livestock is kept out by fences, the pressure on nature is lessened. In fact, that fence is dead and people are alive, camels are big and sheep are small – that is to say, you can`t change people, and if the herders` behaviour doesn`t change, any measures will only be for show.”

Song Jun, deputy head of the ecology association, believes that the scarcity of government successes in environmental protection is due to the top-down nature of implementation. The government designs the rules of the game and implements the projects – but it is not an interested party, a stakeholder.

Song believes that environmental protection should be commercialised, with interested parties identified, the government putting preferential policies in place, and environmental protection then implemented by the market. The herders should also participate, becoming beneficiaries of the ecology industry.

Zhou Jigang, formerly of Economy magazine and Hong Kong`s Phoenix Weekly, focuses on in-depth reporting about macroeconomics and current affairs. His investigations into radioactive pollution in Baotou and China`s underground industries both caused considerable controversy in China.

China`s attitude to corporate environmental management has developed in three stages. From the foundation of the People’s Republic in 1949 to the start of the reform era in the late 1970s, the government regarded environmental pollution as a consequence of capitalism – something that socialism would simply not suffer from. The role of enterprises was to manufacture goods in accordance with government planning. There was no need for them to consider environmental issues, nor was there any conception of what corporate environmental management might be.

During the second phase, from the reform era up to the mid-1990s, the government realized the importance of dealing with industrial pollution and put many environmental laws and regulations in place – but their implementation was not strictly enforced. Businesses were unwilling to take the initiative, while the exploitation of loopholes was rife. Also, some local governments opted to tolerate pollution for the sake of maintaining income, and so failed to enforce environmental law. Business paid lip-service to environmental management, but it was not actually implemented.

During the third stage, from the mid-1990s to the present day, industrial pollution has reached a level where it cannot be left untreated and the government has taken a firmer attitude, using stoppages, closures, company mergers and changes in production to force enterprises to make real improvements in their environmental management. Finally, businesses are starting to face up to environmental management issues.

It seems that Chinese companies have only changed their environmental performance when they are forced by external pressures. In the past, this pressure came mostly from government, but the situation now is more complex. For instance, pressure may come from overseas purchasers and investors. If a company’s products or technologies do not meet specified environmental standards, buyers may refuse to purchase and investors can pull out. Chinese companies may have no option but to spend on improving their methods and keep the other party happy. Pressure may also come from civil society, including the media and NGOs. When people become better-off, they are no longer willing to tolerate dust storms or polluted waterways and will protest to the companies responsible. In some areas, locals have blockaded factories. Meanwhile, NGOs and the media have taken on a supervisory role, repeatedly exposing offending factories. These voices of society may not have binding force, but their influence cannot be underestimated.

In China, a company’s response to environmental concerns differs according to its size. Large firms are relatively responsive as their corporate image directly affects profits. This is mainly true for state-owned companies and the China-based subsidiaries and joint-ventures of multinationals. State-owned companies are closely associated with government, and at least have to take a stance in support of the government’s sustainable development strategy. Companies owned by multinationals need to consider the parent company’s global image, and so take environmental concerns into account at every stage for fear that a mistake could set off a chain reaction in the global media and markets.

But corporate image is of less value to small and medium enterprises (SMEs), and the majority of them do not pay adequate attention to external pressure about environmental concerns. Many of these are Hong Kong and Taiwan-invested SMEs and local firms in heavily-polluting low-tech industries such as fur, clothing, paper-making and metallurgy, which present a serious threat to China’s environment. Over the past decade, areas where these firms are concentrated – such as the Pearl River delta – have already suffered serious damage. These companies are unwilling to change, believing that environmental management will bring nothing but increased costs. This leads them to attempt to evade government regulations or purchasers’ requirements. It has also lead to some bizarre situations – water treatment plants are installed and never used except during government inspections, or companies wait till nightfall to discharge their waste.

This is not to say that every business owner is at fault. Apart from a few corrupt bosses, I`m sure most would like to run a safe, environmentally-friendly operation. The mistakes they make are due to a lack of knowledge about environmental management and what they can do beyond buying new equipment.

I once heard an electroplate manufacturer complain that to meet environmental standards, he had needed to build a new factory, equipped it with modern, imported machinery using overseas technology, and installed a water treatment plant. The cost of his products rose greatly and sales went down as a result. He was extremely discontented and put the blame squarely on environmental standards. But in fact he was harbouring two key misunderstandings about corporate environmental management.

Firstly, he mistakenly believed that becoming an environmentally-friendly company required nothing more than the purchase of new equipment. Corporate environmental management is not just an issue of equipment and technology – the most crucial factor is the management itself. The equipment can be bought, but the management needs to be learnt. Generally speaking, good environmental management combined with decent technology can cut operating costs by saving energy, materials and human capital.

Secondly, he failed to target a new group of customers to match his new circumstances. In producing environmentally-friendly products, his customers should not have been restricted to China. He should have looked to global markets to find customers willing to spend the extra. Perhaps on the other side of the world, companies were complaining that they could not find an environmentally-friendly electroplate supplier. Bringing together the needs of both buyer and seller could have covered the additional costs of production, and his products would have remained competitive.

If a company can change its attitude towards the environment, it will see wider markets and increased competitiveness, not increased costs – something too few Chinese businesspeople have realised. But the government must also bear some of the responsibility. In the process of dealing with industrial pollution, the government has treated it as a public good. As a result, people feel the government is ordering business to sacrifice its own interests in order to protect the public interest. The government uses crude measures, such as inspections, punishments, stoppages and closures, which may scare a company, but cannot persuade it to change. Companies will always look for ways to get around the government. It becomes a never-ending game of cat and mouse.

To turn the situation around we should change our old ideas about dealing with pollution – particularly end-of-pipe treatment – and make competitiveness a starting point. Environmental management should be part of the essence of corporate management itself. Many Chinese companies use a low level of technology, and management techniques are often coarse – there is great room for improvement. But with the correct guidance, these firms could be given a new lease of life, becoming both environmentally friendly and more competitive.

China already has some innovative prospects. For instance, a Sino-German environmental consulting project in Zhejiang now helps local firms adopt the environmental management tools used in German companies. Profits have improved, and so have the environment and the company`s organisational management. It is an example worth learning from.

Guo Peiyuan is a researcher and PhD candidate at Qinghua University, focusing on finance, sustainable development and corporate social responsibility. He is the co-founder of Syntao.

Also about sustainable business on chinadialogue: Green grows the opportunity

Homepage photo by Astrid B

China`s many varieties of grassland cover an area of 1 billion acres. They account for 41% of the country`s total area, and are 3.3 times the size of its cropland. Yet these vast grasslands cannot feed the animals they are home to, which together account for one-third of China`s livestock. Many years of overgrazing have led to the deterioration of 90% of China`s grasslands, giving rise to environmental problems such as sandstorms.

Ecologists sometimes refer to the “10% rule”: that 10% of the energy of a primary producer should be passed on to a secondary producer. This means that under good environmental conditions, the world`s green vegetation totals about 200 billion tonnes (pure carbon), of which around 10% will be eaten by herbivorous animals. The dry weight of vegetation on China`s grasslands is 300 million tonnes, leaving about 30 million tonnes for grazing if the ecosystem were undamaged. But the methods currently used to calculate grassland capacity are flawed, and overgrazing is widespread. Actual numbers of livestock are far above even %26lsquo;theoretical` thresholds, and the grasslands have inevitably deteriorated. How can this pressure be relieved and the grasslands allowed to recover?

The answer lies not with the grasslands, but in China’s cropfields. Aside from producing 500 million tonnes of food, China`s 167 million acres of farmland also produce over 700 million tonnes of straw. Corn, wheat and rice make up 38%, 22% and 19% of the total straw, respectively. Other crops produce smaller proportions, such as legumes (4.8%), tubers (2.8%) and rapeseed (8.3%). Of this straw, 94.9% can be used as fodder. In fact, all of China`s straw could provide 22 times as much fodder as the grasslands can reasonably provide. And using technology to double the value of the fodder could feed all of China’s livestock.

Unlike on the grasslands, if straw is eaten by sheep and cattle it can be returned to the land in the form of manure or residue from biogas production. Not only will the land be unharmed, but it will also be fertilised. Livestock production should be moved south, from the arid grasslands of traditional herding areas in Inner Mongolia, Tibet, Xinjiang and Qinghai to the food-producing provinces of Shandong, Henan, Hebei, Sichuan and Hunan.

China has 4.7 billion chickens, and an annual demand of 3.7 chickens per person per year. But farmers squeeze chickens into wire cages and overuse additives to fatten them up as quickly as possible. This makes them ready for slaughter in 45 days, as opposed to the 300 days of a free-range chicken. These unnatural meat-production methods are contributing to obesity in our cities. They are aiding the spread of avian flu that endangers food safety and public health, and are inviting criticism of China`s record on animal-welfare issues. The wide open spaces poultry need are not to be found in farmyards, much less in wire cages; the space is out on the grasslands. Chickens present no danger to the grassland, and can help control pests. In the future, the huge quantities of chicken and eggs that China needs should come from the grasslands.