Transforming the model

China has never seen a better chance to become the first developing country to grow environmental protection as fast as its GDP, or at least to turn it into a viable business in the next few years.

Admittedly, to create a new industry, especially where there was no such a thing just less than a decade ago, has never been easy. It largely requires two factors to do so - society's consensus, which represents the demand, and financial reward for those who provide the products and service.

On society's level, Westerners tend to believe that something has to be a social movement first to be listed on the political agenda. China is different in that agenda setting is usually done at a more centralized level, with the central government and some forces from urban centers, as leader of innovation.

As reflected by the views expressed by lawmakers, administration officials, policy research specialists, academics and journalists, the environment has become a dominant discourse that hardly anything can challenge.

In Beijing and Shanghai, in the national media, even in large online forums where opinions can be quite diverse, hardly anyone is defending the old development model of high growth, high pollution. Protecting the environment and conserving resources are the right thing to do.

Hearing how officials of Shanxi, Henan, and some other resource-rich provinces talk about plans to close down the local small coal mines and chemical plants running on 19th century formulas, it is amazing that the country can change so much as to be ready to kill a huge number of the cash cows it had raised just a decade or so ago.

Shanxi, the province that supplies most of China's coal, is to close down all the mines with annual output less than 90,000 tons this year. And in 2010, it will close down all the mines with output less than 300,000 tons a year, according to Ling Zhengce, the province's top planning official and a delegate to the 17th CPC (Communist Party of China) Congress.

Of course, on the local level, there will be resistance. Some rich people will lose their fortunes and workers will lose their wages. It is said that some central government officials are also planning on job relocations for the existing work force in polluting industries.

Precisely a centralized government can do the job more effectively - so long as enough importance is attached to it (which the lawmakers, top political advisors and journalist will help ensure).

However, it must be pointed out that closing down all the old polluting and wasteful factories do not necessarily create a new industry, certainly not automatically. These efforts tend to make the economy more costly, and its products more expensive if they are not matched with the new technologies to use resources more efficiently.

Energy efficiency, especially the use of renewable energy and recycled materials, is where the future is. That is the hard part of the change - for developing countries as well as developed countries. The resistance comes from the fact that most of such technologies are still to be developed and improved to be commercially viable.

This is where China still has huge room to realize the potential of its centralized government - by taxing the polluting enterprises and rewarding the ones using new technologies, by raising energy and resource prices, by setting new and green standards, by keeping up budgetary spending on the environmental infrastructure and its building, and by setting up development funds for research projects.

Right now, as argued in a recent commentary in the Financial Times in London, the global market is waiting for China, India and other large developing countries to spend more so as to generate new driving force for growth.

But on which items should the developing countries spend their newly earned export income? Despite the fact that many technologies are still waiting to be developed to make the economy efficient in energy and resources, the general line is clear: Spend to save, not spend to waste.

If China can lead its course in such a direction, it will make a huge contribution to the world - an even more significant one than its rise in economic power in the past three decades. And this is surely one of the goals of the 17th CPC Congress.

(China Daily 10/15/2007 page5)