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China’s Environmental Future: The Power of the People

Author: Elizabeth C. Economy, C.V. Starr Senior Fellow and Director for Asia Studies
June 2013
McKinsey Quarterly

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China faces a deep and enduring environmental crisis. Less than 1 percent of the country's 500 largest cities meet World Health Organization clean-air criteria. More than one-quarter of China's land is either desert or facing desertification. At least ten provinces are below the World Bank's water poverty level, and up to 40 percent of China's rivers are reported to be seriously polluted (20 percent are so polluted that the water is too toxic for human contact). In conjunction with ongoing crises—Beijing being enveloped in smog; more than 16,000 dead, diseased pigs floating down Shanghai's Huangpu River; reports of toxic cadmium-laced rice being sold in Guangdong Province—it's no wonder there are serious questions about the effectiveness of the Chinese government's efforts to balance economic growth and environmental protection.

China's leaders say they recognize the challenge at hand. In a 2011 editorial, Environment Minister Zhou Shengxian said the "depletion, deterioration, and exhaustion of resources and the worsening ecological environment have become bottlenecks and grave impediments to the nation's economic and social development." And former Premier Wen Jiabao acknowledged in March 2012 that the government had failed to meet most of the environmental targets in China's 11th five-year plan, including reductions in energy intensity, nitrogen and sulfur dioxide, and water-pollution measures. Leaders are well aware that the state of the environment is a leading cause of social unrest, as well as one of the most important contributors to a range of public-health issues ranging from respiratory disease to cancer and developmental delays and deficiencies. And it hurts the economy: a study by the Chinese Academy for Environmental Planning (CAEP) estimated the cost of pollution spills, deteriorating soil, vanishing wetlands, and other environmental issues at 3.9 percent of Chinese GDP in 2008.

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