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China’s Xi Says Country Won’t Sacrifice Environment for Growth

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May 26 (Bloomberg) -- China’s President Xi Jinping said the country won’t sacrifice the environment to ensure short-term economic growth, amid rising public discontent that industrial expansion is creating pollution and threatening food safety.

Xi’s pledge at a study session of the Communist Party’s top leadership on May 24, was made as the State Council approved reform proposals that include taxing products that are resource-intensive and heavily polluting.

Protests this month against a planned chemical plant in Yunnan province and revelations that rice produced in southern China contained excessive levels of a toxic metal are adding pressure on the new leadership to tackle environmental issues. Pollution has replaced land disputes as the main cause of social unrest, Chen Jiping, a former leading member of the Communist Party’s Committee of Political and Legislative Affairs, said in March.

“Environmental issues are much higher on the agenda with the current leadership,” said Ma Jun, a Beijing-based environmentalist and founder of the Institute of Public and Environmental Affairs. Xi’s comments “are very positive and more serious this time, although the implementation will be very difficult.”

While China already has environmental laws and rules they are not enforced, and local leaders who do attempt to sacrifice growth to improve the environment are “completely in the minority,” Ma said in a telephone interview.

Reducing Pollution

China must carefully balance economic development and environmental protection, Xi told a meeting of the Political Bureau of the party’s Central Committee on promoting ecological progress, according to a report released by the official Xinhua News Agency.

“We should be fully aware of the urgency and difficulty of protecting the environment and reducing pollution as well as the significance and necessity of improving the environment,” Xinhua quoted Xi as saying. “We should take the responsibility for the sake of our people and our children.”

The country will “consciously promote a green, sustainable and low-carbon development pattern,” Xi said, according to Xinhua. Xi took over as general secretary of the Communist Party in November and president of the country in March.

The State Council, or cabinet, headed by Premier Li Keqiang issued a notice on May 24 on the government’s website that it approved proposals by the National Development and Reform Commission to deepen reform this year.

Growth Engines

Li has said that the government must improve the quality and efficiency of the country’s development. He has pledged to undertake reform and promote urbanization to provide new engines for growth.

In March he said the country needed to achieve economic expansion of around 7.5 percent a year until 2020 to meet the government’s social and development targets. That’s down from an average pace of 10.5 percent a year over the past decade, with growth driven by surging investment and exports.

Economists at banks including UBS AG, Royal Bank of Scotland Group Plc and Bank of America Corp. lowered estimates for China’s 2013 expansion after the pace of gains in gross domestic product unexpectedly moderated to 7.7 percent in the first quarter from a year earlier.

The median estimate of 51 analysts in a Bloomberg News survey this month was for economic growth of 7.8 percent this year. That’s down from an 8 percent median projection of 52 economists in an April poll and would match the pace of expansion in 2012 that was the weakest in 13 years.

Stimulus Room

In a May 13 speech, Li signaled policy makers are reluctant to use stimulus to counter the slowdown.

“To achieve this year’s targets, the room to rely on stimulus policies or government direct investment is not big -- we must rely on market mechanisms,” Li said in a speech broadcast to officials around the country, according to a transcript published May 14. Relying on government-led investment for growth “is not only difficult to sustain but also creates new problems and risks,” he said.

Demonstrations against industrial plants have taken place in Shanghai and Kunming, the capital of southern Yunnan province, this month. State-owned China National Petroleum Corp., the country’s biggest oil producer, pledged to take measures to ensure a chemical factory it wants to build near Chengdu, the capital of Sichuan province, won’t harm the environment amid growing opposition to its proposal.

Unparalleled Awareness

Rice from Hunan province was found to contain excessive levels of cadmium, a toxic metal, according to the Guangzhou Food and Drug Administration. State-owned grain researcher Cngrain.com said rice traders in Hunan reported sales dropping by more than half since the reports.

“The public’s awareness of environmental issues as well as their rights are unparalleled,” Ma said. Degradation is getting worse “because the economy is expanding. The impact isn’t just confined to industrial zones any more, it’s widening as the scale of industrialization and urbanization spreads.”

Xi vowed to set and strictly observe an ecological “red line” to ensure the environment is protected amid rapid urbanization, and said those who cross the line will be punished, according to Xinhua’s report. The president also reiterated calls for more economical use of resources and for a reduction in consumption of energy, water and land.

Suspend Approvals

As part of efforts to curb pollution, the Ministry of Environmental Protection said this month it suspended approval for coal-fired power projects in the regions of Inner Mongolia, Henan and Guizhou. It also ordered 15 companies, including state-owned Hebei Iron & Steel Group, to pay fees for sulfur-dioxide emissions, according to a statement on its website.

The government has ordered stricter approval criteria to be applied to approvals of bond sales by financing companies set up by local governments in industries identified as being heavy polluters, people with knowledge of the matter told Bloomberg News this month.

To contact Bloomberg News staff for this story: Bloomberg News in Beijing at emailtv@bloomberg.net

To contact the editor responsible for this story: Stanley James at sjames8@bloomberg.net

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