China Comes Clean on Dirty Air
Perhaps the biggest unanswered question hovering over each round of international climate change talks is whether China can be trusted to abide by any carbon reduction commitments it agrees to. Given Beijing's history of pushing for vague, non-binding targets -- and its reported intervention last weekend to block efforts to include a rigorous review process in the Lima Accord -- there's certainly grounds for skepticism.
But a recent development in China gives clear reason to be optimistic. Last Tuesday, the Institute of Public & Environmental Affairs [IPE], a Beijing-based NGO, published a report on air pollution produced by publicly listed companies operating in China. At first glance, the data seems to confirm that most Chinese companies have little reason to abide by pollution laws and regulations.
The mere existence of the data, however, suggests something far more important: China, after decades of prioritizing economic growth over the environment, now seems willing to pressure and even embarrass some of its most powerful corporate citizens in order to curb pollution.
The IPE report is damning. Of the 2,679 companies included in the study, 1,092 were found to have committed air pollution violations between August and October 2014. They include 34 out of 36 listed steel firms operating in China, and almost eighty percent of listed power companies. Among them are powerful, state-owned enterprises such as China Aluminum Company (Chalco), as well as private firms such as Hong Kong-based Kingboard Chemical Holdings (which, according to McClatchy, counts Fidelity Management, among its biggest shareholders), a major manufacturer of circuit boards, among other commodity items.
Such transparency is not the norm in China and it's clearly a result of a decision made in Beijing's most senior policy-making circles. The data collected and analyzed by IPE was disclosed because of a recent order by the central government that China’s 15,000 biggest polluters begin real-time monitoring and disclosure of air and water emissions. That program, which was initiated on January 1, follows a handful of earlier environmental transparency efforts, including a 2012 central government decision requiring Chinese cities to monitor and disclose real-time air quality data.
Why is the Chinese government suddenly pushing transparency? After all, the authorities could keep have easily kept such data to themselves (an approach taken with other damaging environmental data, including, until 2012, most urban air quality data). It would be nice to think that Beijing is motivated by a desire to please its partners at international climate talks. In reality, it's probably more interested in pacifying the Chinese public, which has increasingly taken a suspicious view of the government’s commitment to environmental protection. In that sense, data disclosure might be a half-step meant to forestall other tangible steps to cleaning up China’s air, such as shutting down coal burning power plants.
But the cynical explanation for transparency likely isn't the whole story. President Xi Jinping doesn't seem content to stick with half-measures on pollution. Under his leadership, China has issued a range of directives intended to clean up China’s air. If Xi is giving the Chinese public unprecedented access to environmental data, it's likely because he wants the public -- via social media and other means -- to hold companies and officials accountable.
This isn't to suggest that progress on international climate change has been foremost on Beijing's mind. But China should be given credit for its newfound interest in disclosing the scale and sources of its pollution (especially to its own public). After all, China's initial contribution to a climate change solution was always going have to entail an accurate account of its own role in the climate change problem.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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