China's dangerous gamble
Premier Li Keqiang wants to wean the Chinese economy off its dependence on export trade in cheap electronics, clothes, toys and tchotchkes of all variety. Let the Chinese people consume instead, he says, and let them consume products and services of high value.
But how do you take a developing country like China, where saving has traditionally been favored over spending, and transform it into a nation of mass consumers? Simple, Li explains: You urbanize it, because city dwellers earn much more and spend much more.
China's urban dwellers are 53.7 percent of the population (by contrast, developed countries are 80 percent urban on average). Li and the State Council, China's Cabinet, are convinced that increasing that figure to 60 percent by 2020 - taking 100 million rural Chinese and plopping them down in cities - can generate a flurry of domestic spending. If all goes well, Li's hope is to move an additional 150 million by 2025. That would be resettling 250 million people - 80 percent of the U.S. population - in 11 years into cities.
I am no economist, so I am willing to accept Li's premises that more city folk means more consumption, and that more domestic consumption, especially of high-value goods, will boost the economy. After all, in 1982 the urban population was only 20.6 percent; the shift to today's 53.7 percent has resulted in enormous economic growth, with an average annual 10 percent increase in gross domestic product.
But that shift has been costly to China's environmental well-being. Much of the air, water and soil in the country is now toxic.
We have all seen images of the thick soupy air that envelops cities such as Beijing, Shanghai and Harbin, and renders daytime there into night. We have read about the acidic air that rains down and contaminates the country's waterways and soil.
The migration plan is sure to result in more construction, an expansion of urban infrastructure and an increased demand for housing, automobiles, large appliances and air-conditioning and heating systems. All of this is good news for the domestic consumption side of the equation. But it bodes ill for an environment that already bears the scars of three decades of urbanization and higher consumption.
Many measures to ensure protection of the environment come to mind for this urban migration to succeed, but a few are particularly important:
• Authorities should plan for denser cities, not more sprawling cities. In recent years, increased urbanization has translated into urban sprawl: the creation of suburbs far from city centers. These suburbs are residential, with few services. Residents commute to the city centers for most of their needs. This has meant more cars, more roads and highways, and more congestion. Densification allows for more efficient energy and water use, improved waste and wastewater management, and reduced dependence on private transportation. Critically, densification also reduces encroachment on China's increasingly scarce arable land.
• Beijing should institute a local property tax. Today, local governments have no revenue base of their own. That encourages local officials seeking funds to resort to the seizure of land within their jurisdictions. Officials "compensate" the landowners at perhaps 20 percent of the land's value and then sell it to developers at a huge profit. One reason for today's urban sprawl is the unsystematic and lawless appropriation of land, often on the outskirts of cities and towns. A local property tax would yield more stable and steady revenue. This would not only discourage land seizures, which invite social protests and riots, but also enable local authorities to be more deliberative and environmentally attentive about the needs of growing cities.
• The price tag for moving 100 million to 250 million people out of the countryside should include upfront costs for the design and construction of smarter cities. Efficient and green public transit, gray-water recycling, non-fossil fuel energy production, sky gardens, rainwater collection systems, public utilities consolidation and the like would go a long way toward making the booming cities clean and livable.
• Beijing must change its criteria for assessing local officials. Promotion or demotion is determined today by the success those officials have had in developing their local economy and contributing to the country's GDP. But if China's air, water and soil are going to survive the onslaught of the new urbanization, the central government must unambiguously signal that environmental protection weighs at least as heavily as economic growth in performance assessment. Only then will local officials shift their priorities away from a policy of economic growth at all cost.
• And perhaps most urgent, Beijing must undertake structural reform. Today, there is no central supervisory body or mechanism with real authority to monitor and enforce compliance with environmental policies and regulation. Responsibility for monitoring is shared among at least six State Council ministries and agencies, with often competing agenda and goals. Environmental authority is too disparate and weak. The Ministry of Environmental Protection has limited financial and human resources (e.g., 300 employees versus 17,000 in the U.S. Environmental Protection Agency). It is time for Beijing to give it the authority and resources to become a genuinely effective national environmental protection agency, one capable of enforcing compliance among local officials.
The ambitious migration plan is intended principally to develop the economy by expanding the urban middle class. But it will be a success only if it brings about the desired economic benefits without inflicting deeper, irreparable damage on the environment.
Daniel K. Gardner is a professor of history and East Asian studies at Smith College.
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