The financial crisis has local and global implications for the environment.  China in particular is at a crossroads: many wonder whether it will use this time to re-trench with heavy industry or as an opportunity to “go green.”  Carnegie Beijing Senior Research Associate, Zhang Shiqiu led and chaired a discussion on “The Environmental Impact of the Financial Crisis.”

The Impact of the Crisis: Positives

The majority of participants optimistically saw the crisis as a short-term and long-term opportunity for China.  In the short-term, factory bankruptcy, as well as a reduction in consumption of resources and technologies that emit or discharge pollution can provide immediate relief to the environment.  Additionally, the drop in exports provides an opportunity to use new energy technologies domestically rather than send them overseas.  That way, local environmental conditions can be improved.

In the long-term, the crisis has forced the acceleration of the CCP’s original strategy to restructure its economy.  While China has traditionally fueled its development by being “the world’s factory,” this has also meant that the environment has come second to growth.  Mass-producing, energy-consuming industries have taken their toll on the nation’s water supply and air quality.  The regime can use the recent factory closings and enterprise bankruptcies to develop a cleaner, high-technology industrial sector. 

Both in the short and long-term, the government can use the increasing need and demand for clean technology to become a global leader in green technology and renewable energy investment.   

The Impact of the Crisis: Negatives

The negative impact of the crisis on the environment is more obvious: First, participants fear that the momentum in the global environmental movement has been diverted amid the economic crisis.  As attention is elsewhere, government policies will prioritize quick economic development and employment fixes. Second, there is the fear that approved policies will be shelved because of cost.  Third, although the effect of the regime’s stimulus investment in major industries has yet to be measured, participants predict that heavy pollution, heavy energy consumption and weak regulatory oversight will likely occur.  This would be disastrous and a step back for China’s environmental progress.  Last, the strengthening of government intervention and the weakening of the market will give rise to further administrative problems with individual or factional interests trumping national ones.  This includes local promotion of environmentally damaging enterprises that harm locals and national environmental goals. 

The Road Ahead: Debate and Accord

Opinion was divided as to whether the crisis could successfully induce accelerated economic restructuring.  According to some scholars, regional differences and regional technology transfers will mean a more gradual structural adjustment.  Others pointed out that the existing infrastructure cannot support a change in China’s industrial sector in the short-term.  While the crisis may highlight the need for China to restructure and embrace green technology, such a transformation is unlikely to occur as quickly as people hope.  Many suggest China might follow the Japanese model of good price and tax policies as a way to incentivize a growth.

Forum participants agreed upon three final points:

  1. Sustainable development is no longer a “choice.” China faces public awareness, scientific awareness and a legal system that constrains any desire to forge forward with a reckless development strategy. 
  2. Scholars supported the foundation of an independent global think tank able to consider diversity in development strategies and climate change responses free of ideology.  For instance, the low-carbon economic model has become increasingly popular but it is not the only path towards sustainable development.  Although China is applying itself in this direction, scholars agree that it is unlikely that China will choose this path in the short-term or give commitments in this regard.  An independent think tank would be able to address the needs to each country’s unique situation. 
  3. The international community has become more pessimistic in its negotiations on climate change recently. A lack of funding as well as attention is discouraging people.  Something needs to be done to bring climate change and the environmental back to the forefront of international dialogue.