China Faces Costly Pollution Cleanup

China’s booming economy faces a $34.5-billion bill in the coming years to clean up an environmental mess caused by lax enforcement of pollution laws, outdated technology and massive under-funding, a new report said.

The report, “The China Environmental Market: A Technology Transfer Approach,” said China’s rapid economic growth had brought with it serious and costly pollution problems.

“The Chinese government understands that the estimated economic growth will turn the country into an environmental nightmare if corrective methods are not introduced,” said the report, published last week by the Singapore-based Regional Institute of Environmental Technology and Hong Kong’s Fintrade-Mercer Group. “Overall, China requires some $34.5 billion worth of investments in the environmental protection sector.”

A copy of the report was obtained by Reuters.

It gave no specific time frame for the total cleanup bill but listed a number of measures or projects that would be needed over the next few years.

Among the worst environmental side effects of China’s economic success are acid rain, smog-induced lung disease and polluted drinking water.

About 80% of China’s urban river water is polluted, commonly with ammonium, nitrate, volatile phenol and oxygen-consuming organic material.

China’s National Environmental Protection Agency estimates that about 0.85% of gross domestic product, or $9.7 billion, is spent annually on environmental protection, but that to be effective, it needs to reach 1.5% of GDP.

Environmental spending is likely to hit only 1% by 2000, which, coupled with a lack of large-scale imports of Western technology, would not be enough, the report said.

Inefficient cleanup methods are a major problem, it said.

“Only a third of the Chinese-made pollution treatment installations operated as designed, one-third operate irregularly and a third do not operate at all,” it said.

Solid-waste pollution alone was estimated to cost China about $10.9 billion a year in economic losses.

Over the next 15 to 20 years, “the scale of environmental problems will be so huge that domestic production cannot meet the increased demands for advanced environmental technology equipment,” the report added.

Western firms, through joint ventures and technology transfer deals, would have to be granted access to China’s developing pollution control industry--predicted to be worth $2 billion by 2000--if the country were to meet the mammoth challenge of combating pollution, the report said.

“Modern equipment is needed where the legislative regime is to be effectively enforced. China has a great need for Western technology and the continuing enforcement drive paves the way for Western entry into the Chinese market.”