Environmental policy in China
Environmental policy in China is set by the National People's Congress and managed by the Ministry of Environmental Protection of the People's Republic of China. The Center for American Progress has described China's environmental policy as similar to that of the United States before 1970. That is, the central government issues fairly strict regulations, but the actual monitoring and enforcement are largely undertaken by local governments that have a greater interest in economic growth. The environmental work of non-governmental forces, such as lawyers, journalists, and non-governmental organizations, is limited by government  regulations. Under the Ministry of Environmental Protection of the People's Republic of China, the Department of Policies, Laws, and Regulations is in charge of establishing and strengthening basic laws and policies such as environmental laws, administrative policies and economical regulations. It is also responsible for the development of national environmental protection policy and macro strategy. China's rapid economic expansion combined with the country's relaxed environmental oversight has caused a number of ecological problems. In response to public pressure, the national government has undertaken a number of measures to curb pollution in China and improve the country's  environmental situation. However, the government's response has been criticized as inadequate. Encouraged by national policy that judges regions solely by their economic development, corrupt and unwilling local authorities have hampered enforcement. Nonetheless, in April 2014, the government amended its environmental law to better fight pollution. Since the 2010s, the government has given greater attention to environmental protection through policy actions such as the signing of the Paris climate accord, the 13th Five-Year Plan and the 2015 Environmental Protection Law reform From 2006 to 2017, sulphur dioxide levels in China were reduced by 70 percent, and air pollution has  decreased from 2013 to 2018 In 2017, investments in renewable energy amounted to US$279.8 billion worldwide, with China accounting for US$126.6 billion or 45% of the global investments. China has since become the world's largest investor, producer and consumer of renewable energy worldwide, manufacturing state-of-the-art solar panels, wind turbines and hydroelectric energy facilities as well as becoming the world’s largest producer of electric cars and buses. Policy jurisdiction. The Ministry of Environmental Protection (MEP), formerly the State Environmental Protection Administration (SEPA), is a cabinet-level ministry in the executive branch of the Chinese  Government that is responsible for implementing environmental policies, as well as the enforcement of environmental laws and regulations. The Ministry is tasked with protecting China's air, water, and land from pollution and contamination. Directly under the State Council, it is empowered and required by law to implement environmental policies and enforce environmental laws and regulations. Complementing its regulatory role, it funds and organizes research and development. There are 20 offices and departments under MEP including General Office, Department of Planning and Finance, Department of Policies, Laws and Regulations, Department of Human Resources Management and Institutional Arrangement, Department of Science , Technology and Standards Department of Environmental Impact Assessment, Department of Environmental Monitoring, Department of Water Environment Management, Department of Air Environment Management, Department of Soil Environment Management, Department of Nature and Ecology Conservation, Department of Nuclear Facility Safety Regulation, Department of Nuclear Power Safety Regulation, Department of Radiation Source Safety Regulation Bureau of Environmental Supervision and Inspection, Department of International Cooperation, Department of Education and Communications, The MEP Committee of Communist Party of China, Office of the CPC Central Commission for Discipline Inspection at MEP. All 20 offices are at the "judicial" level in the government ranking system. They carry  out regulatory tasks in different areas and make sure that the agency is functioning accordingly. Since 2006, there have been five regional centers to help with local inspections and enforcement. History. In 1972, Chinese representatives attended the first United Nations Conference on the Human Environment. The next year, the Environmental Protection Leadership Group was established. In 1983, the Chinese government announced that environmental protection would become a state policy. In 1998, China went through a disastrous year of serious flooding, and the Chinese government upgraded the Leading Group to a ministry-level agency, which then became the State Environmental Protection  Administration. According to the Chinese government website, the Central Government invested more than 40 billion yuan between 1998 and 2001 on protection of vegetation, farm subsidies, and conversion of farm to forests. Between 1999 and 2002, China converted 7.7 million hectares of farmland into forest. From 2001 to 2005, Chinese environmental authorities received more than 2.53 million letters and 430,000 visits by 597,000 petitioners seeking environmental redress. Meanwhile, the number of mass protests caused by concerns over environmental issues grew steadily from 2001 to 2007. The increased attention on environmental matters caused the Chinese government to display an increased level  of concern towards environmental issues. For example, in his 2007 annual address Wen Jiabao, the Premier of the People's Republic of China, made 48 references to "environment," "pollution," and "environmental protection", and stricter environmental regulations were subsequently implemented. Subsidies for some polluting industries were cancelled, while other polluting industries were shut down. However, many internal environmental targets were missed. After the 2007 address, the influence of corruption was a hindrance to effective enforcement, as local authorities ignored orders and hampered the effectiveness of central decisions. In response, CPC General Secretary Hu Jintao implemented the "Green G.D.P." project, where China 's gross domestic product was adjusted to compensate for negative environmental effects; however, the program quickly lost official influence due to unfavorable data. The project's lead researcher claimed that provincial leaders "do not like to be lined up and told how they are not meeting the leadership’s goals ... They found it difficult to accept this." The government attempted to hold national "No Car Days" where cars were banned from central roads, but the action was largely ignored. In 2008, the State Environmental Protection Administration was official replaced by the Ministry of Environmental Protection during the March National People 's Congress sessions in Beijing. Citizen activism regarding government decisions that are perceived as environmentally damaging increased in the 2010s. In April 2012, protests occurred in the southern town of Yinggehai following the announcement of a power plant project. The protesters initially succeeded in halting the project, worth 3.9 billion renminbi (£387m). Another town was selected for the location of the plant, but when the residents in the second location also resisted the authorities returned to Yinggehai. A second round of protests occurred in October 2012 and police clashed with protester, leading to 50 arrests and almost 100  injuries. In response to a waste pipeline for a paper factory in the city of Qidong, several thousand demonstrators protested in July 2012. Sixteen of the protesters were sentenced to between twelve and eighteen months in prison; however, thirteen were granted a reprieve on the grounds that they had confessed and repented. In total, more than 50,000 environmental protests occurred in China during 2012. In response to an increasing air pollution problem, the Chinese government announced a five-year, US$277 billion plan to address the issue in 2013. Northern China will receive particular attention, as the government aims to  reduce air emissions by 25 percent by 2017, compared with 2012 levels. In March 2014, CPC General Secretary Xi Jinping "declared war" on pollution during the opening of the National People's Congress. After extensive debate lasting nearly two years, the parliament approved a new environmental law in April. The new law empowers environmental enforcement agencies with great punitive power, defines areas which require extra protection, and gives independent environmental groups more ability to operate in the country. The new articles of the law specifically address air pollution, and call for additional government oversight. Lawmaker Xin Chunying called the law  a heavy blow [in the fight against] our country's harsh environmental realities, and an important systemic construct. Three previous versions of the bill were voted down. The bill is the first revision to the environmental protection law since 1989. In 2019, China launched the Belt and Road Initiative International Green Development Coalition. In 2020, Chinese Communist Party general secretary Xi Jinping announced that China aims to peak emissions before 2030 and go carbon-neutral by 2060 in accordance with the Paris climate accord. According to Climate Action Tracker, if accomplished it would lower the expected rise in global temperature  by 0.2 - 0.3 degrees - "the biggest single reduction ever estimated by the Climate Action Tracker". In 2020, a sweeping law was passed by the Chinese government to protect the ecology of the Yangtze River. The new laws include strengthening ecological protection rules for hydropower projects along the river, banning chemical plants within 1 kilometer of the river, relocating polluting industries, severely restricting sand mining as well as a complete fishing ban on all the natural waterways of the river, including all its major tributaries and lakes. Current law. When the new environmental protection provisions go into effect in January 2015 , the government's environmental agencies will be allowed to enforce strict penalties and seize property of illegal polluters. Companies that break the law will be "named and shamed", with company executives subject to prison sentences of 15 days. There will be no upper limit on fines; previously, it was often cheaper for companies to pay the meager fines provisioned by the law than install anti-pollution measures. In all, the new law has 70 provisions, compared to the 47 of the existing law. More than 300 different groups will be able to sue on the behalf of people harmed by  pollution. It remains to be seen whether these changes to the law will overcome some of the traditional problems with environmental litigation in China, such as difficulty getting cases accepted by the court, trouble gathering evidence and interference from local government. Under the new law, local governments will be subject to discipline for failing to enforce environmental laws. Regions will no longer be judged solely on their economic progress, but instead must balance progress with environmental protection. Additionally, local governments will be required to disclose environmental information to the public. Individuals are encouraged to "adopt a low-carbon and frugal  lifestyle and perform environmental protection duties" such as recycling their garbage under the law. In June 2017, the Chinese government made a second amendment to the Water Pollution Prevention Act. Based on the first regulation of Water Pollution Prevention Act in 1996, the amendment will increase the punishment for water pollution and the penalty ceiling may be raised to 1 million yuan. According to the statement of the Minister of Environmental Protection, the second revised version further strengthened the responsibilities of local governments, and refined and improved the drinking water safety protection system. Since the legislation in 1984, this law  has made a significant and positive contribution to improving the water environment in China. However, the quality of water environment in China is still not promising. Protected areas. A number of different classes of protected areas are recognized under Chinese law. National, provincial, and local governments all have the power to designate areas as protected. Regardless of designation, most enforcement is made at the local level. On January 1, 2019 the Chinese government promulgated the "Soil Pollution Prevention and Control Law". 1. The new law has guidelines for performing mergers and acquisitions environmental due diligence Phase II and III and  HHRA (Human Health Risk Assessments) 2. Chinese government will not accept ASTM E1903 - 11 Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process 3. Following the new Chinese law Phase II sampling guidance will cost 30-40% more than the ASTM methodology a. In part due to the requirements in the Chinese guidance that requires up-gradient and down gradient ground water testing and other technical guidance. b. Phase II due diligence sampling under the new Chinese regulation will become “Public Record” – accessible to any company or Chinese citizen. This transparency could damage global companies' reputation if  a site under their control is publicly declared "polluted" c. The Chinese Technical guideline will necessarily add significant time to the process of due diligence – M&A (sale-deals need to factor this into transaction timelines - expect up to a year longer time line in cases where property in on a watch list or deemed by the government to be a PSPF (Priority Soil contamination Prevention and control Facility.) 4. Starting immediately ALL ACQUISITIONS NEED TO BE PREDICATED UPON A CHINESE POLLUTION LAW GUIDELINE COMPLIANT BASELINE – this requirement will add to the acquisition execution time line significantly. 5. Acquisitions need to  establish contractual warranty and environmental escrow following the principles of the Chinese Regulation (Investor company legal counsel needs to change their acquisition agreement template to align with Chinese law guidance.) 6. If a target site has recently been found to be polluted under the regulation – M&A should cease until expert panel rules on remediation plans/proposals… buyers should not enter agreement to purchase until scope and cost to remediate have been approved by the expert panel and an escrow can be established along with warrantee language in the purchase agreement. 7. It is highly recommended that companies with property having  historical recognized environmental conditions (HRECS) perform routine sampling that follows the Chinese guidelines a. If a company has facilities that fall into certain “High Risk Sectors” they are entered automatically in to the Watch List – including: i. Chemical ii. Pharma iii. Manufacturing iv. Oil & Gas v. Non Ferrous Metals b. Also a company can be listed on the Watch List if certain triggers are met: i. Store, Handle manager hazardous material ii. Generate >100 tonnes of Hazardous Waste per year iii. Located near sensitive areas (residential, water bodies) c. Sale or closure of any property on the “Watch List ” must be accompanied by Phase II Assessments that follow the guideline d. Contaminated property discovery must be reported to the government – added to the “Watch List” which will be updated and released annually. 8. Where divestiture/purchase contracts include “indemnification” language protecting the seller or buyer – the new law provides these contractual provisions can be overridden by the Chinese Government. 9. Watch List site closure or sale (divestiture) requires Phase II report per the Chinese Pollution Law guideline – becomes public record – CAN HAVE NEGATIVE IMPACT TO COMPANY REPUTATION 10. Even though the new Chinese Law follows the principle of “polluter  pays” - ERM sited client case studies where the “buyer” did not contribute to contamination – and yet ended up sharing the remediation cost with the seller. 11. Whenever a site has been found to be contaminated under the guidelines of the law – the owner must seek guidance from an “Expert Panel” who will make judgements/decisions about HHRA as well as remediation. Current issues. China has many environmental issues, severely affecting its biophysical environment as well as human health. Water Shortage. China is facing three major water resources problems: water pollution, shortage of water resources and waste of water resources. The  problem with water resources will be China's obstacles to achieve sustainable development in the 21st century. The government has begun to deal with water resources problems since the 1970s, establishing water pollution control and environmental protection agencies. China ranks 5th globally in terms of water resources but the water resource per capita is less than 1/3 the world average. The Chinese government implemented two policies to alleviate the water shortage issues;supporting the South-North Water Diversion Project and improving water use efficiency. The government has provided funding for the South-North Water Diversion Project, which aims to bring 44.8  billion cubic meters of water to Beijing and other northern parts of China. The project will cause disruption to local inhabitants forcing the migration of nearly one million people. The total cost of this project is estimated at $62 billion. In 2010, the Communist Party of China and the State Council set policies to change ways of using water and improve water use efficiency. The central government had invested 1.8 trillion yuan to enable efficient water use by upgrading both agriculture irrigation systems and clean water systems in rural areas. Besides the water shortage, the water quality is also  an issue which has influenced public health and led to political disputes. Only less than half of all water resources meets the safe drinking water standards in China. Besides political oppositions between regions, the current government structure is also a barrier for water pollution control. The Ministry of Ecology and Environment of the People's Republic of China is a relatively young ministry. It is assigned relatively less power and fewer employees than other existing ministries, which results in its heavy dependence on local environmental protection bureaus (EPB). The problem is that local EPBs do not only get controlled by  higher EPB but also by local governments whose performance is assessed mainly by economic development. Therefore, the local governments have loose policies on companies that producing water pollution. Additionally, the financial support of EPBs comes from pollution fines instead of the Ministry of Ecology and Environment, which makes it difficult for the ministry to manage local EPBs. Air pollution. Various forms of pollution have increased as China has industrialized, causing widespread environmental and health problems. In January 2013, fine airborne particulates rose as high as 993 micrograms per cubic meter in Beijing, compared with World Health Organization guidelines of no  more than 25. Heavy industry, dominated by state-owned enterprises, has been promoted since the beginning of central planning and still has many special privileges such as access to cheap energy and loans. The industry possesses considerable power to resist environmental regulation. At the end of October 2018, the Chinese government has issued the Atmospheric Pollution Prevention and Control Law (2018 Amendment), which will be implemented starting immediately. Experts believe that although the law is inevitably flawed in some aspects, if 80% of the law can be implemented, it is going to significantly improve the air quality. This law has  been scrutinized three times. The new amendment has clearly stated out that enterprises of iron and steel, building materials, non-ferrous metals, petroleum, and chemical industry that discharge dust, sulfide, and nitrogen oxides in the course of production shall adopt cleaner production processes, construct dust-removing, desulfurization, and denitrification equipment in a complete set, or adopt technological transformation and other measures to control the discharge of air pollutants. Compared to the revised Air Pollution Control Law in 2000, the new version doubled the entries. Almost all the laws in the current version have been amended and revised to fit the  current situation. Based on 2015's China Environmental Bulletin published by the Chinese government, in 2015 the national urban air quality is getting better. The first implementation of the new air quality standards has made the PM 2.5 average concentration decreased by 14.1% compared to the year of 2014. The Ministry of Finance established a fund of 10.6 billion Yuan to improve the air quality and to control the air pollution around the Beijing-Tianjin-Hebei and the surrounding areas, Yangtze River, and other key areas. The government is also actively promoting renewable energy vehicles with an annual production of  390,000, four times more than the production in 2014. Soil pollution. Soil pollution problems, which is the land surface degradation caused by the abuse of resources and land caused by human activities, together with corresponding protection measures in China have occurred in recent decades. In total, nearly 16.1% of China's soil was polluted. These pollutions have caused a serious impact on the growth of crops and the health of the people. In terms of related policies, the Chinese government decided to draw on the successful examples of other countries and integrate China's national conditions to maintain long-term  governance of soil pollution problems. From the 1980s to the 1990s, China began to work on soil environmental research by starting the Modern conservation tillage research with the support of Australia. From 2000 to now, the problem of soil pollution in China has become increasingly serious. The government has gradually put the prevention and control of soil pollution issues and other environmental protection issues in the first place by charging fines for polluted factories. China conducted a large-scale soil quality sampling analysis nationwide from 2005 to 2013, and according to the National Soil Pollution Survey Bulletin promulgated by the  Ministry of Environmental Protection of China in 2014, the total national soil exceedance rate (the percentage that exceeds the upper limit value) was 16.1%, of which slight, slight, moderate and heavy degree of pollution spot is 11.2%, 2.3%, 1.5% and 1.1%, respectively. From the point of view of pollution distribution, soil pollution in the south is heavier than in the north. The soil pollution problems in some regions such as the Yangtze River Delta, the Pearl River Delta, and the old industrial base in Northeast China are more severe. The soil in the southwest and south-central regions has exceeded  the upper limit of heavy metals tolerance. The contents of the four inorganic pollutants such as cadmium, mercury, arsenic, and lead have gradually increased from northwest China to southeast China and from northeast China to southwest China. As far as the current state of legislation is concerned, China already has air pollution prevention and control law and water pollution control law, but it still lacks a soil pollution control law. In June 2017, the Ministry of Environmental Protection pointed out that China will establish a more refined working mechanism, continue to carry out investigation of soil pollution, promote the improvement  of the legislative system, and fully cooperate with the National People's Congress in the legislation on soil pollution control law. Desertification. Land desertification is another pressing environmental issue. A land survey conducted by the State Forestry Administration of China from 2013 to 2016 shows that 2.61 × 10 km of the national land, accounting for more than a quarter of China’s overall territory, is desertified. Arid, semi-arid, and sub-humid lands located in Northern and North-Western China make up for the majority of the affected territory. Desertification has long reaching consequences, resulting in ecological degradation, halting  local economic development, as well as damaging the health of residents in the affected area. Desertified land facilitates the creation of sandstorms which threaten the health of residents in the nearby rural and urban areas alike. As the desert expands, it turns more and more land non-arable and unsuitable for development, creating poverty and food shortage. The current issue is a result of the combination of various anthropogenic and ecological factors. Devegetation brought about by unfavourable hydrologic conditions, climate change induced droughts, as well as unsustainable human activities such as overgrazing, agriculture, and deforestation, exposes the soil to frequent  water and wind erosion, creating desert. To combat land desertification, China has implemented a range of legislative policies as well as restorative programs. Laws are passed to prevent logging, agriculture, and animal grazing in locations of high desertification risk, establishing these areas as ecological function reserves. In areas surrounding desertified land, a large scale of protective forests and shelterbelts are created by programs such as the Three-Norths Shelter Forest Construction Program to reduce the effect of wind erosion. Since 1999, The Ministry of Forestry has been providing monetary rewards for farmers who plant trees instead of crops, as well  as auctioning away national land to individuals to rehabilitate for economic gains. In 2002, The Sand Prevention and Control Law was introduced to encourage sustainable development in desertified areas, encouraging afforestation and establishment of green industries such as water efficient pasture and natural pharmaceutical production. This policy is met with wide support from the residents in these areas as it also stimulates local economic growth. Residents in the Kubuqi Desert, for example, have had their annual income increased from $56 to $2000 in less than 30 years. Impact. China's lax environmental oversight had contributed to its environmental  problems. Sixteen of the world's twenty most polluted cities were found in China in 2013, but has since reduced to just one at 19th place Government response has been criticized as inadequate. An official report released in 2014, found that 20% of the country's farmland, and 16% of its soil overall, is polluted. An estimated 60% of the groundwater is polluted. According to the U.S. Environmental Protection Agency, China has shown great determination to "develop, implement, and enforce a solid environmental law framework" However, the impact of such efforts is not yet clear. The harmonization of Chinese society  and the natural environment is billed as one of the country's top national priorities. International groups called the law revision passed in April 2014 a positive development, but cautioned seeing the laws through to implementation would be a challenge. Because China does not have a fully established legal system, enterprise executives base their environmental practices largely on perceptions about regulators rather than concerns for legal issues, according to a 2014 study published in Journal of Public Administration Research and Theory. One executive interviewed said that China's environmental regulations were “comprehensive” but yet “vague,” leaving local officials with large  discretion in terms of enforcement. If executives think local officials may arbitrarily target their enterprises for enforcement, they are likely to adopt proactive practices, such as “developing certifiable environmental management systems,” but not basic ones, such as waste recycling.