It’s as unlikely to reverse as are its debt and demography challenges — and the government is largely to blame.
It’s as unlikely to reverse as are its debt and demography challenges — and the government is largely to blame.
C hina is dealing with the effects of extreme weather that are impacting millions and have the world watching. Record heat in the west, record rainfall and flooding in the northeast, and multiple destructive typhoons in the southeast in the past few years have led to significant loss of life and economic livelihood and to the displacement of countless numbers from their homes throughout the country. Alongside reports of devastation is the cautionary tale that this is what the rest of the world should expect from the effects of climate change over time.
Little is being written about the decades of Beijing’s mismanaged, top-down, government-knows-best economic and industrial policy, which continue to today, that contribute to the devastation we’re seeing. Beijing’s economic and environmental challenges are largely self-inflicted, the result of decades of poor decision-making characteristic of central planning and authoritarian government.
China’s environmental crisis is a fourth structural challenge that endangers the long-term prospects for the country. The others are
demography, with the population in a decline that will continue through this century;
debt, which is more than three times GDP, as GDP growth has plateaued despite increasingly massive stimulus programs; and
dependence on state-driven Keynesian overproduction of everything from high-speed rail to housing to electric vehicles with ever diminishing marginal returns as China dumps its overcapacity into foreign markets and faces trade wars in return. Central planners believe they have little choice, given anemic consumer demand internally and declining foreign investment.
Together, these four walls and their combined effects are closing in on China. For example, excess production is creating greater debt. Overbuilding is adding to the environmental challenges. The declining birth rate is resulting in lower numbers of productive workers, which is impacting the ability to sustain economic growth. These challenges are interwoven and intractable and will shape China’s future so significantly that it is difficult to see what the government can do to change course.
The environmental crises China faces today would be difficult to overstate. Given the climate obsession of global media and most Western governments, it is easy to conclude that China is just being hit hard by climate change. If only it were that straightforward. The country is paying the price of the government-engineered rapid economic growth of the past 45 years.
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This is not a new observation, even if there is scant focus on it today. When Xi Jinping took power, he was welcomed by Western leaders as a reformer who quoted Abraham Lincoln and would usher China to a new level of cooperation with the West. At home, though, there were warnings that the country’s unconstrained growth was creating environmental challenges that were getting little attention. The BBC in 2015 reported on economic and development policies “that have ravaged the environment and damaged the health of generations.” “Environmental pollution is a blight on people’s quality of life and a trouble that weighs on their hearts,” China’s premier Le Keqiang told the National People’s Congress that year. “We must fight it with all our might.”
Unfortunate natural circumstances contribute to China’s challenges with pollution and with the effects of extreme weather, albeit poor policy choices for many years have made everything worse. The United States and other countries are blessed with abundant water, arable land, forests, sources of energy, and other natural resources. China is not. The U.S. and China occupy roughly the same geographic latitudes and size of landmass, but that’s where the similarities end. The U.S. has the most arable land in the world and the third-highest volume of fresh water. With about 18 percent of global population, China has only about 7 percent of the world’s water and arable land, which is declining in volume owing to rapid urbanization and industrialization, misuse, and natural disasters. Much of China’s arable land is in the heavily populated eastern part of the country, compared with the vast U.S. central plains regions, whose population is relatively low. China’s high-farming areas are much more impacted by naturally changing weather patterns of the Pacific Ocean than the protected U.S. heartland is by its more generally stable weather. Not to overstretch the comparison, but in China it is as if the highest-volume farming in the U.S. were concentrated along the coasts, more impacted by extreme weather events. By some estimates, China can farm only one-fourth as much land as the U.S. can.
Water is a particular challenge for the PRC. In terms of the absolute volume of water available, the PRC isn’t that far behind the U.S. But China’s problems are profound. Some 2 billion people in 18 countries depend on about a dozen rivers, most originating on the Tibetan plateau in China’s southwest. China has manipulated the flow and control of those waters for decades. A further challenge is that most of the water is where the people are not, requiring extensive infrastructure projects to move water through the country. Attempts to address this have gone on for millennia in China. Again, compared with the United States, water scarcity in China — for human consumption, power, and irrigation — is a serious problem and a source of instability.
China’s water scarcity is compounded by the fact that its waters are among the most polluted in the world. Again, we see the impacts of excessive industrialization and the government-mandated overproduction in so many sectors to try to generate export-led growth, and of the rapid urbanization of the country. Overreliance on groundwater for fast-growing cities is made worse by industrial runoff; inadequate human- and animal-waste management; heavy use of plastics, pesticides, and fertilizers; and other sources of contamination. The data are startling, more suggestive of an undeveloped country than of the second-largest economy in the world. From a variety of studies and sources, including a Ministry of Water Resources study by China’s own analysts, we learn that:
In Shanghai, more than 85 percent of the city’s river water is undrinkable.
The drinking water for more than half the country’s population is said to be contaminated with animal and human waste.
Eighty percent of major river-basin groundwater is unsafe for humans, according to an oft-cited 2016 study by the Ministry of Water Resources.
The Yangtze River is so polluted that experts refer to it as “cancerous,” while the Yellow River is unsuitable for swimming.
Nearly 200 million people each year have water-pollution-related illness, according to one study.
Of China’s many environmental challenges, the scarcity of water and its unfitness for human use pose the greatest threat to the government. A study in Nature in 2020 describes the way that scarcity is exacerbated by pollution and notes the regional inequalities — the cities benefit at the extreme distress of the poorest in rural areas. This will worsen as growing urban demands will place even more strain on limited supplies of clean water.
Mass urbanization and overbuilding is driving subsidence, another aspect of China’s environmental disaster. Technically, subsidence is the downward vertical movement of Earth’s surface. The result: China’s cities are sinking. The overpopulated cities, with their massive infrastructure and tall buildings, are simply too big for the land on which they sit. A primary cause is the overuse of groundwater beneath the cities, with the weight of overbuilding causing gradual sinking into the voids beneath. While subsidence is not unique to China, the problem there is especially large and entrenched. About 900 million people live in China’s cities. A third of them are already impacted by the effects of subsidence, according to analysis in the journal Science earlier this year. Nearly half of China’s more than 80 major cities, including Beijing (population 22 million) and Shanghai (population 25 million) are sinking.
The scale of this problem is difficult for Westerners to grasp. Who had really heard of Wuhan before Covid? Wuhan has about 14 million residents, and yet it barely makes the top ten of China’s largest cities. China has a dozen cities larger than New York City, America’s largest. China’s total urban population is nearly three times the size of the United States, and subsidence is impacting a third of that, or about 300 million people. The estimate is that a quarter of China’s coastal landmass will be underwater in 100 years, mostly because of subsidence, not rising seawater. The problem is so expansive and has been going on for so long that practical solutions used elsewhere — population relocation, restricting the use of groundwater, and other remedies — are not feasible.
While this is not well understood or reported on by mainstream-media outlets in the West, social media are rife with videos of sinkholes opening without warning across the major cities. Cars and people being swallowed up in an instant. Overpopulation and overbuilding have caused excessive groundwater removal, which contributes to and accelerates the problem. Other countries, including Japan, faced these challenges many years ago and have taken effective countermeasures, including bans on groundwater removal. China is caught in an overdevelopment trap. How can this problem be addressed now without seriously impacting 300 million people living in some of the world’s largest megacities?
Desertification and the loss of forests is another example of the consequences of central planners in Beijing pursuing, over decades, heavy-handed policies that have resulted in the environmental crisis today. The Gobi Desert has expanded by nearly 15 percent in the past 45 years. Overinvestment in industrialization and haphazard conversion of forests to agricultural lands have led to soil erosion and desertification, affecting hundreds of millions of people. In the post-Mao era, it has been clear that something needed to be done to attempt to reverse the effects. In 1978, the Three-North Shelterbelt project was initiated. Intended to last until 2050, the objective was to increase forestation by as much as 15 percent. Billions of dollars have been spent, grazing and agriculture policies have been altered, and hundreds of millions of trees planted, with mixed results. In a 2015 study, researchers at Beijing Forest University and other government institutes concluded that deforestation continues, and that 80 percent of the deforestation results from “human activities.” Perhaps most prominent among these is that rural economic development in China significantly lags that of the urban areas and that subsistence land usage works against grandiose central plans for a “Great Green Wall.”
Economic development continues to be skewed toward urbanization and major projects rather than toward basic subsistence and improving the lives of the hundreds of millions of largely rural Chinese subsisting on a few dollars a day. Investment in primary education has lagged in these areas, and the internal migration to the cities as people seek work has held back rural advancement. The government’s encouragement of property development in the cities is now a drag on the entire economy. Ghost cities, high-speed railways to nowhere, and shoddy “show me” engineering projects divert resources from where they are needed more.
Consistent with the pattern of decades of poor policy-making by the communist government, Beijing’s headlong rush into alternative energy and the clean-energy transition is only making the problems worse, given the near-term challenges that “clean tech” poses for the environment. In one sense, much of the transition is simply a manifestation of the other problems. The global glut of Chinese EVs, for instance, is just another version of the Keynesian overproduction to which the government has been wedded for decades. China is now exporting these bad policies to many other parts of the world through its Belt and Road Initiative.
For instance, China’s dominance in battery technology and the associated critical minerals that are needed for EVs has led to billions of dollars in investments in mining and production facilities in China and around the world. The Center for Critical Minerals Strategy at SAFE (Securing America’s Future Energy) in a March 2023 study analyzes what it calls a race to the bottom. One area it highlights is the $30 billion that China has invested in Indonesian nickel. The report describes environmentally intensive processes, including high-pressure acid-leaching plants that throw off acidic by-products and rely on coal-fired power generation with triple the greenhouse-gas emissions of alternative processes. So even as China is lauded for its pursuit of battery technology for electric vehicles, the processes by which this is achieved are quite destructive.
Beijing’s investments in emerging markets are saddling those economies with significant debt in exchange for super-projects notable for many of the same negative consequences that these projects have in China itself: destruction of natural habitats for indigenous native species, deforestation and removal of protective wetlands, low-quality construction and safety, displacement of local labor in favor of imported China labor, and other perverse outcomes. The U.S. embassy in China dedicates a portion of its site to “China’s Environmental Abuses.” It cites a Nature Sustainability report highlighting “permanent environmental degradation” through pollution, loss of natural habitats, and other factors attributable to the Belt and Road Initiative.
The breadth of the EV-production chain is more energy- and carbon-intensive than is the production of ICE (internal combustion engine) vehicles. The literature on and analysis of this is vast, so one is free to find the study that most suits one’s argument. But the logic of the matter is pretty obvious. The mining and refinement of lithium for EV batteries is a dirty business indeed. By some estimates, it takes about 2 million gallons of water to produce enough lithium for about 100 batteries. China produces billions of batteries each year. The grids on which EVs operate in China and in its export markets still rely on electricity produced with traditional sources of energy, including a high percentage from thermal coal. The same is true for the production processes of most of the components of the car. While this is the case for ICE vehicles, too, the carbon intensity in EV production is higher than in ICE production. EVs do become the more energy-efficient option over some period of time.
Even so, EVs will not solve China’s pollution problems. Personal-use automobiles are a small percentage of total emissions in China, which is not a car country in the way the U.S. and other developed countries are. It is difficult and expensive to own a car, even a low-cost EV. China’s cities are congested, and there are restrictions on car ownership and use. The PRC has about a quarter of the per capita car ownership of the United States. Only about a fifth of China’s population own cars; three-quarters of Americans do. Automobiles account for about 15 percent of greenhouse-gas emissions in the U.S. and just 5 percent in China. Globally, there are now about 40 million EVs on the road — out of a total of about 1.5 billion cars. China’s EV production is more important for the economic activity it creates and as part of the government’s overproduction strategy for export into other markets than as a response to domestic demand. The U.S. buys few Chinese vehicles, but Europe is a big market, and the EU has matched U.S. policy in terms of tariffs.
The overproduction of other clean-energy technology is having negative impacts, too. China dominates the world in solar-panel production. It has dumped solar panels into global markets including the U.S., effectively ending economically competitive solar-panel production in the U.S. As with EVs, though, the production of this clean-energy technology is anything but clean. China has become the global leader in photovoltaic cell production, as the result of an industrial policy by which the government, including regulators, state-owned banks, and other arms of official authority ease every step of the way. A Nature Scientific Report study earlier this year found a sixfold increase in energy and water usage for the processes involved in manufacturing silicon cells between 2010 and 2020. That is expected to rise 70 percent by 2030. At the same time, credible findings of forced labor in Xinjiang for solar-panel manufacturing contributed to U.S. passage of the Uyghur Forced Labor Production Act in 2021. The FLPA has resulted in the blockage of thousands of panels from entry to the United States.
None of this is surprising. In its zeal to industrialize, Beijing has long abused the basic human rights of its citizens and shown scant regard for the environment. The push into alternative-energy technology is just following that same trend. What we’re seeing through the impacts of extreme weather, though, is in large part the wages of failed policies. Desertification has led to the inability of the land to absorb or channel the rainfall that is wiping out urban areas, with flash floods washing away whole communities. Western media, under heavy censorship, reveal only snippets of these crises, but citizen journalists have documented dozens of dam breaches, road and bridge collapses, and other failures resulting from shoddy “tofu dreg” construction compounded by weather extremes. “Tofu dreg” has for years referred to poorly designed and managed government construction projects. Over the decades, tens of thousands of Chinese have been killed by failed infrastructure. This will worsen as government industrial policy rushes into alternative-energy production.
The four walls of China’s structural challenges — demography, debt, overproduction, and environmental disaster — are interacting in a way that makes China’s problems intractable and increasingly irreversible by unilateral Chinese government action. Unfortunately for Beijing, this is happening at a time when there seems to be a policy bidding war under way between the two U.S. political parties as to which is tougher on China. Trade policy is the most obvious example. The Trump administration imposed a range of tariffs on China exports, including technology and agricultural and consumer products. The Biden administration continued most of those tariffs and added more, including a 100 percent tariff on electric vehicles. Not to be outdone, Trump proposes 60 percent tariffs on all Chinese exports and — just to be sure we’re paying attention — 200 percent on EVs.
This is quite a reversal from not that long ago, when among political leaders of both parties and their foreign-policy apparatuses there was a consensus that the PRC sought to be like us. That’s over. Everyone realizes now that China is more committed to disharmony and to undermining the existing rules-based global system than in being a constructive actor within it. Hence the American competition to be tougher on China. In part, that comes from each U.S. political party wanting to expiate the failures of policies that its forebearers left behind.
But just as policy-makers erred in prior assessments of China, it would be a mistake now to place too much weight on the belief held by some that that Beijing is outfoxing us on a strategic level and is an inevitable peer competitor to the United States or a standard-setter in leading-edge clean tech. Of course, we must prepare to counter China’s growing military capabilities and wiggle out of the stranglehold Beijing seeks to achieve on critical supply chains.
But we should acknowledge the significant challenges facing China in every dimension — economic, demographic, and environmental. U.S. policy should be grounded in that recognition. Policy-makers should accept that there is almost no way Beijing can reverse the momentum of its manifold challenges without assistance from the rest of the world. In one thoughtful example, Thomas Duesterberg of Hudson Institute suggested in a study earlier this year that the U.S. and like-minded countries could organize a collective approach to the South Asian “water commons” that are being so mismanaged by Chinese unilateral chauvinism now.
While the U.S. and its allies should maintain the capabilities to deter China’s potential military adventurism, we should also have the confidence to confront China with the clear recognition that we know how bad their circumstances are. We need them to know that we know. To avoid another generation of flawed Western policy toward China, we should be unflinching about what is driving China’s activities today and develop policies that are based on reality rather than either wishful thinking or worst-case assumptions.
The relatively short period of rule by the Chinese Communist Party and the ravaging of the natural world is inconsistent with the country’s history. China’s pre-communist culture was based on Daoism, Confucianism, and other philosophies that included respect for nature and finding ways for technologic advances to move downwind and downstream, so to speak. By contrast, the Communist Party’s hammer-and-sickle attempts to impose human supremacy over the natural domains is a recent development. The party has attempted to reverse the flow of rivers to serve cities and has engaged in other nature-busting advancements, such as the Three Gorges Dam, high-speed railways into the desert, and grotesque, mostly empty high-rise office buildings that cause cities to sink into the earth. In 75 years of communist rule, thousands of years of respect for nature has been upended.
In contrast to command-and-control dictates, openness, transparency, and adaptability are needed. Policy-makers in the U.S. and other developed countries have shaken off years of self-delusion that China has invented a new economic model. That assumption led to poor policy choices by the West until quite recently. But it’s important now not to misread China again and fall into the trap of believing that the PRC is leapfrogging the world in new technology and that it will save the planet along the way. The opposite is more likely: The rest of the world may at some point need to save China.