MAC: Mines and Communities

China Update

Published by MAC on 2006-02-23

China Update

23rd February 2006

Introducing "green accounting" to a state in the throes of massive and often indiscriminate industrialisation sounds encouraging. Yet, according to conventional GDP figures, China will have to spend more on containing pollution than it reaps in accelerating "growth".

As the regime turns increasingly to nuclear power to meet energy demand, so this "quick fix" looks more and more chimerical. Thirty projected plants will deliver only 4% of estimated energy needs by 2020, but require massive inputs of uranium from other countries.

In this update, we're also happy to publish four articles from the World Watch Institute's "China Watch" site. They deal with China's neglect of the rights of its Indigenous Peoples; the impacts of acid rain; the continued dumping of hazardous wastes - notably mercury - into waterways; and attempts to address the vastly increasing problem of so-called "e-wastes."

The country's galloping export of electronic products - rich in the highly toxic metals cadmium, lead, hexavalent chromium, as well as mercury - will suffer from European Union regulations, due to come into effect this July.

At the same time, the regime is framing compulsory legislation to impose limits on the import of hazardous substances which are stricter than those of the EU itself.

China Faces Uphill Battle to Turn its Growth Green

by PlanetArk, BEIJING

22th February 2006

There are days in Beijing the smog is so thick residents can stare straight at the sun.

Residents of the 2008 Olympic Games host city watch the air quality index like they do the weather forecast.

Some Chinese cities may dazzle with gleaming skyscrapers and some rural backwaters have been transformed into industrial hubs, but more than two decades of 9.5 percent annual growth have come at a cost.

Now the country is trying to calculate exactly what price it is paying for choking smog, poisoned rivers and toxic waste, floating the concept of a "Green GDP" index likely to be debated at the annual parliament session that convenes on March 5.

"Green GDP deducts ecological and environmental losses. It is able to more fully test and measure the quality of economic development and avoid false achievements," Pan Yue, deputy chief of China's environment body and its most outspoken green crusader, said in an interview with local media.

It's an idea that fits with the model of development that the leadership under President Hu Jintao and Premier Wen Jiabao has been trying to project, one of tempering the pace of economic growth with a focus on balanced growth.

The changes are likely to be tough to implement. Local leaders are accustomed to being judged on growth above all else and would be fearful that stricter environmental controls would impact their bottom line.

A first step, analysts say, is establishing a system of green accounting to get a more accurate idea of the costs associated with degradation.

"It is evident to any thinking person that things need to be changed. What is not clear is what strategy to use," said Andres Liebenthal, an environment specialist at the World Bank.

A number of pilot projects are under way to test green accounting systems, but there are a whole series of instruments that could be adjusted if a complete green GDP system were adopted, including pricing systems and natural resource taxes.

"The price of water only reflects the transport and treatment, for example, not the scarcity value or the costs associated with pollution," said Liebenthal.


While Green GDP is an idea popular with top leaders trying to keep a growing gap between rich and poor in check and counter social instability, it is also likely to be less appealing to local officials after investment dollars and tax revenues.

The government is trying to change that, with wide-ranging regulations that aim to integrate environmental losses into the measurement of regional development - and into the evaluation of local officials.

"If you really want to change, you need to develop a system in which the environment is a parameter that plays a more and more important role in the status or evaluation of local officials' behaviour," said Zhang Jianyu, China manager of US-based Environmental Defence.

But with China home to 20 of the world's 30 most smog-choked cities, with some 400,000 premature deaths a year linked to air pollution and with degradation a frequent cause of riots, the need to transform near-daily pledges to clean up the environment into action is becoming ever more acute.

"Estimates maintain that 7 percent annual growth is required to preserve social stability. Yet the costs of pollution are already taxing the economy between 8 and 12 percent of GDP per year," Nathan Nankivell, a researcher at Canada's Department of National Defence, wrote in a recent report.


In the Zhejiang town of Xinchang, it took a riot to shut down a local factory that had been dumping its waste into the river. The factory may have provided revenue to local authorities, but the question for residents was at what cost.

"The situation has been better since the protest but of course there has still been a negative impact on us. Just look at the crops," said one resident surnamed Song, gesturing toward the poisoned fields from the window of her small shop.

The Xinchang protest was one of three riots in Zhejiang alone last year over pollution.

Across the country, China has earmarked $3.3 billion to clean up the Songhua River in the northeast, poisoned last November after an explosion at a chemical plant caused a toxic spill that contaminated drinking water supplies for millions.

Economists vary on just how much environmental woes are costing. The World Bank estimates air and water pollution cost China about 8 percent of GDP.

But different provinces may have vastly different costs. For example, in Shanxi - China's top coal-producing province - if environmental degradation and pollution were incorporated into GDP calculations, they would negate all growth for the past decade, a Deutsche Bank report cites officials there as saying.

Despite the economic imperative, analysts say China's environmental leaders are likely to have a tough sell ahead of them to make Green GDP a meaningful policy.

"It's a very good idea," said Environmental Defence's Zhang. "But the practicality of that and how applicable it is in local situations is something very hard to do."

Story by Lindsay Beck


China Warns Officials against Covering up Pollution

by PlanetArk, BEIJING

22th February 2006

China has warned local environmental protection officials that they will be punished if they allow or cover up damage to the environment in favour of economic growth, state media said on Tuesday.

China has been struck by a steady string of environmental crises, including a river pollution case that left millions in northeast China without drinking water for days, and degradation of the environment has become an issue threatening growth, social stability and public health.

"China's environmental problems will be four or five times as bad 15 years from now if it continues in current energy consumption and pollution trends," Zhang Jianyu, a visiting scholar at Tsinghua University, told the China Daily.

A new regulation that took effect on Monday set out penalties for officials who approved projects that had not passed environmental impact assessments, improperly cut or cancelled fees for industry waste discharge, held back or falsified reports or tried to cover up accidents, the China Daily reported.

"By cracking down on corruption and environmental destruction, we are correcting the wrong principle of pursuing fast economic growth by sacrificing environmental quality - which is a principle held by some local officials," Liu Yufu, vice minister of supervision, was quoted as saying.

The State Environmental Protection Administration (SEPA) has struggled to get regional officials, under pressure to spur economic growth, to comply with its policies, and the new punishment rules may be no different.

"SEPA is busy handling highly frequent environmental accidents. It is hard for SEPA to spare more manpower and resources into pushing the regulation to every corner of the country," Zhang told the newspaper.

Earlier this month, the watchdog named and shamed 11 companies for heavy pollution from their factories and told them to clean up offending projects or face closure and fines.

The southern boomtown of Guangzhou has followed up on that policy by ordering nine major local factories, including a chemical plant on SEPA's blacklist, to move away from the city centre to reduce pollution, the newspaper said.

Water pollution has become a major national concern since a blast at a chemical plant in November poured cancer-causing benzene compounds into northeast China's Songhua River, forcing water supplies to be cut off to millions.

The head of SEPA was forced to resign after the spill, which became an international incident as the river flows into Russia.

But a string of similar accidents have been reported since the Songhua crisis, the latest a release of toxic chemicals into a river in southwest Sichuan province that has disrupted water supplies to 20,000 people since last week.


China Seeks New Nuclear Designs Using Less Uranium


22th February 2006

China's ambitious nuclear power plans could tighten global supplies of uranium, leading the nation's power developers to pursue designs that use less of the raw material, industry executives said on Tuesday.

Beijing plans to quadruple installed nuclear power capacity to 40 gigawatts by 2020, a plan which requires developers to start construction of two or three 1,000 megawatt units each year.

"We are developing new technologies since the price of uranium is going up," Shen Rugang, deputy general manager of China Guangdong Nuclear Power Holding Co., told reporters at an energy forum in Shanghai.

"But technologies like fast-breeder reactors allow us to extend the life of the uranium, and eke more out of it."

World uranium prices have more than tripled since 2004 to about $35 a pound, as nations trying to cut pollution take another look at nuclear power. China's plan to build as many as 30 new reactors has galvanized new exploration and investments.

Fast-breeder reactors, a concept under development since the 1960s, are designed to produce more nuclear fuel than they consume.

China could consider joint ventures to explore for and mine uranium in countries like Australia, said Shen Wenquan, a vice chairman at China National Nuclear Corp, without providing further details.

"Uranium prices are up a lot and given current developments, they are likely to continue to rise. But they are still low in comparison with fuel prices for oil-fired plants," Shen said.

Electricity generated by nuclear plants is still cheaper than that from coal-fired plants in southern and coastal China, where coal transport costs are highest, partly due to port congestion, he said.


Despite the massive expansion, nuclear energy's share will only rise to 4 percent of China's generation capacity by 2020, from about 2.3 percent now.

"Under this plan, the proportion of nuclear energy in China's energy mix doesn't change much, but the big question is where will they get the additional uranium?" said infrastructure consultant Michael Komesaroff of Urandaline Investments.

Two units of the Tianwan plant are due to be completed in April and December, bringing China's installed nuclear power capacity to 10,350 megawatts (MW).

Work began late last year on a 1,000 MW unit of the Lingao plant, in Guangdong Province, with another two 650-MW units due to start construction at the Qinshan plant in March.

Three foreign companies are still vying for $8 billion in contracts to build four reactors at the Sanmen and Yangjiang plants that will incorporate new technologies.

China will likely compare the performance of foreign-built reactors with a Chinese model, slated to begin construction in 2012, before finalising which version to emphasize from that point forward, said Paul Felten, a senior vice president at Areva, a partner in one of the bidding consortia.

"It's such a large market, we can't allow it to be controlled by foreigners. We need to promote our own Chinese designs, especially after 2012," CNNC's Shen said.

China's late expansion of its nuclear program brought an added advantage, by delaying the day it would have to deal with radioactive waste, Shen said. The nation is studying a plan for deep waste storage in its deserts, probably in Gansu.

Story by Lucy Hornby


Local Group Nurtures Indigenous Voices in Development of China's West

by Lila Buckley, China Watch

21th February 2006

Nestled in a small building complex in the heart of Kunming in southwestern China, the Center for Biodiversity and Indigenous Knowledge (CBIK) is easily overlooked. But behind its modest headquarters, this 100-member strong organization is changing the face of development in China's remote western provinces. By providing channels for ethnic minorities to voice their concerns, the group hopes to foster greater understanding of indigenous issues in development both locally and in the nation as a whole. "Unless local people have a way to speak out about the unintended consequences of resource exploitation projects, there is no way the general society can find out what is really going on," explains Li Bo, head of the Zhongdian Field Base of CBIK's Community Livelihood Project.

In a China that lacks strong legal infrastructure and civil participation, CBIK hopes to play a key role in helping the government both implement its own regulations and hold investors accountable for their social and environmental practices. In recent years, China has passed numerous laws and policies in support of environmental impact assessments, civil participation, and environmental rights in an effort to quell growing civil unrest. "I think that there is a legitimate concern now across all levels of government that the environmental crisis might get out of control," speculates Li, noting that the central government now sees environmental issues as "in their interest" to solve.

The recent flurry of policies is evidence that the government wants to "listen and respond to the needs of civil society," says Li. For example, the State Environmental Protection Agency (SEPA) not only enforces an Environmental Impact Assessment (EIA) law to "promote and standard­ize public participation" in the EIA process, but it has called for public feedback on the law itself. In 2005, a regulation was issued calling for "fast, professional dealing" with citizen complaints in all government bureaus. And a new "Four Rights Policy" guarantees rural citizens in particular "access to information, access to participation, access to decision-making, and rights to monitor projects that concern their livelihood."

In practice, however, development projects and private investors largely ignore these laws, and local government leaders often choose short-term economic gain over long-term sustainable development. CBIK dealt with one case in which an EIA was filed for a proposed cable car tourism project near Jisha village, within the Three Parallel Rivers World Heritage site, where the organization has done extensive fieldwork. "The report was a joke," laughs Li, "In the section where they were required to gather local opinion on the project, only one farmer was consulted in the village of over 400 farmers, and he was in support of it. We worked in that village for five years. We know everyone there but we didn't recognize the name. So we approached the villagers and they had not heard of that farmer either. What a fake!" In the absence of outside intervention, the project's investors would likely have been able to move ahead with construction without the required public review. But now, the permits have been postponed for at least another year while the EIA is further reviewed.

China's west is especially vulnerable to this kind of exploitation because there is rising interest in the largely undeveloped region, which boasts the country's richest natural resources and ethnic cultures. "The private sector is eager to come here because it is resource rich," Li explains. "And the government is eager to develop here because it wants to stabilize the unrest caused by the economic gap between the eastern and western regions." The problem, according to CBIK, is that the government is encouraging investment from coastal urban centers or from overseas, yet regulations and public participation in the region remain weak. "The result," says Li, "is investments that upset the fragile and pristine environments of the west, destroy the livelihood foundation of local people, and take resources away from the region."

While existing policies protect the rights of local farmers to voice their concerns and defend their rights, the Chinese legal system does not provide them adequate channels for exercising these rights. CBIK acts as a bridge between rural residents and the government policies that protect them. This type of support is especially needed in the west, where most minority groups lack formal education and are unfamiliar with concepts like statuary law or due process.

"Most of the villagers in Jisha I have worked with do not even know what a lawyer is," Li points out, "much less what a legal advisor could do for them or how to find one to protect their rights. Just getting villagers to come to a meeting about these issues is a huge effort for us." Moreover, many of the minorities do not have a written language in which to translate key documents—or if they do, often only the elite can read or write. "The result is a destructive cycle of investors who have every incentive to hide, escape, exploit, and distort the interpretation of laws, and locals who do not know the laws, have no access to them, and fear local authorities."

To escape this cycle, CBIK works closely with minority groups to educate them about China's legal framework, document their indigenous knowledge, and facilitate their participation in the development process. This year, the organization will also be collaborating with Conservation International's Critical Ecosystems Partnership Fund and Chinese law schools to conduct case studies in the western provinces, giving law students the opportunity to understand the region's unique environmental justice concerns.

Although western minorities "are fragile in the sense that they don't know their rights and they have very little resources to protect what comes out of their land, they are not fragile; in fact they are resilient," says Li. "They know their environment and have lived there for generations, adapting through many climatic and environmental changes." Rather than keeping these indigenous residents "poor and barefoot" forever, CBIK aims to involve them directly in the process of change, to allow new developments to happen at a pace to which they can adapt.

Acid rain, air pollution increasing despite counter measures

b y Zijun Li, China Watch

14th February 2006

In a recent study of overcast versus cloud-free days in China, researchers from the U.S. Department of Energy’s Pacific Northwest National Laboratory found that the amount of sunlight reaching the ground at 500 measurement stations in China fell dramatically between 1954 and 2001. This decline in solar radiation, which averaged 4.43 watts a square meter per decade, occurred despite an overall decrease in China’s cloud cover over the study period, according to the report. The authors surmise a link between the worsening haze and the country’s nine-fold increase in fossil fuel emissions since the 1950s.

China’s smog, caused mainly by emissions from power plants, vehicles, and other human activities, is seriously affecting urban air quality. In a 2003 World Bank survey of air pollution in 100 cities worldwide, more than 80 percent of the Chinese cities listed had sulfur dioxide or nitrogen dioxide emissions above the World Health Organization (WHO) threshold, according to the Worldwatch Institute’s Vital Signs 2005 report.

In Beijing, residents are warned to stay indoors during the spring duststorm season, and flight delays from heavy smog are common. In Guangzhou, fine particulate levels are up to five times U.S. safety limits. And in Hong Kong, sulfur dioxide levels rose by 41 percent in 2005 alone, threatening the city’s competitiveness as the free-trade center of Asia. For much of the year, the city is shrouded in smog and people can barely see across the famous Victoria Harbour.

Globally, China is home to 16 of the 20 cities with the most polluted air. Roughly one-third of the nation’s land area is exposed to acid rain, just one of the many environmental side effects of the 2.1 billion tons of coal produced and burned there last year.

Acidification now affects some 30 percent of China’s cropland, and the estimated damage to farms, forests, and human health is US $13 billion, according to the Worldwatch Institute’s State of the World 2006 report. Ozone, a pollutant formed from the incomplete combustion of fossil fuels, is threatening crop yields as well. A study by the Atlanta-based Georgia Institute of Technology showed that the range of ozone exposure in agricultural regions in the Yangtze River Delta and Hong Kong Island is enough to reduce yields by 10 percent or more.

Air pollution is not just a matter of aesthetics, but increasingly one of life and death. While smog-obscured skylines grab the headlines, the lingering consequence of deteriorating air quality has been a rise in serious health problems and premature deaths. Worldwide, short- and long-term exposure to air pollution has been associated with a variety of adverse health effects, including acute respiratory inflammation, asthma, and chronic obstructive pulmonary disease. An estimated 200 Chinese cities fall short of WHO standards for the airborne particulates that are responsible for respiratory diseases.

A recent study by a Chinese research institute found that 400,000 premature deaths are caused every year in China by diseases linked to air pollution. And China's Ministry of Science and Technology reports that 50,000 newborn babies are killed by air pollution a year. Poor air quality can also exacerbate other life-threatening conditions: a 2003 study in Environmental Health found that SARS (Severe Acute Respiratory Syndrome), a virus that swept through China and other parts of the world in 2003, is twice as likely to kill patients in China’s severely polluted areas.

The study showed that in regions with low air pollution, the death rate was 4.08 percent; in areas with moderate pollution, such as Beijing, it was 7.49; and in areas of high pollution, it soared to 8.9 percent. Scientists also worry that China’s pollution will accelerate the effects of global warming. China is already the world's second largest producer of greenhouse gas emissions. With coal production set to exceed 2.2 billion tons this year, emissions are expected to increase, contributing to rising temperatures and, among other effects, to accelerated shrinkage of glaciers on the Tibetan plateau, which feed many of the big rivers of Southeast and South Asia.

Moreover, the recent study by the U.S. Department of Energy suggests that the worsening haze may be masking the effects of global warming across central and eastern China, where daily high temperatures have actually decreased in recent decades. The authors warn that once the cooling mask is lifted, the pollution will likely accelerate the effects of global warming in these areas.

For China’s top officials, the sense of urgency is most keenly felt in Beijing, one of the country’s most polluted cities and the designated host of the 2008 Olympic Games. The city’s air pollution could become a major embarrassment if Beijing does not meet its environmental targets by 2008. Experts are speculating whether it is even feasible for Olympic athletes to run a marathon through streets where respiratory particulate levels average 3-4 times U.S. safety levels. The danger is real: on February 13, 22 runners were taken to the hospital, two in critical condition, after taking part in the biggest annual marathon in Hong Kong, which is currently experiencing the worst air pollution in months.

Beijing has already passed some of China's most ambitious environmental measures, and in 2005 it embraced 22 tough new rules, including strict controls on industrial smoke, automobile exhaust fumes, and construction dust. Tighter vehicle emissions standards were adopted in 2003, and some public buses now run on alternative fuels such as clean natural gas. Meanwhile, the city’s heaviest polluters, such as coking plants in the southeastern suburbs, have been relocated to neighboring cities, a move that has subsequently raised concerns about worsening air pollution in these areas. Despite citywide efforts and tighter environmental regulations, however, Beijing's air has become increasingly hazardous to human health.

In January, the city registered only 11 blue-sky days, the lowest figure for that month over the last six years. Although Beijing boasted 234 clear-sky days in 2005, 134 more than in 1998 (the year the city launched its “Defending the Blue Sky” campaign), the capital is experiencing ever-soaring motor vehicle growth, energy consumption, and construction in preparation for the Olympics. Greater efforts are needed, and the city’s best intentions must be implemented on the ground, in order to achieve WHO air quality standards by 2008.

EU "Green" Directives Cast Challenge to China's Electronics Industry

b y Zijun Li, China Watch

22th February 2006

European reaction to an ever-growing mountain of discarded cell phones, computers, televisions, MP3 players, and other electronics equipment has put companies in China and elsewhere in a scramble to respond.

Two recent European Union (EU) directives aim to boost recycling of old electronics, curtail use of hazardous substances in manufacturing, and improve the environmental performance of producers. But these tough "green" regulations could serve as trade barriers to electronics exports from China, the world's third-largest trading country.

The new EU directives apply to virtually every type of electronics product on the market, from household appliances and computer and telecommunications equipment to medical products and toys. The Waste Electrical and Electronic Equipment (WEEE) directive, which took effect in August 2005, calls for product end-of-life management, eco-friendly design, and life-cycle thinking. Meanwhile, the Restriction of Hazardous Substances (RoHS) directive, scheduled to take effect this July, prohibits the use of six hazardous substances—including mercury, lead, cadmium, hexavalent chromium, and brominated flame retardants—in all electronics exported to the EU.

China already suffers an annual loss of tens of billions of dollars in global exports due to standard non-tariff barriers, according to the World Trade Organization's 2005 World Trade Report. Chinese electronics exports to the EU amounted to US$380 billion in 2005, or roughly 30 percent of the country's total exports, reports Xinhua News. It is estimated that once both new EU directives are in force, they will affect $5.6 billion worth of Chinese exports to the region, causing a loss in foreign trade to the tune of $37 billion.

The RoHS regulation applies specifically to producers in the supply chain, requiring them to reevaluate the chemicals used in every component, product, and process. It is expected to have huge industry-wide effects, leading to higher material, equipment, and unit costs and to a need for increased worker training. Industry insiders estimate that the directive will lead to a 10 percent rise in production costs in China's electronics industry.

Together, the two directives will affect more than 6,800 Chinese electronics companies, though the most immediate effects will be felt by the small- and medium-sized enterprises at the bottom of the supply chain, which account for 30 percent of China's electronic product lines and already face pressure from multinational companies and larger domestic enterprises upstream. Guangzhou AC Panasonic recently announced that one-quarter of its 208 suppliers, which provide a total of 7,268 different assembly parts, would be unable to meet the standards imposed by the EU directives. Unless they can alter their technologies in time, these suppliers could rapidly lose their market share.

Despite the short-term downsides, over the longer term the EU electronics standards will undoubtedly play an active role in encouraging Chinese companies to pursue more sustainable product development. And since China isn't the only developing country affected by the directives, it has the opportunity to get ahead of the game by complying more quickly and enhancing its competitiveness in the EU market.

Statistics from China's Ministry of Commerce show that joint ventures and large domestic enterprises produce roughly 75 percent of the country's electronics exports. Since many of these companies have already begun integrating environment and health considerations into their operations, they will have an easier time complying. Many firms, including Phillip, Skyworth, Haier, and TCL, are making full preparations for the new directives, with some even implementing stricter requirements than WEEE and RoHS require. A recent Global Sources" RoHS Compliance Readiness survey indicated that 93 percent of electronics manufacturers in mainland China, Taiwan, Hong Kong, and South Korea expect to comply with the RoHS directive by the looming July 1 deadline.

On the legislative side, recognizing that such regulations will have a growing effect on its export trade, China has begun participating in international standards discussions. To date, it has developed 6,500 national product standards in line with international standards, or 40 percent of the national total. So far, however, only 20 or so standards have been approved by the International Organization for Standardization's International Electronic Commission, which oversees more than 17,000 standards worldwide.

Moreover, in correspondence with the European RoHS directive, the Chinese government is developing its own China RoHS law, which is likely to be broader in scope and even more comprehensive than the EU directive. The new legislation will apply to every participant in the electronics supply chain, from manufacturers and distributors to importers and retailers. And unlike the EU's "self-certification" approach, the new law will require every product to be tested before it is allowed entry into China. All products sold in China or imported to the country will be required to comply with the law as of January 2007.

Globally, the negative impacts of the high-tech industry are felt most keenly during the manufacturing and disposal of products.

According to the Worldwatch Institute's Vital Signs 2003 report, the total weight of fossil fuels and chemicals used to produce just one 2-gram memory chip is 630 times the weight of the chip itself. And today's consumers dispose of old computers every two years on average, compared with 4-5 years in the past. In the face of these challenges, more companies are trying to reduce their waste and emissions while also redesigning goods and production processes to be less resource-intensive—in a push to be not just eco-efficient but also "eco-effective," reports researcher Erik Assadourian in the March/April 2006 issue of World Watch.

Chinese companies aren't the only ones scrambling to adapt to the new RoHS climate in Europe. Communications and electronics manufacturers in the United States, Canada, and Japan are also seeking to make more reliable and environmentally sound products, an effort that should ripple along their supply chains. On February 7, Japanese manufacturer Toshiba introduced the Tecra M5, a notebook computer that is fully compatible with the new EU RoHS directive. A week later, U.S.-based Ample Communications, a provider of communications silicon for network systems, introduced RoHS compliant, lead-free MACs (Message Authentication Codes), components used in text messaging systems.

China's Rivers: Frontlines for Chemical Wastes

b y Zijun Li, China Watch

23rd February 2006

Three months after a chemical plant explosion contaminated northeastern China's Songhua River, a second large spill occurred on the upper reaches of the Yuexi River in southeastern Sichuan province, releasing toxins into a 100-kilometer stretch near the city of Yibin on February 14 and disrupting the water supply of some 20,000 people. The frequency of such incidents provides a powerful example of the pollution challenges the Chinese government increasingly faces, and has led authorities to reconsider the longtime trend of locating industries along rivers.

Riverside chemical and power plants, along with paper, textile, and food production facilities, are a leading source of pollution of China's rivers and lakes, an estimated 70 percent of which are now contaminated. A recent survey by the State Environmental Protection Agency (SEPA) showed that more than half of the country's 21,000-plus chemical plants are located along the Yangtze and Yellow Rivers. Many have not conducted environmental impact assessments and were built in locations that directly threaten drinking water supplies, groundwater, and coastal waters.

Jilin Petrochemical, the company responsible for the Songhua incident in November and China's largest producer of aniline, a benzene derivative, has discharged more than 150 tons of mercury into the river since the plant was built in the 1950s. China's paper industry, meanwhile, discharged 3.18 billion tons of wastewater into water bodies in 2004 alone, accounting for 14.4 percent of total releases. Such discharges have directly affected water quality in the nation: the tap water in downtown Chongqing, one of China's largest industrial cities, has been found to contain 80 of the 101 pollutants recently banned from drinking water under new national regulations.

Heavy industries are the primary vehicle behind China's 9.9 percent annual economic growth and are held up as the so-called "industrial pillars of the river valley." Riverside cities, keen to attract business investments, have frequently approved factories and industrial projects while ignoring the ability of riparian sites to handle the pollution. Many of these factories, including chemical plants and oil refineries, are producing above capacity as a result of surging market demand, increasing the risk of workplace incidents. The lack of pollution early-warning systems and emergency response mechanisms has also intensified the negative impact of plant accidents.

Prompted by the spate of recent chemical spills, SEPA issued a notice in February ordering that environmental accidents must be reported directly to the Agency or to the State Council (China's parliament) within one hour after being discovered. After receiving a notification, authorities must launch an immediate investigation into the incident. The disclosure system aims to provide the public with the latest and most accurate reporting, in an effort to avoid the misinformation and widespread panic that occurred following the Songhua spill in November.

Although China has stepped up efforts to clean up its rivers and crack down on plants that pose obvious environmental safety risks, progress has stalled due to a lack of funds and professional personnel. By mid-2004, for example, a five-year cleanup plan launched by SEPA in 2001 had received only one-third of the US$7.25 billion in planned investments. China has also invested $2.4 billion since 1994 to clean up the Huai River, the country's third largest and the primary water source for a sixth of the population. However, SEPA recently deemed the project a failure after a 2004 inspection showed that 31.5 percent of industrial polluters exceeded the maximum permitted discharge and 56.7 percent of water treatment plants were out of service. Moving forward with cleanup remains difficult because huge sums are also needed to relocate or shut down polluting plants.

Pollution treatment infrastructure, another key to preventing and alleviating serious contamination, has lagged in China as well. Due to lack of funds, some 85 water treatment plants along the Huai River, slated for operation by the end of 2005, have not yet been built. Wastewater processing is ineffective at several urban wastewater treatment plants, and some are not even operating. Across China, the government is keen to attract foreign technology and innovations to build and operate new water supply and sewage projects. Official statistics show that the potential commercial opportunity from these efforts could top $37 billion.

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