This January, a new law took effect in China designed to give more emphasis to environmental protection and more powers to enforcement agencies. DW speaks to IHS analyst David Yang about its implications.
For the first time in years, China made amendments to the country's environmental protection laws in April last year as part of its efforts to tackle the increasingly worsening pollution problem. On January 1, China's amended Environmental Protection Law or EPL took effect. It significantly strengthened environmental enforcement provisions, most significantly introducing uncapped fines assessable daily for each day of non-compliance.
More than three decades of industrialization and rapid economic growth have led to deteriorating air, water and soil quality in the world's second largest economy. However, according to a recently released analysis, air quality in China's coastal regions and cities has modestly improved over the past 12 months thanks in part to strict air pollution control policies.
The Greenpeace report found that while Beijing still ranked in the top five worst polluted provincial-level regions in China, the capital's PM2.5 concentration improved more than 13 percent compared to the first quarter of 2014, and industry-heavy Hebei province, just outside of Beijing, also improved 31 percent.
In a DW interview, David Yang, China expert at the global analytics firm IHS, says that despite the new measures, maintaining economic growth will continue to be the top priority in many regions. He adds that although foreign-based businesses face only moderate risks of selective enforcement, they appear likely to receive more severe penalties when sanctioned.
DW: What concrete measures or sanctions does the amended EPL entail?
David Yang: The EPL stipulates a range of penalties that are possible, including daily and one-time fines, suspensions, plant closures, and administrative detention of up to 15 days.
However, the EPL only provides a general framework. It does not stipulate, for instance, the exact fine amount to be levied for an illegal discharge of some specific amount. Detailed penalties are left up to the discretion of local Environmental Protection Bureaus, which are local branches of the Ministry of Environment Protection.
What impact are these new measures likely to have on the current pollution situation in China?
Maintaining economic growth will continue to be the top priority in most locales. However, in key metropolitan centers such as Beijing and Shanghai, the new measures should have some substantial impact on local sources of pollution. The problem, however, is that pollution is not a local problem.
Strict enforcement in Beijing will only have limited impact if factories in Inner Mongolia, for example, continue to pollute. The pollution situation in Shanghai should see some significant improvement, precisely because of a concerted effort by surrounding provinces and provinces upstream along the Yangtze River to crack down on pollution.
What will the enforcement of the law depend on?
I would say the decisive factor is the state of the local economy. Localities with robust economies and less dependent on traditional, high-pollution industries can afford to enforce the law more vigorously.
What regions and industries have been most affected by enforcement sanctions so far and why?
Recent patterns suggest that enforcement will continue to be the strictest in eastern coastal provinces, around major population centers such as Beijing, Tianjin, Henan, and along the Yangtze and Pearl Rivers. Sectors such as coal and other coal-fuelled industries, chemicals, steel and cement will also receive extra scrutiny.
Although foreign-based businesses face only moderate risks of selective enforcement, they appear likely to receive more severe penalties when sanctioned, due perhaps in part to their reluctance to engage in protracted negotiations with regulators.
In the report I published on China's implementation of expanded environmental regulation, I mentioned the Beijing plant of the US processed food company Simplot, which supplies potato products to McDonald's restaurants. They were recently hit with a $630,000 environmental fine, the largest ever issued in Beijing and quite probably a record in China nationwide.
Have the enforcement sanctions led to any improvement in air or water quality?
As I mentioned above, enforcement has been variable, and improvements have also varied from city to city. In Beijing there has been some improvement. In Shanghai there have been more significant improvements. Seasonal factors also play a role so it's too early to assess the full effects yet.
Will this be enough to tackle China's pollution woes or is it just one step?
It's one step in the right direction, especially since so much of the detailed regulation and enforcement is left to the local authorities.
David Yang is analyst for China, Country Risks & Economic Forecasting, at the global analytics firm IHS.