What to make of China’s pollution crackdown?

To judge from their recently published official biographies, China’s new President and Prime Minister – as well as many of their newly appointed colleagues on the country’s Politburo Standing Committee – have spent most of their lives fighting against pollution.

Which might say a lot about their good intentions. But – to judge from Beijing’s smog cloud, or the dead pigs in the river supplying Shanghai’s drinking water – if that’s the best they can do, China’s Communist Party must have selected just about the most ineffectual wimps to lead a major country since the Roman Emperor Caligula threatened to appoint his horse Consul around AD 40.

They haven’t of course. The uncritical praise China’s State-controlled press showers on its leaders isn’t meant be taken seriously (any more, BTW, than Caligula’s threat to put his horse in charge was): it’s simply official China’s way of indicating priorities. China’s new premier (Prime Minister) Li Keqiang and its President Xi Jinping have spent a large proportion of their public utterances since being confirmed in their new jobs preaching the importance of breathable air, drinkable water and production systems that use fewer resources. Those biographies are simply their colleagues’ way of emphasising that no-one of any importance particularly disagrees.  

But what are they planning to do about it? There’s clearly no shortage of rhetoric.

In his introductory news conference Li went outof his way to stress his government would fight to solve the country’spollution problems "without mercy and with iron fist". After yet another drinking water scandal, Xi reportedly told officials from the area near the polluted Lake Tai in eastern China “The standard that Internet users apply for lake water quality is whether the mayor dares to jump in and swim,” In early March, Yang Donghui, director of the China National Textile and Apparel Council (CNTAC), said of new environmental standards that “Companies who fail to keep up with the [State Council’s] requirement will be phased out."

But it’s not altogether clear what these requirements are. China's State Council issued a directive in February for the creation of a 'circular economy' in China that systematically reuses waste materials and reduces pollution: this has been China’s policy for some time – but, though there are useful targets in its current 12th five-year plan (covering 2011 to 2015) there is little sign of any substantial improvement in air or water quality.

For the garment and textile industry, it seems to me there are three completely different kinds of Chinese rhetoric.

-                    Mandatory. The 12^th Five Year Plan requires of the textile industry that by 2015, the use of recycled fibres should grow from negligible quantities today to 8 mn of the country’s forecast production of 51.5 mn tonnes (15% of the total), energy input per unit of output should fall by 20% the use of water per unit of output should fall 30%.  These are mandatory. But with production forecast to increase, these requirements do not of themselves mean less demand on resources.

-                    Judgemental. A substantial proportion of China’s worst pollution scandals comes from facilities being constructed or run illegally, or with deceptive previous estimates of their environmental impact. Much of the politicians’ “iron fist” rhetoric is about this kind of thing, and businesses should expect a raft of decrees closing factories built illegally and show trials of officials accepting

-                    Advisory. CNTAC’s Yang Donghui said in private that the council has developed its own sustainability promotion policies, including 35 green production projects covering emissions reduction, environmental protection and recycling. These will be rolled-out in the next decade. The State Council’s “circular economy” directive encourages measures promoting "water conservation, energy efficiency, developing alternative bio-based fibres, and producing recycled fibres." These appear to include in the textile industry “the utilisation of biodegradable slurry, as well as using new processing technologies such as digital printing, airflow dyeing and cold pad-batch dyeing.”

For businesses, the tricky problem is the last group. Is this a list of things that are going to be mandatory – or just a few examples of best practice the state Council is suggesting businesses follow to meet important goals? And, though the leadership’s commitment to clean air and water is almost certainly as rigid as its commitment to economic growth and the dominance of the Communist Party, how wedded is the government to the minutiae of achieving a less toxic environment? How does the leadership intend solving the inevitable conflicts between growth and environment – and in a country of 1.2 billion people, does it really believe there’s one best solution to all those conflicts that works everywhere, all the time?

 China wants economic growth, and its Five Year Plan requires a shift from low-value commodity manufacture to higher value, more specialised operations. It’s not at all clear that airflow dyeing, for example, is a more efficient way of achieving sustainable high value production than aqueous dyeing with zero liquid discharge technology. The likelihood is that there are all sorts of optimal solutions for maximum growth with minimum pollution – and that which is right will vary from problem to problem

In the West such an issue would be handled relatively straightforwardly: governments would set standards for water use and emissions, and implement them after widespread – and relatively open - industry consultation. Consultation would involve all those involved in the process (whoever owned them), and usually involve foreign trading partners. Businesses likely to be affected would be given warning of changes, and have time to protest or adjust

The Chinese government, though, has a great deal of confidence in its micromanagement skills.  It did not ensure its garment and textile industries survived the 2008 crash far better than competitors anywhere else by deep, rule-based, consultation: a group of committed Party functionaries talked to the people they trusted, developed a plan that looked right and got on with – without communicating the detail to people they thought didn’t need to know.

It’s impossible to predict how China will solve this – and how long pollution will remain problem number one. The crucial thing, I’d suggest, for businesses is to attempt to influence the outcome in a similar way to how they’d do it in the US or UK: join local or industry business associations, and use them to lobby local and national decision makers.

China doesn’t want to lose prosperous businesses, or even to force foreign businesses out of the country. Demonstrating in a specific industry how a Western company can help China marry its growth and environmental objectives is potentially good both for China and for Western companies’ long-term future there.  

I’m certain China’s new found environmental obsession isn’t greenwash: citizen fury at the filth they’re surrounded by is becoming a big a threat to the Party’s control as continuing poverty was always expected to be. But whether today’s enthusiasm survives all the other pressures senior politicians inevitably find their inboxes full of is a completely different question. Western business can only help themselves by demonstrating they have techniques that help politicians achieve their environmental objectives.