Tuesday, December 05, 2006

"Environmental Colonialism": The China Blame Game

Thanks to China Law Blog "China Law Blog focuses on business law in China" for highlighting this post in the Washington Post.

This Washington Post article is quite remarkable for its ability to highlight so many issues of central interest to this blog.

China's Foreign Business Blame Game

The Washington Post today (in its Sunday edition) ran an article, written by Elizabeth Economy, on how and why China is blaming foreign companies for China's own pollution problems. Entitled, "Blame Game China Needs to Stop," the article discusses how China is seeking to diffuse international criticism of its environmental record by "launching a political campaign that lays much of the blame for the country's mounting environmental problems squarely on the shoulders of foreigners."

The Washington Post article is an interesting one - the meat of it is posted below.
China has already embarked on a very different strategy to manage its environmental reputation: launching a political campaign that lays much of the blame for the country's mounting environmental problems squarely on the shoulders of foreigners and, in particular, multinational companies.

While still in its initial stages, the campaign has gained steam over the past month. Senior Chinese officials, the media and even some environmental activists have charged multinational firms and other countries with exporting pollution, lowering their environmental manufacturing standards and willfully ignoring China's environmental regulations. Faced with growing international and popular discontent over the country's environmental crisis, China's leaders are tapping into anti-foreign and nationalist sentiments to deflect attention from their own failures.

In late October a top environmental official, Pan Yue, accused the developed countries of "environmental colonialism": of transferring resource-intensive, polluting industries to China and bearing as little environmental responsibility as possible. At the same time, a leading member of China's National People's Congress claimed that foreign companies were not only exporting their waste but also underpaying Chinese workers. When a Chinese nongovernmental organization released a list of 2,700 companies cited for violations of China's water regulations in late October, the ensuing media frenzy focused exclusively on the 33 multinationals, including 3M, Panasonic, PepsiCo and DuPont, and ignored the more than 2,600 Chinese companies similarly cited. Not surprisingly, Chinese bloggers have taken up the call, discussing the "eco-colonialist" policies of multinationals and calling for "eco-compensation." Even environmental activists who have worked closely with multinationals have accused these corporations of not practicing what they preach.

This paragraph is quite astonishing really - I would like to see the China Daily article that alludes to these injuries and deaths.
Perhaps nothing is more troubling to China's leaders, however, than the environment's contribution to domestic social unrest. In May, China Daily reported that there were 50,000 environmental protests in China in 2005. Some of these demonstrations engaged upward of 30,000 people and resulted in serious injuries and even deaths. In such a climate, scapegoating foreigners can be an attractive policy option.

The conclusion of the Washington Post's article is below.
The environment has been one of the most fruitful areas of cooperation between China and the rest of the world for almost two decades. Billions of dollars in environmental assistance have flowed to China from foreign governments and international organizations. In most cases, multinational firms have been at the forefront of raising China's environmental standards, transferring best practices and cutting-edge technologies, and supporting a range of broader environmental initiatives. China should not risk all this -- and its own environmental future -- for the short-term and largely illusory benefits of playing an environmental blame game.

The sentiment expressed above is, in essense, the driving force behind a series of academic papers that we currently writing. The question we are addressing is whether "environmental spillovers" exist. This work builds on the FDI spillover literature (of which there is a vast number of papers). Eskeland and Harrison (JDE) "Moving to Greener Pastures? Multinationals and the Pollution-haven Hypothesis" is one of the first papers to investigate this issue. This post provides excellent motivation for continued study in this area. Our initial results suggest that there are environmental spillovers and that MNE's are generally cleaner than domestic firms and that firms "within" the MNE's supply chain may also improve their environmental management systems. Whether MNE's are good or bad for the environment relates to the standard "Scale", "Composition" and "Technique" effects that are the foundation of Pollution Haven and Kuznets Curve studies.

If anyone is aware of a firm level data set that is available for China (that includes an energy use variable or such like) we would be grateful for any information. We have so far been able to find any such data (that is publically available). The data certainly exists in some form but getting it appears to be a whole lot harder.

Aside: can Elizabeth Economy be her real name? I wonder how many Economys there are in the US?

1 comment:

Anonymous said...

Thanks for the comment. This is also our "sense" and as academics we want to use micro-econometric analysis to "prove it". If such work is published in a respected journal it provides weight to argument against propaganda that says otherwise.

This is a complex issue and there is no doubt that MNEs do cause some problems (see some of our previous posts) but the fact remains, ceterius paribus, that "globalisation" can be benefical to the global environment.