Environmental Laws and Regulations
Since the promulgation of the Environmental Protection Law in 1979, the first of its kind in China, 5 pollution-control statutes and 0 natural resource conservation statutes have been enacted. The Environmental Protection and Natural Resources Conservation Committee of the National People’s Congress, the lawmaking arm, submitted a 5-Year Legislative Plan to the National People’s Congress in 1993. According to the plan, approximately 7 key environment and natural resource statutes will be created or amended by 1998, and more than 17 such statutes will be created or amended by the end of this century. The United States, by comparison, has passed approximately 21 major environmental acts in the last four decades.
The Energy Conservation Law was passed on November 1, 1997, and came into force on January 1, 1998. The scope of this law extends to energy from coal, crude oil, natural gas, electric power, coke, coal gas, thermal power, biomass power, and other energy sources. This law may be the harbinger of strengthened efforts by the Chinese Government to prohibit certain new industrial projects that seriously waste energy and employ outmoded technologies.
Despite the complex system of legislative and policy tools in place and the network of environmental officials throughout China, compliance with environmental regulations remains low, essentially because economic development remains the country’s priority at all levels of society.
As part of its efforts to strengthen environmental law enforcement, the government revised its criminal code to punish violations against the environment and resources. This step may provide law enforcement agencies with some power. However, the vagueness of standards in many laws and regulations, coupled with the lack of a comprehensive enforcement regime, has led to a situation where many environmental laws still reflect deals cut between the local environmental protection agencies, NEPA, other ministries, local government bodies, and the polluting enterprises. Thus, the degree of actual compliance and enforcement depends on the region concerned and the personalities involved. Often, the richer the potential investor, the more strictly environmental policy will be applied [86].
For the next decade or so, China’s rapid development will likely lead to further uncertainty in the regulatory regime. In the meantime, an increasing array of resources are being devoted to enforcement, and discussions are currently underway to elevate NEPA to ministerial status, which may give NEPA more leverage and authority in law enforcement. Nonetheless, many Chinese officials adamantly hold that economic development must come before environmental protection. They also disagree about how stringent environmental initiatives need to be to protect the health of billions of citizens while maintaining economic growth. This internal struggle enhances the paradoxical quality of Chinese environmental law, which may at once appear both simple and complex, or lenient and severe [87].
Using economic instruments – Harnessing the market
In its transition from a command to a market economy, China is trying to harness the market to work for the environment rather than against it. Continued and accelerated economic reform is a prerequisite to reorient state enterprises so that they respond to environmental penalties. Liberating international trade will give Chinese industry access to the latest environmental technology. The development of capital markets is necessary to provide financing to firms and municipalities supplying environmental infrastructure. Adjustments of the pricing system are needed to ensure that it reflects true environmental costs.
Despite the fact that China is resource-poor, it prices its energy and water far lower than the actual costs. However, great strides are being made to rectify this situation. Over the past 3 years, the government has raised and partly deregulated coal prices; in most areas, coal prices now cover the costs of production and delivery. In addition, many cities and provinces are currently preparing to increase sewage and water charges to consumers and industries. In Taiyuan of Shanxi Province, for instance, the price bureau has announced that water prices will quadruple over the next 5 years in order to recover supply costs [88]. Shanghai recently increased tap water prices by between 25 and 40 percent to fund water quality improvement programs and to make sewage self-financing. Guangzhou and Chongqing are eager to do the same [89].
The increasing market orientation of the industrial sector offers an opportunity to use market-based pollution controls more effectively. Achieving pollution control objectives will require increasing pollution charges. NEPA has proposed a 10-fold increase in the air pollution levy; this increase would go a long way toward reducing air pollutant emissions. Higher levies are needed both to lower current emissions and to finance the large investment required to achieve desired ambient air quality in Chinese cities. Currently, the pollution levies are assessed only on discharges that exceed the standard; in other words, emissions cost the polluter nothing until the standards are breached. Moreover, effluent charges are based on the pollutant that exceeds the standard by the greatest amount and do not reflect the risks posed by other pollutants. The World Bank has been working with NEPA to overcome these shortcomings. These two organizations are developing a system that incorporates both maximum discharge rates for all pollutants as well as incentives to encourage emissions at levels below the maximum allowed [90].
References and notes
86. Op. cit. 83, p. 1.
87. Richard J. Ferris Jr., “The People’s Republic of China: An Environmental Law Briefing for Corporate Council,” The Metropolitan Corporate Counsel (December 1997), p. 13.
88. Op. cit. 12, pp. 95<196>96.
89. Shuping Lu, Director, Shanghai Environmental Protection Agency, 1998 (personal communication).
90. Dr. Hua Wang, Consultant and Principal Economist in the Environment, Infrastructure, and Agriculture Division, Policy Research Department, The World Bank, Washington, D.C., 1997 (personal communication).
