Environmental Engineering Reference
In-Depth Information
FDI in China
China's economy is the fourth largest in the world, with a GDP of $2.7 trillion in 2006,
but the second largest in the world on a purchasing-power-parity basis. It continues to
grow rapidly, with an average annual growth rate of 10 percent since 1978 (Xinhua, 2007).
The success of China's economic development strategy has lifted 400 million people out
of absolute poverty, although an estimated 200 million remain in poverty (World Bank,
2007).
Until 2007, China's economic growth strategy was investment and export led. The
Chinese government poured its own resources into its own
rms while simultaneously
requiring them to improve product quality, to export more and more to integrate China
into the global economy, and to improve competitiveness. The government also actively
pursued FDI. Between 1990 and 2000, China received $30 billion per year in inward FDI
on average, but this amount has grown substantially since then, with China receiving $69
billion in 2006, accounting for 18 percent of total FDI into developing economies
(UNCTAD, 2007).
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The environmental situation in China
The environmental situation in China is becoming increasingly grave as its unfettered eco-
nomic growth continues. By nearly every indicator of environmental quality, the situation
is getting worse. Sulfur dioxide emissions rose 42 percent between 2000 and 2005. Soot
emissions rose 11 percent during the same time period. Water pollution is also a serious
problem. Between 2001 and 2005, on average 54 percent of the water from the seven main
rivers was deemed unsafe for human consumption (World Bank, 2007). One-third of
China's cities do not have wastewater treatment plants (CCICED, 2008). Acid rain costs
9 billion yuan annually in crop damage. A recent report estimated that, in total, water and
air pollution costs in 2003 were 362 billion yuan, equivalent to 3 percent of China's GDP
that year (World Bank, 2007). Other estimates of the economic cost of China's pollution
have been much higher. The situation has become so dire that local protests have become
strikingly frequent. In 2006, Minister Zhou Shengxian of China's State Environmental
Protection Administration (SEPA) announced that there were 51 000 environmental
protests in 2005, nearly 1000 per week (Economy, 2007). In many of these cases, dumping
of hazardous wastes and toxic substances into local water supplies is a primary cause of
protest. In terms of climate change, Chinese carbon dioxide emissions are rising rapidly.
In 2007, China surpassed the USA in terms of total aggregate greenhouse gas emissions,
although its per capita emissions are approximately one-
fth those of the USA, now the
second-largest emitter of greenhouse gas emissions (IEA, 2007).
Many of China's environmental problems are driven by its heavy reliance on coal.
China consumes twice as much coal as does the USA, and coal accounts for 70 percent
of commercial energy supply. In 2006, power plants and industry reportedly consumed
2.8 billion metric tons (tonnes) of coal, which was 70 percent higher than in 2001. The
growth in China's power sector has been incredibly fast, unrivaled anywhere else. In 1995,
power plant capacity was 217 GW. Five years later, in 2000, it surpassed 319 GW. Between
2005 and 2006, electricity generation capacity grew by 20 percent from 517 GW to 622
GW, nearly all of which was coal-
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red power (Zhao and Gallagher, 2007).
The Chinese government is actively tackling most of these environmental challenges
and is making some progress. Desulfurization equipment has been installed on 200 GW
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