Environmental Engineering Reference
In-Depth Information
vehicles with larger engines in an e
ff
ort to encourage consumers to buy smaller, e
cient
cars. This system took e
ff
ect in 2006.
FDI and the environment in China
Because there has been so much foreign investment in China, there are now more cases
where one can examine the extent to which FDI has been correlated with environmental
technology leapfrogging as compared with cases available regarding other countries. The
evidence is mixed.
In some cases, FDI has contributed to better environmental performance. Eriksen and
Hansen (1999) describe the joint venture between Novo Nordisk and Suzhou Hangda
Group, which introduced a production process that eliminated the discharge of
untreated water in accordance with Novo Nordisk's own corporate environmental poli-
cies. Christmann and Taylor (2001) argue that global ties increase 'self-regulation' pres-
sures on
fi
rms in 'low-regulation' countries in a sample of 188
fi
rms operating in China,
and in particular, they showed that
rms that were providing products to multinational
corporations in China or to foreign customers were more likely to adopt the ISO 14000
system than other
fi
rms. In the case of wind energy development in China, China's large
government wind tenders have local content requirements that increased from 50 percent
in 2003 to 70 percent at the time of writing, in essence requiring foreign
fi
rms to look for
ways to shift their manufacturing base to China (Lewis and Wiser, 2007). In general, the
case studies of positive environmental spillovers in China seem to show that when there
are environmental corporate norms on the part of the foreign investor or when a product
is being exported to a country with higher environmental standards, then the Chinese-
foreign joint venture
fi
rm will acquire and use cleaner technologies.
On the other hand, there are numerous cases where no environmental bene
fi
fi
t is associ-
ated with FDI, putting aside the large potential 'scale' e
ect that one would expect to
result from the FDI spurring greater economic output, which in turn will increase pollu-
tion, all things being equal. Xian et al. (1999) provide several examples of poor environ-
mental performance by foreign investors in China, particularly on the part of other Asian
investors in the toy, leather, footwear and plastics industries. Ohshita and Ortolano (2002)
show that in the case of the clean coal technology transfer program of the Green Aid
Program of Japan's Ministry of International Trade and Industry, there was a total failure
of deployment of cleaner coal technologies due to the lack of e
ff
ective mechanisms to
enforce the environmental policies that would have made the use of clean coal technolo-
gies mandatory. Since the policies were not enforced, there was no need to pay additional
money to transfer more expensive technology to China. In his examination of the chem-
ical industry in China, Stalley (2005) also found that the simple lack of enforcement of
existing environmental laws in China created a disincentive for cleaner technologies to be
transferred and utilized.
ff
Technology transfer in the Chinese auto industry
The US auto industry was among the very
fi
rst industries of any kind to invest in China.
The
rst investment was that of American Motors Corporation (AMC), maker of the
Jeep brand all-terrain vehicle at the time, when AMC formed a joint venture with Beijing
Auto Works (BAW) in 1983. Shortly thereafter, German
fi
fi
rm Volkswagen was the second
foreign
fi
rm to invest in the automobile industry, forming its own joint venture with the
