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Keeping China Afloat

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All eyes are fixed on China as it continues to churn out higher productivity volumes at faster revenue speeds.Photo of Water Pollution in ChinaThe Chinese even surprise themselves and cannot help but be amazed at the level of economic activity —and growing affluence — all throughout their country.

“This year the economy is growing so steadily and strongly, it looks like 10% GDP. Growth in general is tremendous despite people saying it will slow down.

If you go around China, you will be amazed,” said Zhang Xin, a 41-year-old native who manages a real-estate firm in Beijing. Zhang was interviewed by renowned financial journalist Maria Bartiromo of CNBC and the Wall Street Journal.

Li Xiaochao, a representative from China’s National Bureau of Statistics, said “the national economy is picking up in an all-round way…Except for fixed-asset investment, all major economic indicators have shown signs of acceleration.“

The Upside’s Downside

However, not everything is coming up roses for China. There is a looming cloud of worry that the economic status quo may take a nosedive as rapidly as it rose up. Hence, the Chinese government is preparing for the worst: an economy that is expanding so fast in such a short span of time that it may, just like a bubble, suddenly burst.

According to David Barboza of the International Herald Tribune, “The explosive growth was fueled by a huge trade surplus, booming retail sales and immense investments in new factories, roads, bridges, and real estate projects.”

But Barboza also pointed out that the good news sparked “fears that the economy was overheating” due to inflation rates rising as sharply as the economic growth rate.

“Analysts have said that Beijing is now under mounting pressure to raise interest rates or to allow its currency, the yuan, to further appreciate against other global currencies in an effort to diminish the trade surplus and ease pressure on the economy,” Barboza further wrote.

Even Xinhua, the official government information portal of China, released a report saying that Goldman Sachs “has allayed fears that China could emulate Japan’s 1980s bubble economy.” Goldman Sachs is one of the largest securities, investment banking and management firms in the world with its headquarters in New York.

A Case of Bad Water

Meanwhile, the photo of a somber-looking fisherman afloat on his boat on murky waters is published in Time magazine’s August 30, 2007 issue. The fisherman looks into the horizon at the approaching dusk, as if hoping for something better to come his way. The photo caption reads: Cambodian fisherman Bun Neang says the Mekong-fed Tonle Sap lake is yielding ever smaller catches—and blames China for it.

China’s economy might be moving faster than a speeding bullet despite anxieties of rising inflation rates, but its water initiatives are inching ahead much slower by comparison.

Recent economic reports are still raving about China’s astounding 11.9% annual growth from 2006; but the other side of this victory reveals the very bleak picture of a failing natural resource.

Demand vs. Supply

[Photo of Waste Pollution]“With a population close to 1.3 billion, the People’s Republic of China has the biggest hurdle when it comes to providing water supply and sanitation to its people,” the country’s profile from the Asian Development Bank stated. ADB’s main goal for the Asian region is to have “water for all.”

“Annual floods, drought, pollution, and soil erosion complicate the water problems even further,” the report continued.

As far back as 1998, word already spread that China’s water levels were starting to be at an unusually low average — more than 50% of the country had been affected.

“China’s annual renewable per capita water supply falls 50% below the UN-defined danger threshold for minimum social and economic stability in North China, a region that produces 45% of the country’s economic output and is home to 40% of its people,” John McAlister stated in his report for Deustche Bank in 2005.

Another report from the US Department of Commerce stated that “China is encountering severe water shortages, resulting from both a large population and water pollution caused by rapid economic develop- ment with a minimal regard for environmental impacts.” This executive summary, published by the International Trade Administration under the USDOC, further stated that “accelerated urbanization and high- speed economic growth in China continue to aggravate the water shortage problem.”

Moreover, only last year, China was tagged as the world’s most polluted country by the World Bank and placed second in a separate ranking by the The Blacksmith Institute, a nongovernment organization dedicated in solving pollution-related environmental projects, especially in the developing world.

Superstore No More

China’s water supply is seriously threatened. And should the Chinese government refuse to prioritize solving the nationwide water crisis, the move could jeopardize not only their booming economy but, most of all, the world’s water supply.

Worsening levels of water pollution as well as a looming global water shortage may just be the culprits to end China’s reign as the superstore to the world.

The world’s most populous country is already feeling the impact of its inadequate water initiatives.

“China’s fish- and seafood-farming industry is worth around $35 billion and the country is the largest exporter of seafood to the US, where imports totaled about $1.9 billion last year,” stated a story in the July 2007 issue of Asia Weekly.

But over 60% of these US-bound seafood imports from China were stopped at port in 2006 because the US Food and Drug Authority “seized ‘filthy’ frozen  scallops, and catfish, eel and shrimp laced with banned chemicals, unsafe additives, pesticides and other cancer-causing agents.”

More than 11 Chinese coastal cities are home to seafood products that are distributed around the world. “Pesticides, including DDT, which was banned in China in 1983” were found to have contaminated the coastal waters, including those in Guangdong, where “large deposits of oil, lead, arsenic, mercury, and copper” were found by the Chinese Academy of Sciences.

“In light of this,” the Asia Weekly story continued, “some US Congress members are pushing for even tougher measures against Chinese imports.”

Proactive Measures

Yet developments are underway in the fight against increasing levels of pollution in China. The ADB reports at least three pursued initiatives for cleaner water in 2007 alone. These efforts include a build-operate-transfer project for wastewater management, a public education program for river cleaning, and another involving Shanghai’s preparation for climate change.

Meanwhile, The Economist reported an increase in venture-capital investments for projects related to environmental cleaning and restoration as of 2006. “Venture-capital investment in clean tech in China is picking up, increasing by 147% from $170 million in 2005 to $420 million last year,” said the report.

The Economist qualified that although most investments will be used for the development of solar power, “several initiatives aim to promote the development and deployment of clean technologies within China itself.”

China’s National Development and Reform Commission in 2005 through its “China Water Conservation Technology Policy Outline” stated that it will “provide guidance to the development and application of water conservation technology, push forward the progress of water conservation technology, enhance the efficiency of water use and its benefits, and promote the sustainable utilization of water resources.”

With sustained proactive measures such as these, China may well keep itself afloat and continue to amaze
both admirers and skeptics, at home and abroad.

print ed: 11/07


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