In China, Globalization Can Be Green

BURLINGTON, Vermont President Hu Jintao's recent admission that China may be growing too fast, at the expense of the environment, has once again raised questions about the role of resource conservation in development.

It is significant that Hu's statement was made during a meeting with a former Taiwanese opposition leader, Lien Chan. A composite environmental performance index developed by Yale University has ranked Taiwan two places ahead of the United States in its environmental performance, whereas China was ranked 70 places below Taiwan.

As China struggles with its environmental woes, there are many lessons that China can learn from Taiwan about green growth. And exchanges of clean technologies and environmental knowledge between these two rivals might also lay a path to peace.

Both Taiwan and China have spurred growth through the manufacturing sector across a range of industries that make everything from trinkets to televisions. In Taiwan, however, a much larger share of the manufacturing sector gained momentum through foreign direct investment.

In China, many foreign multinationals did not open their own manufacturing plants until very recently and instead relied on local companies to run the show. It was thus much easier to circumvent environmental and labor standards in China, where companies had less accountability to shareholders and civil society than in Taiwan.

While multinational corporations are often portrayed by activists as guilty of causing environmental damage, the comparison between China and Taiwan reveals that local companies in poorly regulated lands are usually far more problematic than multinationals.

In fact, while activists tend to characterize globalization as an agent of doom, the crossover of norms between countries is likely to improve environmental performance. China's willingness to improve its environmental image has been spurred by increasing pressure from foreign companies. Even outsourced manufacturing of products for the largest retailers such as Wal-Mart now require a certification mandated by the company's corporate office in the United States.

Furthermore, as Chinese companies increasingly go global, they realize that they cannot operate in foreign countries if their environmental image remains tarnished.

Within China itself, many companies that had operated with environmental impunity in the remote western provinces are being affected economically. In one government study cited by the New China Agency, the western provinces will suffer an annual loss equivalent to 15 billion euros, or 13 percent of the region's gross domestic product, because of environmental damage. President Hu's statement reflects a realization of these direct economic consequences.

So are we witnessing a self-correction system at work? Will China now be able to conserve ecological resources before its capacity to recover from environmental harm is exhausted? If the United States and Britain could recover from their environmental decline, when rivers were thick with pollution, perhaps China can, too.

The salient question, however, is not whether countries can recover from such ecological indiscretions, since the resilience of both humans and their natural environment is considerable, but why we proceed on the path to development so recklessly when there are win-win opportunities for green growth. Taiwan and Japan exemplify ways in which industrial development can be undertaken with less environmental harm.

Short-term economic growth indicators should not be our measure of development performance. Instead, a broader, integrated means of sustaining such performance must be instituted in public policy.

Beijing's admission of environmental harm can provide an opportunity for closer partnership between multinationals and environmental professionals who are willing to assist in China's transition. Further down the track, we will be able to pass on the lessons from China's experience to other aspiring economic giants, such as India and Brazil.

Whether we approach the matter on ethical or economic terms, respect for the environment is an essential ingredient in efficient development.