China calls a halt to dirty coal imports

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Beijing haze

From 1 January next year, China will ban the import of coal with high ash or sulphur content and slap a three per cent tariff onto all coal imports.  The move is a one-stone-two-bird approach; less dirty coal will reduce air pollution, particularly around its coastal mega cities where restrictions are tighter and the struggling domestic mining industry will be given a boost.   

The draft regulation by China’s National Development and Reform Commission is big news in a country where coal is our second largest export and China accounts for 25 per cent of the market. Industry responses have varied. Some fear the restrictions might trip up Australia’s coal miners already struggling with reduced demand. The Minerals Council of Australia on the other hand gave an insouciant shrug and suggested business would go on as usual. 

China is in a bind. While the draft regulation emphasised environmental concerns, economic imperatives are central. After years of more than eight per cent growth, China’s GDP has started to slow. Last month GDP growth was 6.3 per cent. This slowdown has coincided with an oversupply in the market. The net result is a squeeze on China’s (very large) coal industry. China is the world’s largest producer of coal but still takes imports as a cheaper alternative for meeting the energy demands of its coastal regions. This gives it sizeable wriggle room to depress demand for exports.

The environment meanwhile is offering no such wriggle room. China’s meteoric growth has led to an ecological catastrophe. The Atlantic’s James Fallows published two graphs that isolate one aspect of China’s environmental challenge, air quality. The first graph shows that China’s air quality is so bad that the government scales it differently. Readings of 'good' or 'light' in China would be considered in the danger zone for US and European countries.  A particularly bad day in Shanghai is comparable to walking through a bush fire or volcanic eruption. The second graph shows that the ten worst cities in America for air pollution would be ranked in the highest bracket of 'Excellent' using China’s skewed scale. 

China’s environmental problems are not limited to air quality but it remains the most visible. Nearly half a million die each year because of it. Many more get sick. If that’s not bad enough, a Deutsche Bank report released earlier this year projected a 70 per cent increase in air pollution by 2025 if current trends of coal use and automobile emissions continue.

This poses a direct threat to the Chinese Communist Party’s legitimacy.  For all the awesome complexity of China, a very simple contract underpins the political status quo. Successor to Deng Xiaoping, Premier Zhu Rongji enunciated it when he visited Guangdong in the 1990s. 'If we can increase the speed of economic construction and continually raise the people’s living standards, then the Party will be trusted and respected and the people will support us.'  The Party helps people get wealthy. The People let the party hold onto power. Simple.

Environmental degradation threatens this contract however. Sick workers are less productive and sick people tend to redefine their concept of wealth. Beijing knows it needs to act. However the Party leadership is acutely conscious that whatever solution is crafted, it must not stall the economy. This would negate the foundational agreement that gives it power. 

For Australia, I see two immediate takeaways. Firstly, the restrictions should not be overstated as a win for the environment.  As the Deutsche Bank report stated, China needs a massive, coordinated response to avoid worsening conditions. This is far from that. Meanwhile closer to home miners are already talking about diversifying into agriculture or expanding into India if the Chinese market goes soft. Both are hardly green solutions.  However it does show that the Chinese government is willing to address environmental issues, albeit on its own terms. Such pragmatism might hold the key for future joint action on the environment. 

Secondly, these restrictions may be a harbinger of things to come. In the muddle of politics and policy, we have a concrete example of worsening environmental conditions forcing policy makers to place limits on the exploitation of natural resources. With our economy propped up by such exports and the spectre of climate change looming, this ought to give Australia pause for thought beyond the specific implications of the proposed restrictions. 


Evan Ellis headshotEvan Ellis is a freelance journalist currently completing his Masters in International Studies with a China major.

Beijing haze image by Shutterstock.

Topic tags: Evan Ellis, coal, environment, economy, pollution

 

 

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Existing comments

It never fails to amaze me how,on the one hand, we can complain about China's contribution to global warming and yet, on the other, are more than happy to sell it the means by which to continue to degrade the environment. Also, is it not the case that China is one of the few countries in the world investing huge sums of money on renewable energy sources, and actually beginning to turn away from fossil fuels? This is not the case in the West.
Fred Jansohn | 24 September 2014


Now that Qld has passed legislation restricting the right to object to coal mine development, our homes will only be made safe by China ceasing to import Australian coal.
David Arthur | 01 October 2014


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