Environmental governance in China

Detailed accounts of the impact of economic development on environmental landscape through the century have been provided by scholars, many of whom are Chinese. By the mid-1800s, wide swaths of northern China were desert; deforestation and poor agricultural practices had degraded vast tracts of land; overuse had depleted fish stocks; and small-scale factories had begun to pollute the country's water resources. Additionally, the pressures of China's burgeoning population and frequent wars, which took their own serious toll on the environment, compounded the challenge of China's development.
However, by the end of the 20th and beginning of the 21st centuries, there was an explosive growth in China's economy. New government policies encouraged the privatisation of agriculture, the wholesale urbanisation of China's rural population, the development of tens of thousands of small-scale rural industries and an influx of international investment. The results have been staggering: hundreds of millions of Chinese have been lifted out of poverty; China's economy continues to grow at a rate of 8-12 per cent annually, as it has for two decades and by the end of 2005, China was the fourth largest economy and third largest exporting nation in the world, after the United States and Germany. Nevertheless, China's environment paid a steep price for this economic growth. Water pollution, air pollution, and soil degradation pose enormous threat to ecosystems and human health. However, these issues are being taken seriously by the Chinese government and are now being incorporated into policies and plans at the highest level.
Just as rapid economic growth, so is environmental governance system in China rapidly changing; resulting in new environmental institutions and practices. State authorities rule increasingly via laws and decentralise environmental policymaking and implementation. Non-state actors -both private companies and (organised) citizens - are given and taking more responsibilities and tasks in environmental governance. New relations have developed between state, market and civil society in environmental governance, with more emphasis on efficiency and legitimacy.
China’s environmental institutions
China once believed that humans could and should conquer nature, and that only capitalist societies suffered from environmental damage. But in 1972, when China sent a delegation to the First United Nations Conference on the Human Environment, such line of reasoning began to change. In 1974 the government's Leading Group for Environmental Protection was established with equivalent in the provinces. This later evolved into the National Environmental Protection Agency in 1988. In 1983, environmental protection was declared a basic national principle in China and in consequence, key principles for environmental protection was proposed by the , which include ‘prevention is the main, then control’ polluter responsible for pollution control’. Subsequently, a national regulatory framework was formulated, composed of a series of environmental laws, executive regulations, standards and measures (on all the major environmental sectors, starting with marine protection and water in 1982 and 1984 respectively. In 1994, China laid out a broad strategy to achieve sustainable development and by 1996, China had already developed its first five-year plan on environmental protection.
At the national level, China has more than 20 environmental laws adopted by the National People's Congress, there are also over 140 executive regulations issued by the state council, and a series of sector regulations and environmental standards set by the State Environmental Protection Agency (SEPA). In 2003, the government of China proposed a new development concept emphasizing humanism and attempting to achieve sustainable development and harmony between man and nature, as well as coordinated socio-economic progress among various regions and with foreign countries. At the international level, China has also participated in treaties such as the Convention on Biological Diversity and the UN Millennium Development Goals, which include poverty alleviation, environmental protection and sustainable development.
Institutionally, the national regulatory framework is vertically implemented through a four-tier management system i.e., national, provincial, municipal and county levels. The latter three levels are governed directly by their corresponding authorities in terms of both finance and personnel management, while SEPA is only responsible for their substantial operation. The enactment of the various environmental laws, instruments and regulations through the last two decades was paralleled by a stepwise increase of the bureaucratic status and capacity of these environmental authorities. For instance, the NEPA was elevated via the National Environmental Protection Bureau to the National Environmental Protection Agency (in 1988), and in 1998 it received ministerial status as SEPA. By 1995, the ‘environmental state’ of China had got over 88,000 employees across China and by 2004 it had grown to over 160,000 employees. According to Jahiel (1998: 776 cited in Carter et al., 2007) on this environmental bureaucracy: ‘‘the past 15 years has seen the assembly of an extensive institutional system nation-wide and the increase of its rank’’.
Besides the SEPA, the State Development Planning Commission (SDPC) and the State Economic and Trade Commission (SETC) are important national state agencies in environmental protection, especially since the recent governmental reorganization.
From environmental regulation to environmental governance
China’s initial environmental governance
The initial environmental regime in China saw the state playing a dominant role, while industry and community had little influence in affecting the regime. Primarily, the state consisted of administrative agencies, which included environmental departments and economic agencies with little or no participation from the legislative and judicial institutions. The business or industrial sectors were only passive subjects regulated by the state, without any interest in compliance beyond state environmental regulations.
Before the mid-1990s, there existed no truly environmental NGOs in China. There was obviously no presence of a strong civil society to articulate environmental interests and ideas of civil society amongst political and decision-makers or to press for environmental policy implementation in China. Civil society and victims of industrial pollution could only resort to three channels to safeguard their interests or express their displeasure regarding any environmental conflicts. First, citizens could complain about damages caused by industrial pollution at EPBs at various levels. Second, deputies to the people's congresses and representatives of people's political consultative conferences at the national, provincial, municipal, and country levels could put forward motions and proposals to suspend industrial pollution or compensate victims. Third, individual victims could plea for mediation by environmental authorities in cases of environmental conflicts with industrial polluters, which, in rare instances, resulted in compensation.
State-dominated environmental policy failures
For a very long time, Government-Organised NGOs such as the Beijing Environmental Protection Organization and China Environment Fund dominated the environmental ‘civil society’ sector. They had, and still have more freedom of registration and are able to play major roles in environmental matters due to their less restrictive institutional structure, their expertise and their close links with state agencies. These GONGOs articulate environmental interest and bring them into state and market institutions via their closed networks and personal connections with policy makers. In that way, they assume to be bridging the gap between NGOs and civil society on one hand, and the state on the other hand, hence, becoming an important, non-state arena for China's environmental politics.
However, by the mid-1990s, it was apparent that the relatively comprehensive environmental regulatory framework established in the late 1970s had failed to prevent the overall degradation of China's environmental quality. According to Shi et al., (2006), there are a number of reasons responsible for the unimpressive performance of China's early environmental regulation.
First, China developed its environmental regulation in the 1970s, with little experience and virtually no institutional capacity. This initial environmental regulation was also a model of those of Western countries, but China's international isolation in the 1970s and early 1980s made the learning process difficult and deficient.
Second, China lacked a strong environmental state, with large and effective monitoring and enforcement capacity, to oversee the initial regime of industrial environmental pollution control. Due to EPBs’ lack of authority, capacity and resources to monitor and enforce industrial environmental compliance, the regime became ineffective in handling and addressing industrial pollution. This is especially true at the town level because as at 2004, there were no environmental monitoring stations and environmental supervision and inspection agencies at the town level.
Third, the regime was principally designed to target large SOEs within a centrally planned economy via direct command-and-control interventions. The most important basis of the regulation was the concentration-based pollutant discharge standards, and in consequence, all the regulatory programmes were biased in favour of end-of-pipe pollution abatement, which proved technologically unreliable and economically costly in China. Moreover, the system was ineffective and costly in dealing with the large quantity of emerging small-scale industrial entities, especially the TVEs in rural areas.
Finally, industry experienced constant and rapid change in the 1990s, both in scale (quantitatively) and in structure (qualitatively). The industrial transformation formed a moving target and it proved difficult to develop a corresponding environmental regulatory system
Transition in China’s environmental governance system: The reorganization of state institutions
Chinese state apparatus remains dominantly important in environmental protection and reform. Both the nature of the contemporary Chinese social order and the character of the environment as a public good will safeguard the crucial position of the state in environmental protection and reform for some time. Currently articulations of environmental interests have become the sole responsibility of the Environmental Protection Bureaux (EPBs) which is a prominent department at various governmental levels. However, the most common complaints from Chinese and foreign environmental analysts focus precisely on this system of (local) EPBs. It is evident that the local EPBs depend so much on both the higher level environmental authorities and on local governments and as such they have been criticised for their poor environmental capacity (in both qualitative and quantitative terms) and, more generally, for the lack (and distortion) of environmental information
Yet, the system of environmental state organisations in China is showing remarkable changes since the turn of the millennium, of which four deserve mentioning.
First, the content of China's environmental policy has been modernised and updated. Over the last decade, China has formulated new environmental laws, which include the Cleaner Production Promotion Law (of 2002) , the Environmental Information Disclosure Decree (of 2008), the Law on Promoting Circular Economy (of 2009), the new environmental policy instruments, such as voluntary agreements and emission trading. All these laws point at a harmonisation of China's environmental policy with that of OECD countries.
However, operating system and mode of implementation of these modern environmental strategies still maintain some of their Chinese characteristics: low fines, an emphasis on promotion rather than regulation, and a complicated division of responsibilities between horizontal and vertical lines. Additionally, some typically Chinese environmental policies, such as the three simultaneous principle and the National Environmental Model City program are still intact despite the strong international influence and cooperation
The second development is that China is moving away from a rigid, hierarchical, command-and control system to a decentralised and more flexible environmental policy-making and implementation system. Local and provincial Environmental Protection Bureaus and local governments are more prominent in developing environmental priorities, strategies, financial models and institutional arrangements. This has is as a result of past state failures in national environmental policy, though it is seen also as a part of a wider tendencies of less centralised control in Chinese society. The tendency is one towards larger influence and decision-making power by the local authorities and diminishing control by Beijing, both by the central state structures and by the CPC (for example, decentralisation in energy policy. Proponents of decentralization have argued that decentralised and more flexible environmental policies may be more effective as they can be better adapted to the local physical and socio-economic situation, however citizens perceptions on the (environmental) performance of local urban governments are not very positive. In China, as elsewhere, decentralization does not automatically result in better protection of the environment, as local authorities typically give preference to economic growth and investments over the progressive development of environmental policies and stringent enforcement of environmental regulation and standards. Therefore, decentralised policies need to be paralleled by performance measurement, (environmental) auditing and accountability mechanisms, to make sure that local authorities give priority to the environmental concerns of citizens (and not to their own interest). In contemporary China, the Quantitative Examination System for Comprehensive Urban Environmental Control and an emerging environmental auditing system have been developed in this regard. They ensure some form of national control, where environmental policy-making and implementation becomes decentralised.
The third major development in China's system of environmental governance which is also instrumental to the overall performance of all the decision-makers is the strengthening of the rule of (environmental) law. This can be identified as a modernization in environmental politics, closely tied to the emergence of a market economy. The system of environmental laws has led to the setting of environmental quality standards and emission discharge levels. There are signs that the rule of law is taken more seriously in the field of environments and this has been triggered by the opening up of China to the global economy and polity. The strengthening of the rule of environmental law goes together with more resources for enforcement, a more formal enforcement style of EPBs, and stronger (financial) punishments of companies. For instance, Courts are getting more involved in enforcement in addition to legal procedures initiated by citizens and environmental NGOs, such as the well-known Centre for Legal Assistance to Pollution Victims (CLAPV).
Modes of environmental governance in China
Over the last two decades, environmental management in many Organization for Economic Cooperation Development (OECD) countries has shifted, and different authors have used different concepts to characterise these changes. According to Tietenberg (1998) and Khanna (2001) the use of market-based and voluntary instruments in addition to, and sometimes instead of, command and control regulation have evolved. Others have framed the changes in term of a transition from government to governance (e.g. Jordan et al., 2005), emphasising the role of non-state actors in environmental politics.
Although the state continues to have a major role in regulating pollution externalities in China's environmental regime, civil society and markets can no longer be ignored or regarded as solely dependent upon the state. In China's environmental governance system, three main actors and institutions have taken more balanced positions: the state, economic actors and institutions, and civil society. The state represents all the government bodies affecting industrial environmental management, including administrative, legislative, and judicial branches at different levels. Economic actors include industry, investors, customers and financial institutions, which have become increasingly independent from the state. In this article, civil society is defined as a self-organising and coordinating network of societal actors that are relatively independent of control by the state and private sector
Markets and Economic Actors
Conventionally, centrally planned economies did a poor job in setting the right price signals for a sustainable use of natural resources and a minimisation of environmental pollution. With a turn to a social market economy this is changing. In China, environmental protection slowly becomes part of markets, prices and competition, in four ways.
First, subsidies on natural resources (such as water and energy) are rapidly being discontinued, turning prices for natural resources towards cost prices. For instance, water prices for citizens, industries and farmers have increased sharply over the past decade, often with 10% or more per year. Likewise, energy prices have equally lost part of their subsidies. Higher energy prices contributed to higher energy efficiencies. Lower income groups are at times financially compensated for steep price increases.
Second, economic incentives, fees and taxes are increasingly used, to influence (economic) decision-making of polluters. Particularly, discharge fees (related to the amount of pollution or the amount of pollution in excess of standards) are common. In 2007 environmental authorities received around 174 billion RMB waste discharge fees, and this amount has been increasing over the past five years with 20-30% annually. Between 2000 and 2008, the average wastewater treatment charge per m3 in the 36 largest cities increased with almost 300%. (China Statistical Yearbook on Environment, various editions). Fees are higher in heavily polluted and economically developed areas but many small and rural industries still managed to escape payment owing to lack of enforcement. In addition to these fees, a growing number of pilot projects on payments for environmental services can be witnessed, where resource consumers are financially compensated for less resource use (or less pollution).
The third development in the system of environmental governance in China is the increasing involvement of private companies in executing public tasks and services on the environment. For example, urban service provisioning in drinking and wastewater, energy and solid waste management experiences all kinds of new public-private partnership models. Environmental service functions of provincial environmental authorities are also partly privatised and commercialised (such as monitoring, education and information dissemination;
Environmental Governance Beyond State and Market: Civil society
Apart from direct participation of citizens in the making and implementation of environmental policies, citizens also have enough freedom to organise themselves, express their environmental concerns and set new public agendas for environmental reform in contemporary China.
At present, over 10 000 local, provincial and national environmental NGOs exist in China. Among them, at least 300 belong to a nationwide loosely connected network of environmental activism by the year of 2010. These NGOs are often not very adversarial or confrontational; they are experts and awareness-raising organizations, such as Global Village. Some NGOs are very much related to state organisations, such as the popular Government-Organised Non- Governmental Organisations or GONGOs
The ‘political room’ for a western-style environmental movement still seems limited, but compared to a decade ago this room is expanding. While in some of the Central and East European centrally planned economies, environmental NGOs played a role in articulating environmental and other protests against the ruling social order, in China environmental NGOs have been marginal until now in pushing for environmental reform of the Chinese economy or polity.
International NGOs such as Greenpeace and WWF have invested major efforts in further stimulating the environmental movement in China, with ambivalent successes. Together with economic liberalization, decentralization of decision-making and experiments with local democratization, the pressure from the civil society on local (environmental) authorities to reduce environmental pollution is quite rising.

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