The economics of dams in China - water wars on the horizon?

China is a thirsty country that needs a lot of water. To this end it is using a lot of dams in some very sensitive areas. There are a whole lot of "externalities" involved with dam production for those upstream, downstream and round about.

When those people live in different countries things can get messy quickly especially if two of those countries and China and India.

I like the concluding statement:

"Scarcity in a zero sum situation can lead to conflict but it can also goad countries into more cooperative behavior. It's a bleak picture, but I'm not without hope."

The author of the quote has more hope than I do - I can only guess that he is not an economist.

Water wars? Thirsty, energy-short China stirs fear [Yahoo]

BAHIR JONAI, India – The wall of water raced through narrow Himalayan gorges in northeast India, gathering speed as it raked the banks of towering trees and boulders. When the torrent struck their island in the Brahmaputra river, the villagers remember, it took only moments to obliterate their houses, possessions and livestock.

No one knows exactly how the disaster happened, but everyone knows whom to blame: neighboring China.

"We don't trust the Chinese," says fisherman Akshay Sarkar at the resettlement site where he has lived since the 2000 flood. "They gave us no warning. They may do it again."

About 800 kilometers (500 miles) east, in northern Thailand, Chamlong Saengphet stands in the Mekong river, in water that comes only up to her shins. She is collecting edible river weeds from dwindling beds. A neighbor has hung up his fishing nets, his catches now too meager.

Using words bordering on curses, they point upstream, toward China.

The blame game, voiced in vulnerable river towns and Asian capitals from Pakistan to Vietnam, is rooted in fear that China's accelerating program of damming every major river flowing from the Tibetan plateau will trigger natural disasters, degrade fragile ecologies, divert vital water supplies.

A few analysts and environmental advocates even speak of water as a future trigger for war or diplomatic strong-arming, though others strongly doubt it will come to that. Still, the remapping of the water flow in the world's most heavily populated and thirstiest region is happening on a gigantic scale, with potentially strategic implications.

On the eight great Tibetan rivers alone, almost 20 dams have been built or are under construction while some 40 more are planned or proposed.

China is hardly alone in disrupting the region's water flows. Others are doing it with potentially even worse consequences. But China's vast thirst for power and water, its control over the sources of the rivers and its ever-growing political clout make it a singular target of criticism and suspicion.

"Whether China intends to use water as a political weapon or not, it is acquiring the capability to turn off the tap if it wants to — a leverage it can use to keep any riparian neighbors on good behavior," says Brahma Chellaney, an analyst at New Delhi's Center for Policy Research and author of the forthcoming "Water: Asia's New Battlefield."

Analyst Neil Padukone calls it "the biggest potential point of contention between the two Asian giants," China and India. But the stakes may be even higher since those eight Tibetan rivers serve a vast west-east arc of 1.8 billion people stretching from Pakistan to Vietnam's Mekong river delta.

Suspicions are heightened by Beijing's lack of transparency and refusal to share most hydrological and other data. Only China, along with Turkey, has refused to sign a key 1997 U.N. convention on transnational rivers.

Beijing gave no notice when it began building three dams on the Mekong — the first completed in 1993 — or the $1.2 billion Zangmu dam, the first on the mainstream of the 2,880-kilometer (1,790-mile) Brahmaputra which was started last November and hailed in official media as "a landmark priority project."

The 2000 flood that hit Sarkar's village, is widely believed to have been caused by the burst of an earthen dam wall on a Brahmaputra tributary. But China has kept silent.

"Until today, the Indian government has no clue about what happened," says Ravindranath, who heads the Rural Volunteer Center. He uses only one name.

Tibet's spiritual leader, the Dalai Lama, has also warned of looming dangers stemming from the Tibetan plateau.

"It's something very, very essential. So, since millions of Indians use water coming from the Himalayan glaciers... I think you (India) should express more serious concern. This is nothing to do with politics, just everybody's interests, including Chinese people," he said in New Delhi last month.

Beijing normally counters such censure by pointing out that the bulk of water from the Tibetan rivers springs from downstream tributaries, with only 13-16 percent originating in China.

Officials also say that the dams can benefit their neighbors, easing droughts and floods by regulating flow, and that hydroelectric power reduces China's carbon footprint.

China "will fully consider impacts to downstream countries," Chinese Foreign Ministry spokeswoman Jiang Yu recently told The Associated Press. "We have clarified several times that the dam being built on the Brahmaputra River has a small storage capacity. It will not have large impact on water flow or the ecological environment of downstream."

For some of China's neighbors, the problem is that they too are building controversial dams and may look hypocritical if they criticize China too loudly.

The four-nation Mekong River Commission has expressed concerns not just about the Chinese dams but about a host of others built or planned in downstream countries.

In northeast India, a broad-based movement is fighting central government plans to erect more than 160 dams in the region, and Laos and Cambodia have proposed plans for 11 Mekong dams, sparking environmental protest.

Zangmu dam) was not a project designed to divert water and affect the welfare and availability of water to countries in the lower reaches," India's Foreign Secretary Nirupama Rao said after talks with his Chinese counterpart late last year.

But at the grass roots, and among activists and even some government technocrats, criticism is expressed more readily.

"Everyone knows what China is doing, but won't talk about it. China has real power now. If it says something, everyone follows," says Somkiat Khuengchiangsa, a Thai environmental advocate.

Neither the Indian nor Chinese government responded to specific questions from the AP about the dams, but Beijing is signaling that it will relaunch mega-projects after a break of several years in efforts to meet skyrocketing demands for energy and water, reduce dependence on coal and lift some 300 million people out of poverty.

Official media recently said China was poised to put up dams on the still pristine Nu River, known as the Salween downstream. Seven years ago as many as 13 dams were set to go up until Chinese Premier Wen Jiabao ordered a moratorium.

That ban is regarded as the first and perhaps biggest victory of China's nascent green movement.

"An improper exploitation of water resources by countries on the upper reaches is going to bring about environmental, social and geological risks," Yu Xiaogang, director of the Yunnan Green Watershed, told The Associated Press. "Countries along the rivers have already formed their own way of using water resources. Water shortages could easily ignite extreme nationalist sentiment and escalate into a regional war."

But there is little chance the activists will prevail.

"There is no alternative to dams in sight in China," says Ed Grumbine, an American author on Chinese dams. Grumbine, currently with the Chinese Academy of Sciences in Yunnan province, notes that under its last five-year state plan, China failed to meet its hydroelectric targets and is now playing catch-up in its 2011-2015 plan as it strives to derive 15 percent of energy needs from non-fossil sources, mainly hydroelectric and nuclear.

The arithmetic pointing to more dam-building is clear: China would need 140 megawatts of extra hydroelectric power to meet its goal. Even if all the dams on the Nu go up, they would provide only 21 megawatts.

The demand for water region-wide will also escalate, sparking perhaps that greatest anxieties — that China will divert large quantities from the Tibetan plateau for domestic use.

Noting that Himalayan glaciers which feed the rivers are melting due to global warming, India's Strategic Foresight Group last year estimated that in the coming 20 years India, China, Nepal and Bangladesh will face a depletion of almost 275 billion cubic meters (360 billion cubic yards) of annual renewable water.

Padukone expects China will have to divert water from Tibet to its dry eastern provinces. One plan for rerouting the Brahmaputra was outlined in an officially sanctioned 2005 book by a Chinese former army officer, Li Ling. Its title: "Tibet's Waters Will Save China,"

Analyst Chellaney believes "the issue is not whether China will reroute the Brahmaputra, but when." He cites Chinese researchers and officials as saying that after 2014 work will begin on tapping rivers flowing from the Tibetan plateau to neighboring countries Such a move, he says, would be tantamount to a declaration of war on India.

Others are skeptical. Tashi Tsering, a Tibetan environmentalist at the University of British Columbia who is otherwise critical of China's policies, calls a Brahmaputra diversion "a pipe dream of some Chinese planners."

Grumbine shares the skepticism. "The situation would have to be very dire for China to turn off the taps because the consequences would be huge," he said. "China would alienate every one of its neighbors and historically the Chinese have been very sensitive about maintaining secure borders."

Whatever else may happen, riverside inhabitants along the Mekong and Brahmaputra say the future shock is now.

A fisherman from his youth, Boonrian Chinnarat says the Mekong giant catfish, the world's largest freshwater fish, has all but vanished from the vicinity of Thailand's Had Krai village, other once bountiful species have been depleted, and he and fellow fishermen have sold their nets. He blames the Chinese dams.

Phumee Boontom, headman of nearby Pak Ing village, warns that "If the Chinese keep the water and continue to build more dams, life along the Mekong will change forever." Already, he says, he has seen drastic variations in water levels following dam constructions, "like the tides of the ocean __ low and high in one day."

Jeremy Bird, who heads the Mekong commission, an intergovernmental body of Laos, Cambodia, Thailand and Laos, sees a tendency to blame China for water-related troubles even when they are purely the result of nature. He says diplomacy is needed, and believes "engagement with China is improving."

Grumbine agrees. "Given the enormous demand for water in China, India and Southeast Asia, if you maintain the attitude of sovereign state, we are lost," he says. "Scarcity in a zero sum situation can lead to conflict but it can also goad countries into more cooperative behavior. It's a bleak picture, but I'm not without hope."

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Water pollution in China - 1/4 gone, 3/4 left (for now)

In China's thirst for growth it is in danger of having the breaks applied very sharply from environmental contraints none more important that a lack of clean water.

China might, just might, be getting on top of air pollution but water pollution remains a serious problem. The sheer scale effect of China's growth will mean the battle against PM10 and air pollution is far from over.

Pollution Makes Quarter Of China Water Unusable: Ministry [PlanetArk]

Almost a quarter of China's surface water remains so polluted that it is unfit even for industrial use, while less than half of total supplies are drinkable, data from the environment watchdog showed on Monday.

Inspectors from China's Ministry of Environmental Protection tested water samples from the country's major rivers and lakes in the first half of the year and declared just 49.3 percent to be safe for drinking, up from 48 percent last year, the ministry said in a notice posted on its website (www.mep.gov.cn).

China classifies its water supplies using six grades, with the first three grades considered safe for drinking and bathing.

Another 26.4 percent was said to be categories IV and V -- fit only for use in industry and agriculture -- leaving a total of 24.3 percent in category VI and unfit for any purpose.

Despite tougher regulations over the last decade, the ministry has struggled to rein in the thousands of small paper mills, cement factories and chemical plants discharging industrial waste directly into the country's waterways, and the overuse of fertilizers has also left large sections of China's lakes and rivers choking with algae.

The ministry said there were noticeable improvements in air quality throughout the country's cities in the first half of 2010, with sulphur dioxide emissions declining 30.2 percent compared to last year.

Airborne particulate matter in China's cities fell 12.1 percent and nitrogen dioxide declined 5 percent, the ministry said.

However, 189 out of 443 cities monitored suffered from acid rain in the first half of the year.

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Water shortages in China

A snippit on the problems resulting from drought in Liaoning Province. We will see more stories like this in the future. The economic implications are potentially large. Digging wells is a short term solution. Ground water is becoming polluted and in short supply.

Once lack of water leads to crop failures the pressure on food prices in the region could be severe. The Chinese government needs to keep a close eye on the water supply.

China drought leaves 670,000 without drinking water [ABC news]

A drought in China's north-east Liaoning province has left nearly 700,000 people without drinking water after rainfall in the first three months of 2008 tumbled to one-fifth levels last year, the Xinhua agency said.

The area is a top grain producer, and maize and rice farming is due to begin next week, but from January to the end of March it had got less than 2 centimetres of rain.

Some 66 reservoirs have dried up, but the area has raised cash to build 1,700 new wells and expand and upgrade water conservation systems to try and ensure spring planting can go ahead, Xinhua said, citing local sources.

China's weather administration said in early April that drought parching other parts of northern China was the worst in several decades and would continue this month.

Drought and floods are perennial problems in China, which has per capita water resources that are well below the global average. Its meteorologists have said global climate change is exacerbating extreme weather, including droughts.

About 30 million Chinese in the countryside and more than 20 million in urban areas face drinking water shortages every year despite huge government investment to address the problem.

Food safety, Product Quality and Pesticide Use

So China is spening $1 billion on food safety? This is undoubtedly an attempt to reassure the world that Chinese goods are safe in response to numerous product safety stories that have been a staple of the US and world press in recent months.

The fear is that Chinese exports will be negatively affected and whilst Chinese GDP has been growing rapidly along with domestic consumption and incomes, China is still dependent on its export markets.

A reputation for low quality and dangerous goods can takes years to throw off. This is probably a wise investment. The question is why do they not spend more and why wait so long to do it.

China Spending $1 Billion on Food, Drug Safety [PlantetArk]

BEIJING - China will spend more than $1 billion improving food and drug safety by 2010 and the regulator will be given stronger oversight powers, an official said on Wednesday as fears persist over Chinese products.

China has been struggling to convince the world its produce is safe following a series of scandals over tainted pet food, toys, tyres, toothpaste, medicine and fish.

According to a new poll, US consumers are extremely wary of products made in China, and nearly two-thirds said they would support a boycott of Chinese goods.

China's State Food and Drug Administration spokeswoman, Yan Jiangying, said the government had earmarked 8.8 billion yuan ($1.16 billion) for food and drug safety over the current Five Year Plan, which runs to 2010.

Part of this would be spent on a large, new laboratory, she said, adding this was the first time the spending figure had been made public. Yan did not provide a comparison for previous years.

"Once the Five Year Plan has been completed, the abilities and the base of the regulator will be substantially raised," Yan said. "There will be an enormous improvement in the system for guaranteeing food and drug safety for the public."

New rules would give the watchdog the power to seal factories and seize whatever materials they need when probing sub-standard goods, she added.

Yan said her department would also take the safety message nationwide, starting out in the enormous countryside, home to 60 percent of the 1.3 billion population.

"We will focus on rural food safety," Yan said.

A deputy agriculture minister admitted recently that the backward state of Chinese farming was a major obstacle to raising food safety.

Despite repeated government assurances they are taking a responsible attitude towards food and drug safety, there has been little let up in the barrage of bad news.

State media said on Wednesday, the beginning of the one-year year countdown to the Beijing Olympics, the government would launch a campaign to crack down on the use of highly potent and poisonous pesticides which are banned but still in use.

Five pesticides were banned earlier this year, and the Agriculture Ministry was compiling a blacklist of companies still making them, the official China Daily said.

In rural China there was a problem with farmers improperly using chemicals and spraying them on crops just before they were gathered and sold, the report said.

"As part of the government's food safety strategy, it will educate farmers how to properly use pesticides," the newspaper added.

China uses twice as much pesticide annually as is actually needed which has exacerbated the country's food safety problems, it said. (US $1=7.569 Yuan)

This relates to another story in today's PlanetArk:

China to Crack Down on Banned Pesticide Use

BEIJING - China will launch a campaign to crack down on the use of highly potent and poisonous pesticides which are banned but still in use, a state newspaper said on Wednesday, as fears persist over the country's food safety.

Five pesticides were banned earlier this year, and the Agriculture Ministry was compiling a blacklist of companies still making them, the official China Daily said.

Three companies were still allowed to make the chemicals, it added, but only "in emergency situations to control pests, and under strict government supervision", it added.

In rural China there was a problem with farmers improperly using chemicals and spraying them on crops just before they were gathered and sold, the report said. "As part of the government's food safety strategy, it will educate farmers how to properly use pesticides," the newspaper added.

China uses twice as much pesticide annually as is actually needed which has exacerbated the country's food safety problems, it said.

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There's a rat in the kitchen, what am I going to do?

Some how I missed this article. "China invaded by 2 billion rats" is a good enough story but when one also throws in some climate change, too much snake and owl on the menu and the likelihood that "rat" will soon be joining them and you get a blogger's goldmine.

The economics comes from all of the above. Demand from customers for snake means no snakes left to eat the rats - a classic externality. The demand from consumers for more goods and rampant materialism leads to greater CO2 emissions and hence climate change that may have contributed to the recent flooding. The Chinese government building the three gorges dam that cost billions so that it could be used to control the floods but may also have contributed to the increase in rats. Finally, the ability of the Chinese to substitute rat for other meat and for it to have a cost.

One point of clarification, it appears that what us Brits call mice, the Chinese call rats. What do the Chinese call rats?

This Guardian article is great - it goes straight for the economics. Forget the human misery, lets talk business.

'Rats' on the menu after China swamped by 2 billion rodents [Guardian]

The business management philosophy that one person's crisis is another's opportunity may perhaps never have been taken to such bizarre extremes.

A plague of 2 billion mice in central China was described just days ago as being so bad that it resembled a scene from a horror movie with roads and hillsides turned black with rodents.

But in a remarkable display of entrepreneurship, businessmen are catching, shipping and selling the eastern field mice, also known locally as rats, to the southern city of Guangzhou, where restaurants are reportedly offering rodent banquets to diners notorious for their unusual tastes.

../

According to Beijing News, businessmen from Guangzhou - the provincial capital of Guangdong - were offering 6 yuan (40 pence) for a kilogramme of live rodents.

The Guardian then decides to mention as an aside the fact that:

The infestation was caused by some of the worst flooding in 50 years in central China. In the past two weeks, more than 400 people have died, 105 are missing and more than 3 million have been forced to evacuate their homes as a result of the deluge.

Another externality (in addition to the eating of owls and snakes):

In the ensuing war on rodents, local people beat hundreds of mice to death. Some used ferrets, others so much poison that more than 1,000 cats and chickens were also killed.

Assuming that the cats were trained rat killers the use of poison would appear to be rather hasty.

Finally, forget the great wall of China, the great mouse wall of Hunan could be the next great tourist hotspot. Is £400,000 a lot? We need to get the Contingent Valuation guys on the job.

Hunan province is attempting to raise more than 6m yuan (£400,000) to build a 24-mile wall to prevent future mice invasions.

H/T: Treehugger - who conclude their article with a fine "economics" phrase.

Two Billion Rats Invade China: From Eco-Disaster To Exotic Delicacy

Rats are being sold in greater numbers at live food markets in Changde, at the western end of the lake. From there, animals make their way to un-distinguished plates in restaurants in neighboring Guangdong province. The government has denied the news, saying that bans on wild animals still stand. But Guangdong, the home of Cantonese cuisine, is known for its exotic taste for everything from turtles to sharks to cats. And in China, where there's demand, there's supply -- and vice versa.

Water Pollution in China

An excellent source of information and data on province and municipality water pollution including mapping capabilities. Data from 2004-2007.

China Water Pollution Map

Link also added to the sidebar.

Update: Today's PlanetArk have an article linked to my initial post. This article highlights how bad things of got - the Kuznet's curve literautre would state that China will eventually reach a per capita income turning point from which point things begin to get better - there are signs of this happening in China but "tipping point" issues need to be considered here. If the underground water sources are polluted they may remain so indefinitely. Equally, desertification and climate change may mean water problems get worse over time.

This is one race I would not like to take part in.

Guangzhou Mayor Leads Mass Swim in Polluted River

GUANGZHOU - Leaders of the southern Chinese city of Guangzhou led thousands in a "swimathon" across the Pearl River on Sunday to trumpet its recent cleanup -- at a time of mounting water pollution crises across the country.

Guangzhou Mayor Zhang Guangning fired a starter's gun before leading more than 3,500 people in a much hyped swim across the river, China's third longest, whose lower reaches had been seriously polluted by rapid industrialisation.

The swim, an annual event, was abandoned in the 1970s because of the chronic pollution and resurrected only last year.

Years of promoting economic growth at almost any cost have taken their toll of China's environment, though growing rural discontent caused by dirty water and other pollution has pushed Beijing to promote cleaner growth.

A state media website quoted Zhang as saying the aim of the mass swim was to "make the local residents become aware of the importance of pollution control."

A government report released in May said pollution at the mouth of the Pearl River delta was "extremely severe," and that 8.3 billion tonnes of sewage, much of it untreated, was flushed into the province's coastal waters last year, a 60 percent jump from 2001.

Sunday's 800-metre swim was meant to hail the success of recent cleanup initiatives including new sewage treatment plants -- but some swimmers weren't convinced.

"The water really stinks over there," said one participant surnamed Zhao, who rinsed his mouth with a freshwater hose at the finish. "You can see. The water's black," he added.

Ma Jun, a leading environmental campaigner and water pollution expert, said water pollution was worse in other parts of China. "In many other cities, the water quality is much worse ... The Pearl River is one of the cleaner rivers," Ma said.

Several large freshwater lakes including Taihu Lake were recently blanketed with toxic green-blue algae, feeding on effluent discharged from nearby farms, homes and factories. Millions in nearby Wuxi city had tap water cut off as a result.

Underground water reserves in 9 out of every 10 Chinese cities are now polluted or over-exploited, according to the State Environmental Protection Administration.

Even the water is counterfeit

After hearing so much about IP theft and all round piracy in China it was interesting to read that counterfeit water is everywhere. The writer of this article does a good job setting the scene before launching into a full scale rant.

The bottom line is where there is a profit to be made it will be made. Once water begins to be faked you can bet that much everything else is as well.

H/T Time's China blog.

Now it's Fake Water

This morning, I heard the news that half of Beijing’s bottled water is counterfeit. I was horrified. It seems that illegal factories fill the used plastic bottles from the tap or with perfunctorily filtered water. The bottle tops and tape that they use to seal the bottle look identical to the genuine ones. The bottles aren’t sterilized and the number of mold fungi and e. coli bacteria that have been found in such water can easily make drinkers sick. An industry report quoted by Beijing Times calculates that more than 100 million bottles of such water were sold last year. The profit derived from these illegal sales exceeded 1 billion RMB, or about $12 million.

As a Chinese, I am used to reading about dangerous fakes. But this case really enraged me. This is water that many of us drink every day, after all. And the whole reason people pay extra for bottled water is for the quality—and safety. The Beijing Times did a story a couple of days ago that revealed the illegal business has been going on for five years. One unlicensed water bottler told the newspaper: “I filter the tap water before filling the bottle because I am a moral person and I don’t want to get people sick.”

When I read that I myself felt sick --- with anger. I also asked myself where are the government and regulatory authorities who are supposed to be protecting us. The rampancy of fake water comes down to the inability of the government in China to enforce its own laws. In this case, red tape is usually blamed. The local officials with responsibility for preventing counterfeiting have no legal power to search an illegal bottler’s factory, it is said.

How much longer can Beijingers put up with these kind of mealy-mouthed bureaucratic excuses? Maybe, like everything else in this city, we should look to the Olympics for salvation. After all, if this issue isn’t tackled soon, athletes and visitors around the world might show up for Olympics next year carrying their own water and food.

Environmental Round-up: Water, Ports and Clean Development

Three recent news articles that give a good overview of the problems but also the political will that China now appears to be showing regarding the continued environmental degradation of the country.

I have included only the highlights.

Thirsty China Sets Ambitious Water - Saving Goal

China has per capita water resources well below global averages, and expects climate change to worsen shortages across the already arid north, but until now it has focused on massive water transfer schemes to try to resolve the problem.
The target, which matches one for energy saving over the same period, was also signed off by the water resources and construction ministries, the National Development and Reform Commission said in a statement on its Web site (www.ndrc.gov.cn).

Under the plan, China aims to boost efficiency in agricultural irrigation systems -- in some areas the most wasteful users of water -- increase recycling of urban water and cut back on leaks from urban pipe networks, the document said.

Altogether it should save 69 billion cubic metres of water, the report added.

China has only recently started focusing on environmental protection after years of promoting economic growth at almost any cost, as riots and mounting bills over pollution problems drew Beijing's attention to the problem.

This year alone, drought in northwestern Shaanxi province has left at least 300,000 people short of drinking water.

Tap water turned salty in parts of the gambling hub of the former Portuguese enclave of Macau after water flows down the Pearl River slowed, and the sea level rose, forcing it to hastily build a plan to access fresh water further upstream.

China Orders Closure of 12 Plants for Pollution

BEIJING - China has ordered a dozen heavy industrial plants to shut down for failing to meet pollution standards and told another 70 to comply with the rules.

The State Environmental Protection Administration said on its Web site (www.sepa.gov.cn) that the plants represented combined investment of 2 billion yuan (US$258 million).

They include a metallurgy company in Inner Mongolia, four steel makers in Jiangsu and Hebei and a charcoal plant in Shandong.

"Projects that seriously violate the state's industrial policies and environmental protection thresholds must be immediately and permanently closed down," SEPA vice head Pan Yue was quoted as saying.

The agency has been striving to extend its influence in the face of opposition from local authorities that frequently put growth before the environment.

SEPA said on Monday that China fell short of its goal for 2006 to reduce emissions of pollutants by 2 percent from 2005 levels.

With New Port, China Aims for Cleaner Development

Caofeidian, China's newest and largest iron ore port, is open for business, just 19 months after workers began to convert an isolated sand spit in northeastern China into a massive port and industrial zone.

But the Caofeidian project shows not just the dizzying speed of China's development, it is also meant as a clean departure from earlier policies of growth for growth's sake.

The facility, 220 kilometres (136 miles) southeast of Beijing is held up as a model in a country plagued by smelly black smoke and even fouler water from steel mills and factories.

When completed, it will boast a world-class steel mill, berths to unload coal, crude oil and liquefied natural gas, strategic oil reserve tanks, a petrochemical complex, a refinery, a cogeneration plant, a man-made harbour and a five-star hotel.

Wang Junguo, Caofeidian office director for the Communist Party Committee of the nearby city of Tangshan, said he is confident that this time the planners will manage to achieve economic development without worsening pollution.

The industrial zone's modern, energy efficient facilities will allow China to shut down ageing, polluting steel mills and other plants in surrounding Hebei Province.

A natural deep channel will allow large ships to deliver iron ore efficiently to mills in northeastern China. A railroad will link to the Datong-Qinhuangdao line, China's most-heavily used route for coal, coke, iron ore and steel. A coastal highway is being completed.

China and the Environment: Round up of Stories

The relationship between economic growth and environmental degradation is a close one.

This blog will document news stories on the state of the environment in China.

China Eyes Summer Launch for Carbon Credit Exchange

BEIJING - Beijing plans to launch a pilot exchange for carbon trade this summer to be ready to win a slice of the multi-billion dollar market by 2008 and capitalise on China's emergence as an hotspot for emissions-cutting projects.

The exchange would aim to combine sales of carbon credits valid under the Kyoto Protocol on climate change with a market in voluntary emissions reductions like those traded in Chicago, government and UN officials said on Tuesday.

N.W. China Drought Dries up Water Supplies

BEIJING - Drought in China's northwestern province of Shaanxi has left at least 300,000 people short of drinking water and similar weather conditions have afflicted other parts of the country, Xinhua news agency said on Tuesday.

Below-average levels of rainfall and higher-than-usual temperatures in Shaanxi in recent weeks had also affected thousands of hectares of cropland and curbed water supplies for 60,000 animals, it said.

Drought had also affected areas of northeast, northwest and southwest China over the past month, it cited the weather bureau as saying.

Conditions in some parts of the country were set to deteriorate, with the worst drought in five years expected to hit central parts of Ningxia region in the spring, it said.

China Says Global Warming in Hands of Wealthy Nations

BEIJING - Rich nations are responsible for greenhouse gases fuelling global warming, China said on Tuesday, urging them to cut emissions and deflecting questions about whether Beijing will accept limits.

Spokeswoman for China's Foreign Ministry, Jiang Yu, said Beijing was willing to contribute to curbing greenhouses gases from industry, agriculture and vehicles, which a UN scientific panel last week reported was almost certainly behind rising average temperatures threatening wrenching climate change.

But Jiang told a regular news briefing that wealthy countries bore the blame, and the solution lay in their hands.

"It must be pointed out that climate change has been caused by the long-term historic emissions of developed countries and their high per-capita emissions," she said.

"Developed countries bear an unshirkable responsibility," she said, adding that they should "lead the way in assuming responsibility for emissions cuts".

China is Set on Curbing Fossil Fuels -- Climate Chief

BEIJING - China's top climate official said on Tuesday that Beijing is determined to curb the use of fossil fuels behind global warming, but deflected questions of whether the big emitter will accept caps on greenhouse gases.

Qin Dahe, chief of the China Meteorological Administration, said the nation's leaders worried that global warming, bringing intensifying droughts, floods and heat waves in its wake, would undermine development goals.

"The Chinese government is taking climate change extremely seriously," Qin told a news conference. "President Hu Jintao has said that climate change is not just an environmental issue but also a development issue, ultimately a development issue."