China has an air quality problem. About 1.2 million people died as a result of air pollution in 2010. World Bank report estimates that smoggy skies cost the country 5.78 percent of its GDP every year. China is investing heavily in clean energy sources, but it still burns nearly half of the world’s coal. Last month it unveiled a raft of policies aimed at addressing the problem, and this week it announced that it would back these measures up with $277 billion in government funding over the next five years. Reuters reports:
In December 2012, China said it would spend 350 billion yuan ($56 billion) by 2015 to curb air pollution in major cities. The newspaper quoted Chai Fahe, vice-president of the Chinese Research Academy of Environmental Sciences, as saying that China’s leaders realized, after releasing the plan in 2012, that a tougher approach against air pollution was needed.
But ramping up spending won’t fix China’s local government problem. City and regional government officials are likely to skirt, hedge, or simply ignore Beijing’s mandates. To the extent that these anti-pollution measures hinder industry, local bureaucrats have an incentive to work around them, and China’s central planners lack the ability to enforce their rules at the local level.Still, the problem is enormous, and now that the cat’s out of the bag, China’s ruling class realizes that something must be done.[Man wearing a mask in Beijing image courtesy of Getty]