Ties That Bind - Bay Area Council Economic Institute

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100 Ties That Bind Protection Agency (SEPA) tested the air in 300 Chinese cities in 2002 and found that two-thirds failed World Health Organization air quality standards. By 2020 the government hopes to reduce the amount of energy produced by coal to 54%, with the remaining 46% coming from oil, natural gas, nuclear and renewable energy sources. Massive deforestation and draining of marshes in China has eroded grass and agricultural land and led to rapid advancing of deserts, producing dust and sandstorms reaching Korea and Japan as well as cycles of drought and flash floods. Only 15% of China’s land is arable, compared with 49% for India, and the Ministry of Land and Resources reports that as many as 22 million acres have been lost in the past 10 years, forcing China to increase agricultural imports. With 22% of the world’s population, China has only 8% of its renewable fresh water. Soil erosion dumps adds 5 billion tons annually to river and lake silt deposits. Dam construction along the Yellow River and in the Huai River Basin during the communist era have forced downstream cities and towns to build reservoirs and drill ever deeper wells draining underground aquifers in search of water. Land in the center of Shanghai has sunk more than 6 feet since the 1960s, as a result of deep drilling for potable water. The port city of Tianjin on the northeastern coast has all but drained some 300 tributaries feeding the Hai River on which it is located, with some 30 dams and reservoirs. Agricultural runoff, industrial dumping and urban waste have polluted the reservoirs to the extent that the city of 9 million now diverts water from the Yellow River. Nearly half of the world’s 45,000 large dams are located in China. The largest, Three Gorges Dam across the Chang River, began construction in 1994, with completion of the entire project scheduled for 2009. Building the $25 billion project, which will generate over 18,000 megawatts of hydropower annually, required relocation of 1.3 million people for a 373-mile reservoir upstream. A massive North-South Water Transfer (NSWT) project is underway to redistribute Yangtze River Basin water to Northern China via a series of canals. The 722-mile, $9 billion “Eastern Line,” the least complex and expensive of the three, will deliver water to the Huang, Huai and Hai River Basins and to the Shandong Peninsula, including the cities of Beijing and Tianjin, by 2008. Still, China is experiencing its worst drought in more than 50 years. That in turn is cutting output of hydroelectric power generation from Three Gorges and other projects. Hydropower plants and reservoirs in Chongqing municipality ceased all operations in late August 2006. Water shortages and high oil prices have in turn increased reliance on coal for energy production in recent months. In July 2004 an 83-mile long flow of factory wastes on the Huai River killed fish and wildlife because so much water had been diverted from the Huai that it could not clean itself. In November 2005 a petrochemical plant explosion released 100 tons of benzene into the Songhua River in northeastern China, potentially affecting 3.8 million people. Since then more than 130 accidents contaminating China’s water supply have been reported. An April 2006 spill from two paper mills buried part of the Inner Mongolian village of Sugai after residents tried to stop the spill with a makeshift dike.
Bay Area-China Trade: Behind the Numbers These and nearly 50 other major environmental accidents and discharges reported by SEPA have prompted serious government attention. SEPA places the cost of environmental damage in China in 2004 at about $64 billion, just over 3% of GDP; other estimates place the damage at as high as 10%. Pressure is coming from other quarters as well, among them: � Local constituencies affected by pollution � Urban, affluent Chinese with rising quality of life expectations � Domestic and foreign NGOs � International agencies setting environmental requirements to funding � Neighboring governments complaining of dust, smog and acid rain � Prestige concerns as the 2008 Olympics approaches China is participating in a World Bank carbon trading system growing out of the Kyoto protocol to reduce greenhouse gas emissions worldwide. Long underfunded, SEPA’s resources have been increased, including 11 new regional offices to strengthen local pollution monitoring and enforcement efforts. $175 billion has been committed to environmental cleanup during 2006–2010 for industrial wastewater treatment, improved air quality in 113 cities, 31 provincial level dangerous waste disposal centers, sewage treatment plants in 10 river valleys, and other projects. In February 2006 SEPA announced a “Green GDP” pilot program in 10 regions, to measure performance of local leaders in meeting environmental goals, and to assign a political cost to reckless development for its own sake that has been common at the local and provincial levels. China is also studying $24 billion worth of proposed projects for coal-to-liquids (CTL) and coal gasification to ease pollution. And with the PRC’s auto market expected to grow from 20 vehicles per 1,000 people today to 267 per 1,000 in 2030, carmakers and environmentalists see China potentially providing the critical mass of customers that will enable conversion from the combustible engine to hydrogen fuel cells worldwide. %D\ $UHD &RQQH�WLRQV Foreign company activity in China’s environmental and energy sectors is still in the infant stages. Nevertheless, competition is heating up. As mentioned earlier, Bay Area architects and planners are deeply involved in the design of environmentally-sensitive buildings, planned communities and urban landscaping to address traffic, water quality, energy, open space and livability issues facing Chinese cities. Northern California venture firms participated in the growth of China’s largest alternative energy alternative energy company, Suntech Power, and are showing increased interest in environmental companies as they diversify their holdings. State officials say California is home to as many as 100 firms specializing in energy efficiency technology, but market entry in China for small and mid-sized business is a steep climb, given that the customer base is still largely the government. Most of the Bay Area-China linkages, are still in the government, academic and NGO areas. During a two-week China visit in September 2005, for example, representatives of the California Public Utilities Commission, California Energy Commission and Pacific Gas & Electric Co. signed cooperation agreements with Jiangsu Province, Shanghai Province and the central 101
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The Bay Area Economic Forum wishes
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Bay Area Economic Forum 201 Califor
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Table of Contents Introduction ....
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Introduction About This Report The
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Introduction dollar-denominated ass
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Introduction practices of their sup
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Executive Summary The San Francisco
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Executive Summary As Silicon Valley
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Executive Summary 8. Establish regi
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1 A Rich History of Work and Reward
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A Rich History of Work and Reward m
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A Rich History of Work and Reward t
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A Rich History of Work and Reward T
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2 New Networks Emerge The Bay Area
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New Networks Emerge With scholarshi
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New Networks Emerge nomic Law; the
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New Networks Emerge and academics f
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New Networks Emerge schools on the
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New Networks Emerge Hong Kong and T
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New Networks Emerge financing—ban
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New Networks Emerge Since the mid-1
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New Networks Emerge (R&D) innovatio
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Hong Kong Seeks Its Role New Networ
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New Networks Emerge In recent years
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New Networks Emerge savings rates a
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New Networks Emerge Two, featuring
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New Networks Emerge All of the abov
Page 57 and 58: 3 Bay Area-China Trade: Behind the
Page 59 and 60: Bay Area-China Trade: Behind the Nu
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Page 113 and 114: 4 Investment: Building Global Busin
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Page 145 and 146: 5 Building Bridges, Leveraging Asse
Page 147 and 148: Building Bridges, Leveraging Assets
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Page 151 and 152: Acknowledgments This report was co-
Page 153 and 154: Walter Reichert Hewlett-Packard Co.
Page 155 and 156: Sources Introduction American Chamb
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Financial Services Sources “A Gre
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Sources Schmitt, Kellie, “Lost Ho
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Sources “China-Based Worksoft Cre
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Sources Guerin, Didier, “Human Ca
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Sources Cooper, Chris, Ken DeWoskin
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Sources Liou, Fu Tai, “How Taiwan
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Bay Area Economic Forum 201 Califor
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Ties That Bind - Bay Area Council Economic Institute

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