BOFIT Viikkokatsaus / BOFIT Weekly 2017/25

Air pollution puts a significant strain on China's economy through damage to human health and reduced productivity. The recently released report State of Global Air 2017 estimates that over 1 million Chinese die prematurely each year from air pollution, while the annual amount globally is estimated to be around 4 million. The RAND Corporation estimated in 2015 that the costs of China's air pollution over the past decade corresponded to about 6.5 % of GDP, and that this cost has continued to rise as China urbanises. China has sought to reduce air pollution by e.g. closing plants, limiting car use and reducing its reliance on coal in energy production. Because many measures intended to reduce air pollution tend to lower productivity, finding a balance that allows officials to meet their economic growth targets and protect the environment has proven difficult. The official 2017 goal of reducing air pollution by 10 % seems distant at the moment. The January-April air quality in Beijing, Tianjin and surrounding Hebei province was 20 % worse than in spring 2016.

China's waters are also polluted. Two-thirds of groundwater and one-third of surface water is so polluted that it is not fit for human use. In addition, 80 % of the Chinese shoreline is badly polluted with waste and toxic chemicals. Then there are the climate disruption issues. A substantial portion of the Chinese population lives along the eastern coast in areas threatened by rising sea level.