Category Archives: Public Policy

Urban Creative Culture, Air Quality and the Tragedy of Beijing

Beijing_Pollution

Like many foreign travelers and working expats who arrive to China, Beijing was my first port of entry into the country. Leaving Capital Airport I was struck by the massive scale of the city, overwhelmed by the repetitive concrete towers standing like regimented rows of soldiers in the skyline. Beijing’s urban form is undoubtedly inspired by the Soviet-era tendency towards grandiose urban planning schemes, but as I would come to learn the story on the ground painted a different, much more vibrant picture of urban life.

Beijing is not a city that one can fully appreciate in the matter of just a few days visiting the famous historical sites. In the space between gigantic attractions like The Forbidden City, Temple of Heaven, and Summer Palace, a modern grassroots culture thrives. Underground rock clubs, artist studios and independent coffee shops coexist in what’s left of old hutong neighborhoods as well as reclaimed industrial spaces on the periphery of the city center.

The notion of a burgeoning arts scene would seem to run counter to what many outside China still think of the city: that is, the seat of an oppressive Communist government devoted to quashing all personal freedoms. Although Chairman Mao’s portrait still looks ominously over Tiananmen Square, the perception of Beijing as a cultural desert couldn’t be further from the truth.

Arts and culture are engrained in the city’s urban DNA. Beijingers are rightly proud of their city’s long history as a cultural center, and its young creative residents continue that tradition today. Just as the infinite looping ring roads that surround the city conjure up images of Ouroboros (the serpent eating its own tail), so is the city itself in constant cyclical reinvention mode. The tremendous social and economic changes provide a fertile ground for artistic inspiration and creative freedom.

Yet there is one factor that undermines Beijing’s aspirations as a global urban creative center, and it is not the threat of government oppression. Rather, it is the layer of hazardous grey smog that envelopes the city on a regular basis.

When I first visited Beijing 2006 air pollution was already a problem, but not at quite the level it is now. When I returned to Beijing in 2009, this time moving to China for work, I noticed the pollution had become markedly worse. Thousands more cars were added to the roads and urban development was pushing out past the city’s distant 6th Ring Road. Today, the pollution levels are worse than they’ve ever been, with the density of PM2.5 particles reaching as high as 671 micrograms (or 26 times the level considered safe by the World Health Organization).

As someone with the fortune of being born in a country that is already developed and has established emission standards, I’ve been hesitant to criticize China regarding their development aspirations. Throwing stones from afar would be nothing less than hypocritical, as most developed countries also went through a “dirty phase” during rapid industrial expansion. Thus, the general tone of this blog is supportive of China’s urban development and the economic benefits it has created for the Chinese people.

Yet China’s environmental crisis is a serious threat to that process- and Beijing is ground zero for the country’s challenges. Beijing’s air pollution is a health problem for everyone in the city, regardless of class or economic status. It is an economic problem as much as it is a social problem: if the city’s residents can’t breathe clean air then urban life cannot continue to thrive. Pollution is also a real threat to urbanization, as crisis levels could prompt people to revert back to rural living despite economic opportunities offered by the city.

Encouragingly, the Chinese government has fully acknowledged that pollution is a problem and is taking proactive steps to address the issue. This includes everything from limiting the amount of automobiles on the road at any given time to decommissioning coal-fire power plants near the city.

Yet this is not enough- there needs to be a paradigm shift in the way China and other developing countries urbanize and grow their economies. This includes embracing more ecologically sensitive technologies in power generation and transportation. To incentivize using these new technologies, China is testing out a pilot cap-and-trade program in 7 cities (including Beijing). If successful, China will roll out a nationwide cap-and-trade program by 2016.

In the meantime Beijing residents will have to do what they can to stay healthy in the current environmental conditions. Sadly, until the air is cleaned up, Beijing may have to put on hold its aspiration as a global center of arts and culture, despite the exciting activity happening at the grassroots level.

Chinese Developers on the Defensive After Accusations of Tax Evasion

Beijing Residential Tower

As China’s state media increases its accusations of tax evasion, real estate developers are going on the defensive.

Last week, property tycoon Ren Zhiqian, Chairman of Beijing-based developer Hua Yuan Real Estate Group, posted  a message on Weibo (China’s version of Twitter) calling China state broadcaster CCTV “the dumbest pig on earth“.  This was in response to a program recently aired by CCTV accusing Vanke, another very large property developer, of owing more than 4.4 billion yuan (~$727 million USD) in unpaid taxes. The unpaid tax in question is the ‘land appreciation tax’ (LAT).

As a tax levied on the gains from the transfer of land development rights of state-owned land to real estate developers, the idea of the LAT is simple enough in theory but more complicated in practice. As explained in this South China Morning Post article from November:

“Land appreciation tax is collected by local governments, who have much leeway on deciding the actual tax rate. When a developer gets a pre-sale licence, it needs to pay a certain amount of land appreciation tax based on the asking price of the project. When the project is sold out, the exact amount of the tax will be calculated, deducting the cost of land, construction, marketing and other expenditures from the sales revenues, and multiplying the result by progressive tax rates.”

What this essentially means is that as a property developer increases the value of land through improvements and subsequent sales of housing units or leasing of commercial space, they need to pay a percentage of their gains to the local government. This is money due on top of what they already pay to the local government to bid on the land-development rights. The amount of money earned by local municipal governments in China on land sales is huge, accounting for about 30% of revenues.

Needless to say, as China has been going through its decades-long urbanization boom, local governments have not had to worry about a steady stream of money coming in from land sales.

Yet now China is at a tipping point.

With half the country urbanized, local governments are going to have learn to wean themselves off the land sales teat. There is also growing concern that local governments will not be able to pay back debts from loans taken out from state-owned banks used to fund the building of infrastructure.

Given this reality, it makes sense that the issue of land appreciation taxes is just coming to light. Don’t be fooled though- the accusations by CCTV are very calculated and a poorly veiled threat by the Central Government directed at country’s big real estate developers to “pay up”. It also creates a false narrative using developers as a straw-man to direct negative public sentiment towards.

No wonder Ren Zhiqian is livid.

It will be interesting to see how this plays out, especially since for at least the past 10 years developers have been the go-to guys for local governments in meeting their GDP targets (set by the Central Government ironically enough). As urbanization inevitably slows, tax laws will have to be reformed (and enforced).

Unfortunately, there is perhaps no easy way to make this transition. Clearly broadcasting exposés on state-run media against the country’s developers is only adding fuel to a potentially bigger fire.

Organic Farming in China: Chengdu’s Anlong Village

With the ongoing spate of food safety scandals, Chinese consumers are rightly weary of the source and quality of their food. Unfortunately, food quality regulatory bodies in China remain unreliable and direct access to fresh food sources is limited for an increasingly urbanized populace. This is one of the great contradictions of China’s urban development: a country which for most of its history was majority agriculturally based is on the fast track to be one of the most urbanized nations in the world.

Status conscious Chinese urbanites would rather not associate with anything related to farming, as it evokes the recent memory of rural peasant life. For many upwardly mobile city dwellers, international restaurant chains like KFC, McDonalds and Pizza Hut are considered the best options for upper-class ‘healthy’ dining (that is, food with high caloric content).

The urban growth of China is a boon to these chains as more American consumers shun them in favor of a more organic, natural diet. The shift in American consumer preferences is reflected in the success of supermarket chain Whole Foods, local farmers markets, and the growing popularity of the Slow Food movement.

Given China’s new-found love affair with processed food and growing ambivalence about the role of agriculture, I was confident there was probably not much interest in organic farming. That was until I visited Anlong Village- a wholly organic, zero waste farm 50 km northwest of central Chengdu. With a full-time population of 3,000 residents, Anlong Village is sponsored by the Chengdu Urban Rivers Association (CURA), a local non-profit NGO.

Anlong Village was initially set-up in an effort to help clean up the Funan River, which flows into central Chengdu

Anlong Village is CURA’s flagship project, and unlike other purported ‘eco-cities’ under development in China, lives up to its claim of being 100% sustainable. The partnership was established in 2003 as an effort to help clean up the adjacent Funan River, which flows through central Chengdu, after it was discovered that most of the river pollutants come from agricultural runoff upstream.

Anlong helps abate this problem by avoiding the use of chemical pesticides and instead using natural methods to fight agricultural pests. These methods include surrounding plots with mint (a natural pesticide) and planting garden plots with a variety of different species (so if one crop succumbs to disease, it does not destroy the entire plot). This not only avoids dumping unnatural chemical waste into the river, but ensures that the farm’s soil is nurtured over the long-term.

The village also features a comprehensive composting system. Composting toilets turn waste into organic fertilizer and animal waste is recycled into concrete pits treated with anaerobic digestive microorganisms that convert it into methane gas used for heating and cooking. Plant waste is also re-used as organic fertilizer.

Organic waste is mixed together in large pits and composted naturally before being re-used as fertilizer

Throughout the village, greywater is treated in a series of specialized ponds that naturally remove pollutants. Treated greywater can then be re-used for agricultural irrigation. Constructed wetlands adjacent to the Funan River also treat greywater, assuring that potentially harmful waste water is filtered before entering the river.

Constructed wetlands treat greywater, naturally removing pollutants

Despite the initial apprehension of local government officials, Anlong Village is a tremendous success. Of the few plots available to non-Anlong residents (primarily health conscious families living in the city who tend to their crops on the weekend), demand outstrips supply.

Demand is also great for the organic produce grown in Anlong. This is in large part due to Chinese consumer mistrust of the validity of produce labeled ‘organic’ in large Chengdu supermarkets like Wal-Mart, Carrefour, or Isetan. Anlong, on the other hand, offers a trustworthy source.

Unfortunately, at this point there are very limited formal distribution channels for purchasing organic produce grown in the village. Farmers frequently venture to the city to sell their crops, but usually only those ‘in-the-know’ will know when and where exchange points are. To make it a bit easier for consumers, CURA is currently in the process of training Anlong farmers how to use microblogging sites to announce the time and location of exchange points.

An outdoor dining hall in Anlong Village. The 100% organic & vegetarian lunch I ate here ranks up as one of the best meals I’ve eaten in China

In its relatively short history as a 100% organic farm, Anlong Village is already a benchmark for other aspiring sustainable farms around China. Yet like in the U.S., there is ongoing debate about the scalability of such a model. Considering the high markup on price compared to commercially farmed crops (produce grown in Anlong can be two to three times the cost of commercially farmed produce), many argue that this method of farming is not practical to feed a nation with such a huge population as China.

In spite of this debate, and given China’s struggle with pollution as it continues to develop, Anlong Village is a blessing and a valuable reminder that practical steps can be taken to protect its environment.

Building a Greener Capital

Prosper Center, Beijing’s First LEED Gold Certified Building

The following is a guest post by Daniel Garst, a Beijing-based American writer. This article originally appeared in the March 24, 2011 China Daily Metro edition.

Nothing concentrates the mind of economic planners quite like political instability in key overseas energy suppliers.  China’s new Five Year Plan therefore not only mandates further reductions in the energy used in generating economic output, but also sets, for the first time, overall consumption goals.

Making buildings here more energy efficient will be one key element in achieving these goals.  A January 7, 2011 National Geographic News story states that the building sector absorbs 30% of China’s energy, a threefold increase since 1980.

Beijing has recently made notable progress in reducing energy waste in this area.  A thirty percent wholesale subsidy program encourages the purchase of efficient light bulbs, while local authorities have aggressively pushed a coal-to-electricity project in hutong neighborhoods.

This program both lowers sulfur emissions and energy use, as the electric heaters are more efficient and have adjustable thermostats; some models even have thermostats pre-programmed to use less electricity during peak day hours and store it up at night.  Rooftop solar water heaters are also now a common sight in Beijing’s hutongs.

Moreover, a Ministry of Construction crackdown has raised the compliance rate with the construction code calling for new Beijing buildings to use 65% less energy than their 1980s predecessors to over 90%.

However, even with this success, Li Bingren, chief economist at the Ministry of Housing and Urban-Rural Development, notes in a September 21, 2010 China Daily story that heating energy consumption in buildings here will still substantially exceed those in the west.

Fortunately, lots of room still exists for further efficiency gains.  For example, heat for most residential buildings is still supplied by coal-fired boilers pumping hot water into radiators, so dwellers cannot lower or turn off the heat when it warms up or they’re out of the house.

An October 2010 University of Nottingham China Policy Institute paper on energy consumption in Chinese buildings states that 7% of the heat here is wasted when people open their windows because they have no way of controlling it themselves.

As incomes continue rising in the capital, Beijingers will demand larger flats with more lighting and electrical gadgets.  This makes it imperative for new buildings to allow residents—China’s 2008 Energy Conservation Law mandates that they be charged according to the amount of heat used—to control interior temperatures.

Subsidies could also be given to residents adopting thermal technology products that automatically allocate heat to rooms with different temperature demands.

Lastly, Beijing can be much more aggressive in retrofitting not just siheyuans, but other residential units as well.  The National Geographic News article cited earlier notes that Harbin has spent 1.1 million RMB to improve wall insulation and roofing in 2 million square meters of residential buildings.

Many high-rise commercial buildings also waste energy.  The University of Nottingham paper notes that while such structures take up just 4% of the floor space of Chinese construction, they account for 22% of the building sector’s energy use, thanks to poor design, especially badly insulated windows.

Unfortunately, as a leading Tsinghua University Professor quoted in an April 3, 2006 story on the Science Ministry headquarters, the granddaddy of Beijing’s “green” office buildings, puts it, “local governments just want fancy post-modern designs you can brag about.”

But the newly completed Parkview Green building on the Dongdaqiao Lu, which sports a slanting environmental shield resembling a giant greenhouse, shows that such structures can be very green.  In 2010, it was the first Chinese building to win the prestigious MIPIM Asia “Green Building” award.  And just down the Guanghua Lu stands the Prosper Center, Beijing’s first LEED Gold certified building awarded by the U.S. Green Building Council.

While both these buildings were expensive build and are costly to lease, Beijing’s first U.S. Natural Resources Defense Council certified green building, the Science Ministry headquarters, demonstrates that green construction can be less expensive in the short- as well long-run.  According to the Christian Science Monitor article on this structure, by avoiding the use of expensive materials, like marble, it cost $700 per square meter to build vs. the $850-1000 per square meter for other government buildings.

Of course Beijing’s construction industry still lacks a green material supply chain and expertise.  However, these things will develop as more of these buildings are constructed.  And since most factories have already been moved from the capital, Beijing will have to go green in building to do its part in helping China conserve energy.