Expert Call: China’s New Environmental Policies
Setting Long-term Course Now: China’s new government is planning to implement stricter environmental policies in coming months. The disclosure of more information on air quality in China, as well as greater understanding regarding its impact on health, has generated substantial political pressure for change. While cleaning-up air quality in cities like Beijing is a long-term process, the new government is setting the course now amid widespread discontent.
Reshaped Industrial Infrastructure: China is by far the largest consumer of commodities like coal and iron ore, in addition to being the largest player in polluting industries, like steel and rare earth metals. Dramatic growth in Chinese fixed asset investment and manufacturing has reshaped global industrial infrastructure in the past decade, impacting firms like CAT, VALE, UNP, Siemens and Komatsu.
Benefits and Costs: New policies could drive investment in pollution control technologies, potentially providing opportunities for well positioned competitors, like Siemens or BWC. Plants are expected to be moved away from population centers, which may provide opportunities for factory automation firms amid higher labor costs and tighter regulations. There may also be negative impacts, such as limitations on urban automobile permits and potential reduced coal demand. In addition, increased costs associated with steel production could impact iron ore sales to China.
No Easy Task: While the changes are likely to be implemented slowly so as not to shock markets, the government will need to show steady and independently verified progress. Balancing economic growth with definite environmental progress may prove more challenging than some expect given the severity of pollution and the nature of Chinese economic output.
- New environmental policy initiatives
- Natural gas price deregulation and potential for ‘fracking’
- Potential restructuring of Chinese electrical grid
- Nature and timing of new emissions policies
- Enforcement and implementation challenges
- Discussion of key figures involved
- Industrial consolidation and relocation
Key Tickers: JOY, CAT, VALE, CLF, BHP, RIO, SIE, GE, BWC, GM, ROK
Melanie Hart Bio
Melanie Hart is a Senior Policy Analyst for Chinese Energy and Climate Policy at American Progress. She focuses on China’s science and technology development policies for energy innovation as well as its domestic energy efficiency program, environmental regulatory regime, and domestic and international responses to global climate change.
Before joining American Progress, Melanie was a project consultant for the Aspen Institute. She also worked on Qualcomm’s Asia Pacific business development team, where she provided technology market and regulatory analysis to guide Qualcomm operations in Greater China. She has worked on Chinese domestic and foreign policy issues for The Scowcroft Group and the University of California Institute on Global Conflict and Cooperation, and as a Chinese-English translator for Caijing Magazine in Beijing.
Melanie has a Ph.D. in political science from the University of California, San Diego. Her doctoral work focused on China’s environmental regulatory regime and local-level policy enforcement challenges. She studied Chinese at China Foreign Affairs University in Beijing and has a B.A. in international studies from Texas A&M University.