There is no doubt that China has become an economic “juggernaught” and many signs indicate that the dynamism of the economy will continue in the years ahead.  Economic growth of about 10% annually, expanded manufacturing capability, increased foreign investment in the Chinese economy, increased investment by China in under developed and developed countries, evidence of more competence in technology, research and development and China is about to become a major global player with the 2008 Olympics in Beijing. 

Yet, despite all these positive developments, China has many challenges to deal with including, growing inflation, inadequate infrastructure, corruption, the gap between the rich and poor, water distribution, energy, environment, and transportation. I would like to address just a few of the challenges; transportation, water and the environment.

First, water:  One of the most serious environmental issues facing China is water.  This includes frequent and critical shortages, disastrous flooding in many areas and dangerous areas of pollution.  The lack of water is already adversely affecting industrial and agricultural production.  Also, rivers, the main source of water, have been abused.  For an example, the Yellow River, formerly one of China’s main arteries, no longer flows to the sea about 200 days of the year.  Water wasting is also a problem. In agriculture, almost 75% of water is wasted through evaporation from canals and irrigation systems.  Ironically, as well as water shortages, flooding has a devastating toll in human lives and agriculture harvest.

The World Bank recently states “the Chinese government must do more to tackle traffic jams, choking air pollution and other urban transport problems”.  Any visitor to China can readily see with more cars on the roads large cities in China are increasingly suffering from traffic jams and choking air.  And it will get worse. A recent survey showed that 15% of the population of Beijing, Shanghai, and Guangdong plan to buy a car within the next 12 months!  Beijing has already experienced a ten fold increase in cars in the past 10 years, while Shanghai’s car population has increased from 19,000 to 250,000 in the past eight years.  Some negative results of this dramatic increase in car ownership include:  traffic congestion stifles the urban growth; air quality has caused increasing respiratory problems and vehicle pollution is a major contributor to China’s greenhouse gas emissions; conversion of farmland for urban development is destroying already scarce farmland and displacing farmers.

Finally, China has huge challenges with respect to the environment.  It is a well accepted fact that China is becoming one of the planet’s worst polluters and not only China, but other countries in Asia and Europe are feeling the consequences.  One of my economist friends said to me recently, “China’s main export is now pollution”!  China is now the second biggest producer of greenhouse gases after the U.S.  Coal heavily pollutes China’s air and China is building coal fired power plants as fast as it can.  About 80% of Chinese power plants run on coal.  It is estimated that half a million Chinese die each year from breathing polluted air.

It will be interesting to see what steps the government will take to minimize pollution and present a cleaner environment for the Olympics!

China’s economic growth has resulted in many challenges that affect the quality of life for the Chinese as well as our planet.  We hope our Chinese friends take these challenges seriously.

Richard King,
Chairman Emeritus /Trustee, WoodburyUniversity
Chairman/Founder King International Group
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