By John Ruwitch and David Stanway
SHANGHAI/BEIJING, Nov 2 (Reuters) – It looked like another
victory for the people when the Chinese city of Ningbo announced
the suspension on Sunday of a petrochemical project after days
of street protests by citizens concerned it would pollute their
community.
It may turn out to be more complicated.
As China’s increasingly affluent urban population battles
back against the breakneck growth-at-all-costs model that has
fuelled the economy for three decades, environmental activists
say the apparently straightforward narrative that has played out
several times in recent years – government backs down, citizens
win – is simplistic.
A spokesman for the Ningbo government said in a statement on
Sunday that there would be no further work done on the massive
project, which includes a facility for the production of
paraxylene (PX), a potentially harmful chemical used in making
some plastics, pending further “scientific debate.”
But a source in Ningbo closely linked to the project told
Reuters that once the public furore dies down, China Petroleum
and Chemical Corporation (Sinopec) will likely proceed with the
$8.8 billion dollar expansion to the plant in Ningbo’s Zhenhai
district, including PX production.
Public worries could force the project owners to downplay or
disguise the PX facility by renaming it as something like
“affiliated PTA product capacity expansion,” the source said
speaking on condition of anonymity. PTA is a downstream product
made using PX, and a key component in producing polyester.
The rationale for the government to beat a public retreat in
Ningbo and other places like it is clear enough.
“Capitulating relatively quickly to the demands of the local
populace seems a worthy trade-off when thinking about the
potential for these large scale protests to spread and transform
into something much larger,” said Elizabeth Economy, a senior
fellow at the Council on Foreign Relations and author of a book
on China’s environmental challenges.
“Of course, this is not a sustainable governance model, but
it is clear that neither Beijing nor local officials know what
to do.”
The Ningbo protest came at a highly sensitive time for the
government about two weeks before a once-a-decade leadership
transition within the Communist Party.
SORT OF CANCELED
A quiet resumption of the Ningbo plan would hardly be
unheard of.
“Previously, similar cases were reactivated without much
scrutiny from the public. The public is much less organised, so
when the crisis calms down it’s difficult for them to monitor
what’s going on,” said Li Bo, Secretary General of the NGO
Friends of Nature in China.
In several cases, what appeared at the outset to be
government capitulation turned into quiet compromise. In Dalian
last August, demonstrators protested against a PX plant after a
typhoon damaged the facility. The government agreed to move it,
but months later the plant was still running.
Environmental activists told Reuters that according to the
local government, the plant was being steadily wound down rather
than shut completely, and would finally be closed and relocated
to an outlying industrial park by 2013.
“They have said it is impossible to close immediately
because of safety problems and because other petrochemical
plants nearby are using the PX as a feedstock,” said Tang
Zailin, director of the Dalian Environmental Volunteers
Association, a local NGO.
A large demonstration in Xiamen in 2007, also against a PX
plant, is widely viewed as a watershed moment in urban China’s
growing environmental consciousness. The government cancelled
the project, environmental groups hailed the move as a victory,
and paraxylene became a symbolic target for activists
everywhere.
While Xiamen turned out to be a triumph for the city’s NIMBY
(Not in My Backyard) movement, the resolution there has become a
familiar one. The government over a year later decided to move
the facility into someone else’s backyard – in this case that of
farmers in the neighbouring municipality of Zhangzhou. Residents
there protested sporadically, but to no effect.
RAISING COSTS, UNCERTAINTY
The rising tide of protests may be raising costs and
uncertainty for some businesses – including foreign firms once
attracted to China’s lower costs and its willingness to cut
through regulatory red tape.
In July, a violent demonstration broke out in the city of
Qidong, just north of Shanghai, over a planned waste pipe at a
Japanese-owned paper factory. It prompted the local government
to capitulate and pledge to stop the project altogether.
Since then, however, the company, Oji Paper Co Ltd,
has been left in the dark.
“We don’t know what the status is. There is no information,
and we can’t even get a hold of local government public
relations officials,” said spokesman Yasushi Iizuka.
“We are operating on the premise that the pipeline will be
built. There is no alternate plan.”
The government of Qidong declined to comment when contacted
by Reuters.
Companies, foreign and domestic, hope the government’s now
ad hoc and opaque regulatory processes will improve with time.
More effective environmental regulation is a key pillar of the
current five year plan.
But for now, analysts say, they must simply be more
attentive to the possibility of environmental backlash to big
investments. Duncan Innes-Ker, senior China analyst for the
Economist Intelligence Unit, says the public’s rising
environmental awareness is forcing changes to the way companies
handle large scale projects.
“In the past,” said Innes-Ker, “you really had to manage
local government officials, and once you’d managed that you
pretty much were home and dry. Nowadays, you really have to
manage the local population as well.”
(Additional reporting by Chen Aizhu and Ben Blanchard in
BEIJING and Mayumi Negishi in TOKYO; Editing by Bill Powell and
Jonathan Thatcher)
