In last week’s article on China I wrote that its remarkable levels of economic growth during the past three decades has lifted almost 300 million people out of poverty. In the process of selling manufactured goods across the world, China has built up enormous foreign exchange reserves. These reached $2.3 trillion in September of 2009, compared with only $83 billion for the United States, the richest country on the planet. 
Such amazing levels of economic growth do not come without major costs. Initially, when the economic reforms were introduced by Deng Xiaoping in 1978, farmers did quite well. Under the “responsibility system” they were to allowed to whatever they produced above the state quota level. However, within a decade, the cities began to boom and this drew a huge migration from rural areas into cities. The industrial city of Shenzhen has grown from four million to nineteen million in a space of 10 years. Many of these internal migrant still live in poverty. Even in dazzlingly modern cities such as Shanghai and Guangzhou with their high-rise buildings there are significant pockets of poverty with up to ten people living in a single room. Another feature of the economic boom is that the gap between rich and poor grew by 50 % when compared to the late 1970s. As a result in 2009, century, 1 percent of Chinese households controlled 60 percent of the country’s wealth. This growing inequality is a major problem for the Chinese communist party because it can lead to widespread social unrest, which in turn, could have dire consequences for the party, as happened in the former Soviet Union and its satellite states in eastern Europe.
The environment is another major casualty of China’s brisk economic growth. The drive to build and expand cities has taken a huge toll on agricultural land. During the past twenty years urbanization has claimed 6.475,000 hectares across the country. Each year roads and other infrastructural projects devour 768.42 squares kilometers. The figure is rising by almost 6% each year. The land which is lost is some of the most fertile lands in the country.
In the past 30 years many of the heavy industries, that once polluted areas such as Pittsburg in the U.S. and the Ruhr Valley in Germany, have transferred to China. These include steel, coke, aluminum, cement, chemicals, leather and paper. The vast majority of these factories use coal, which supplies almost 70 percent of China’s energy. Much of China’s coal contains high concentrations of sulphur which increases levels of air pollution.
The city of Handan, situated 300 miles north of Beijing, is a typical example of what is happening. It has become a giant industrial complex because of the presence of rich veins of coal and iron ore and the fact that the city has easy access to the north-south railway. The coking, steel and iron factories in the city cover four square miles. Night and day these factories belch out pollutants. Residents know that if they hang their clothes out to dry, they will turn black within hours. In recent years, industrialists from Handan have bought cleaner steel mills and other heavy industries from European companies such as ThyssenKrupp in Germany, Société Métallurgique de Normandie in France and Arbed in Luxembourg. Handan is not the only pollution black spot in China. Seven of the ten most polluted cities in the world are now located in China. Such pollution is taking a huge toll on human health. It is estimated that more than 300,000 premature deaths each year can be attributed to airborne pollution.
In 2004, the Chinese government began setting targets for reducing energy use and curbing emissions, particularly from heavy industry. Not everyone was happy with this decision, since slower growth rates could lead to higher levels of unemployment. By 2007, targets were set to produce 16 percent of China’s energy from renewable sources, mainly hydro and wind energy, by 2020.
Naturally, all this energy producing over $1 trillion of good for export each year has pushed up Chinas greenhouse gas emissions. In 2009, China overtook the U.S. as the largest CO2 in the world. The Paris based International Energy Agency estimates that over one third of the greenhouse gas emissions are incurred in the course of making and transporting goods for export. Many are asking; should countries which benefit from these cheap goods share the carbon cost of their production?
 `Frank Dillon, “Growth of China’s middle class my represent huge opportunity for US,” The Irish Times, November 8th 2010, page 19.