9 Reasons China Will Have Blue Skies

Chinese cities are poised for an environmental revolution like the one that transformed some rusting American industrial cities, like Pittsburgh, into "beautiful, blue skies" cities today, a leading urban economist said in Chicago Thursday.
China is home to 12 of the world's 20 most polluted cities, said Matthew Kahn, an economics professor at University of California Los Angeles. But in a forthcoming book, Kahn and Siqi Zheng, a professor of real estate studies at Tsingua University, predict a green revolution for China driven less by policy than by economics.
"I'm going to tell a story, not based on optimism but based on economics, for why China's major coastal cities are going to experience a transition similar to Pittsburgh," Kahn told about 100 people gathered at the University of Chicago's Harris School of Public Policy.
Some of the reasons for China's green blossoming, according to Kahn:
1. Urban Redevelopment
In China's major cities, manufacturing plants occupy land that is becoming increasingly valuable for housing and commercial uses. Economics will push those factories to western China, Kahn predicts, and when that happens, 1970s-era factories will close and cleaner 21st Century factories will open.
"Take the dirty factory out of that multi-acre plot, remediate the pollution, and then erect 30-story towers," Kahn said.
"We have solved the problem of dirty industry in cities, not because the companies wake up one morning and say they want to be better people. The factories are profit-maximizing firms who can sell their land if they have property rights to the developers. They have opportunities now to shift to other areas. They're facing higher urban wages now. They can ditch regulation in the superstar coastal cities by moving west, and the net effect is going to be similar to Pittsburgh, this industrial transition."
2. Public Transit
As the factories move out of China's downtowns and people move in, increased population density will support public transit, off-setting China's car-buying trend.
"When people live and work downtown they use public transit," Kahn said.
3. Increased Mobility
China is relaxing its hukou system, which discourages people from relocating to other parts of the country. Although they can't vote with a ballot, mobility will allow the Chinese to vote with their feet, Kahn said. "If a city stays very dirty and you're free to move are you going to live there?"
Meanwhile, bullet trains have opened development in a new class of suburbs near China's large coastal cities. "The introduction of bullet trains creates what we call sweet-spot cities: cities too far to drive, too close to fly," Kahn said.
For example, people who live and work in Beijing can feasibly live in nearby Tianjin and commute to Beijing via bullet train. Cities like Tianjin may attract not only more residents but also the firms that employ them.
"The rise of the bullet trains creates an integrated network of cities, giving people the choice to live where they want."
4. Local Politics
When people vote with their feet, their choice will reflect on urban mayors. And the central government is encouraging urban mayors to pay attention to pollution.
In the past, local officials were evaluated for promotion based on economic development and domestic security, Kahn said. Now China has introduced environmental factors into the promotion criteria. "Thirty percent of local officials' promotion score is based on some indicators of quality of life and environment."
5. Market Demand
Kahn and Zheng studied real estate prices in China's urban areas and found that apartments in areas with cleaner air command a higher price. "This is evidence that the people in China are saying they care about air quality," Kahn said. "The market is saying that people in China are valuing green attributes."
6. Risk Reduction
China's population is becoming wealthier, and "richer people demand less risk in their life." The implicit price that must be paid to Chinese people to risk their lives (in risky jobs or polluted cities) is rising faster than the gross national product.
7. Four-Two-One Demography
China's policy of one child per couple (which leads to families of four grandparents, two parents, one child) gives Chinese parents an added incentive to ensure the health of their children.
"If you have one child you have an undiversified portfolio," Kahn said. Children who are exposed to pollution and bad food get a slow start and don't catch up, and parents may depend upon their sole child for support. Meanwhile, China increasingly values and measures the educational performance of its school children.
"There's aesthetic reasons for blue skies, but just from a cold-hearted Chicago perspective there's investment in the next generation," said Kahn, who got his PhD in economics at the University of Chicago.
8. Energy Security
"China is killing itself by burning coal," Kahn said. "As China's statistical value of a life goes up, are they likely to continue a policy that kills their people?"
Kahn expects China to shift from coal to natural gas and then to renewables. China is flooding the world market with solar panels and windmills, driving down global prices for renewable energy technologies. When China adopts renewable energy itself, it will have to import less coal and natural gas.
9. Media Diversity
On Oct. 21, 2012, the Ministry of Environmental Protection reported the air quality in Beijing as "slightly polluted," but in its Twitter feed, the U.S. Embassy announced it was a hazardous day. The Chinese government protested, calling the U.S. tweet a provocation, Kahn said, but when more Chinese people believed the U.S. announcement, the ministry changed its position. Since then, it has adopted the U.S. system for measuring and rating air pollution.
And Chinese people have access to many more sources of information.
"In China right now there's much more information right now by the microblogs about the pollution people are being exposed to."
Kahn's lecture was sponsored by the Energy Policy Institute at Chicago. Some in the audience questioned Kahn's optimistic outlook, and he acknowledged the challenge.
"It is the case that it is hard to be optimistic in the case of rising population and income," Kahn said, citing as a leading concern the Tragedy of the Commons—the tendency of a population to deplete shared resources.
"With unbridled optimism, this is one of our weakest links," Kahn said.