According to the World Bank, six of the world’s ten most polluted cities are in China. It is also a very inefficient user of energy requiring 4.7 times as much energy to produce a unit of GDP than in the U.S., a consequence of subsidized fuel in China leaving little incentive to implement energy saving technology and lax environmental regulation. The energy subsidies and the lack of environmental regulation contribute to the cost advantage enjoyed by Chinese producers. And, according to BusinessWeek, China is becoming even less efficient in its energy usage:
China's Dirty Face, BusinessWeek Slide Show: As the Middle Kingdom's economy has grown, so have the environmental costs of largely unregulated growth. Despite a clean-up of Beijing and a handful of other big cities, most of China is still reeling from the devastation wrought by three decades of communist industrial development and the subsequent 25 years of quasi-capitalism. ... Of the world's 10 most-polluted cities, 6 are in China, according to the World Bank, which estimates that pollution costs China more than $54 billion a year in environmental damage and health problems.
The problems are compounded by China's inefficient use of electricity, oil, and coal. China consumes 4.7 times as much energy as the U.S. to produce each dollar of GDP-- and 11.5 times as much as Japan. Alarmingly, the nation is getting less efficient, not more. After making steady progress in energy efficiency for two decades, China has been consuming energy at a rate faster than its GDP since 2002.
Coal may be the biggest culprit. China has tens of thousands of small mines that pay scant attention to environmental concerns or safety ... Such neglect helps keep costs down, so most of China's electricity comes from power plants that burn high-sulfur coal. Worse, few have effective emission controls, a big contributor to the acid rain that falls on one-third of the country.
In its quest for development, China is building highways -- and cars -- at an accelerating pace. There are 26 million cars on the road today, and that number is expected to double by 2010. By then, automobiles are expected to account for nearly two-thirds of China's air pollution. Some officials, though, are trying to hold the line on auto emissions ... And Beijing has equipped more than 2,500 buses with engines powered by natural gas, at a total cost of $26 million.
Some 70% of China's lakes and rivers are heavily polluted, largely because more than 80% of its sewage flows untreated into waterways. What's more, even where waste-treatment gear is installed, some companies opt to pay fines rather than operate expensive equipment. Regulators say that while most major industrial plants have water-treatment facilities, one-third don't operate them at all and another third use them only occasionally. There's a bit of good news: China expects to invest $61 billion in city waste-water treatment facilities between now and 2010…