Environmental Protection and Economic Development: The Case of the Huaihe River Basin Cleanup Plan

The case examines efforts by the Chinese government and local authorities to restore the Huiahe River, a 1,000 kilometer waterway which runs through four provinces in eastern China. The river basin, covering an area of some 270,000 square kilometers, is home to almost 150 million people and represents one of the most important areas of agricultural output in China. As a result of rapid economic development, the river has, over the past twenty years, become seriously polluted. This has had dire consequences for industries that depend on the river, notably agriculture and fishing. As well, the limited groundwater supplies in eastern China have meant that surface water has always been an important source of supply for residential and industrial uses. The pollution of the Huaihe has therefore had serious public health consequences. In mid-1995, the Chinese government formally adopted an ambitious plan to restore the water quality in the river. The case is based on material gathered from secondary sources, supplemented by interviews conducted with government officials and company managers in Beijing and Anhui province in China. The case begins with an overview of the impact of economic growth on the Chinese environment, and the steps which China has taken to address its growing environmental challenges. The case then focuses on the plan as proposed by the Chinese Research Academy of Environmental Sciences (CRAES). The case goes on to describe some of the early implementation measures taken as part of the plan, in particular the forced closure of hundreds of small factories that have sprung up along the banks of the river. The case outlines the various stakeholders affected by the plan and its ultimate success or failure. These include local residents and businesses, various Chinese government ministries, multilateral lending agencies and international suppliers of anti-pollution technologies. The ultimate success of the plan is, at the time of this writing, not known. Future issues and questions that will affect the plan's success are then described. These include resistance by some elements of the Chinese government concerned about foreign debts incurred to finance the cleanup plan; local officials who may not wish to sacrifice short-term economic growth for environmental protection; and businesses concerned about the financial burden of having to install new clean technologies.