Environmental Regulatory Development and Programs

| July 18, 2015

 

 

Environmental Regulatory Development and Programs

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Environmental programs in China are designed by the central government. The government issues the guiding regulations while the local authorities are responsible for the monitoring and enforcement of the law. The local authorities are, however, more concerned with high economic growth in their respective jurisdictions. They are also marred with high cases of corruption and ineptitude. The growth of environmental policies is hampered by the undemocratic regime that stifles the contribution of non-governmental players such as the media and legal fraternity (Kutz, 2009). Since 2007 the government has taken drastic measures towards addressing environmental issues. Industries that have not conformed to the new measures have suffered a withdrawal of subsidies and tax reliefs while others have been shut down indefinitely.  Statistics show that China emits a third of the globe’s greenhouse gasses. It hosts sixteen of the most polluted cities in the world. Air pollution has led to a decreased life expectancy by a margin of 5.5 years. Water pollution and its scarcity have also led to massive deterioration of land in China. Almost 9% of the country’s gross domestic income is consumed by effects of environmental pollution (Kutz, 2009).

The United Nations on Human Environment Convention held in 1972 set the stage for China to establish environmental structures. Even though, China was represented in the Conference environmental depletion was rampant due to the economic reforms that were been implemented in the 1970’s. The Ministry of Environment in China has put in place raft of measures to prevent the accelerated degradation of the environment. By the end of 2013, a commission was appointed to provide a national blueprint to guide the nation on matters of climate change keen on meeting the desired goals by the year 2020. All companies including those owned by the state are required to state their real time progress on discharge of water and air emitted from the factories. A budget of $275 Billion has been set aside to ensure that in the next five years there is a significant cleanup of the air (Bennett et al, 2008).  The parliament has further amended the Environmental Protection Law to administer tough and strict punishment to corporations and individuals responsible for pollution. The administration for National Energy has embarked on a very ambitious plan to invest in renewable energy. This is aimed at reducing the intensity of carbon emissions. A budget of $300 Billion has been set aside to address this concern. The government of China has also embarked on the process of partnering with other jurisdictions such as the United States government in addressing environmental issues. It however, remains a great challenge to enforce pollution discipline in China. This is because the local authorities that are mandated to enforce are corrupt, and more concerned with economic gains as opposed to environmental matters (Bennett et al, 2008).

In its 12th Five-year plan, the Government of China anticipates a more sociable income with key emphasis on environmental construction and sustainability. The Environmental regulations proposed in the 15 research areas will change the business arena in China. As the United States Company on pharmaceuticals plans to relocate to China, more emphasis should be put on its compliance with the environmental reforms. The market share for the generic pharmaceutical is already guaranteed due to the availability of raw materials and cheap labor. The U.S Company already has a comparative advantage to other companies due to its advanced technology. The company however, has to invest heavily in infrastructure that will conform to environmental requirements of China. These include emission of safe gasses, proper disposal of solid waste and water. The U.S Company should be alive to the fact that the government will hold it responsible for any acts of pollution that can be traced to it. It means that the capital investment will be considerably high for the US Company due to the environmental compliance.

The company should also invest in high qualified human resource that will be able to undertake continuous research and report to the government authorities frequently. The company will rely on the Chinese suppliers for its raw materials. The U.S Company will definitely demand raw materials that are compliant with the environmental reforms. For example, raw materials that lead to the emission of nitrogen oxide will be discouraged. Alternatively, the cost of raw materials will have to go down, since the company will invest heavily in infrastructure that will diffuse the harmful emissions of greenhouse gasses. The use of coal promotes emission of carbon into the atmosphere; the use of alternative energy such as renewable energy has to be emphasized. It is, for this reason, the responsibility of the government to offer alternate power or extend subsidies for private investment.
China is the fastest growing economy in the world since the early 1990’s. This is a result of decentralization of the economy that was launched in the 1970’s to spur growth in the rural areas. The Chinese government emphasized on economic growth with little regard to the environmental protection. It is only recently that China has realized the negative effect that it’s economic leap policies has caused to its population. The country loses a considerable number of its citizens to environmentally related disorders (Lu, 1995). In 1972, as earlier stated in this paper, the government participated in a conference discussing human environment at Stockholm, but due to its economic growth target little was done to protect its environment. It’s only recently after the intervention of neighbors such as Japan and non-governmental organizations that the Chinese government has been pressed to undertake environmental reforms.

The media especially from the West has also been very keen on exposing the threat of environmental degradation in the country. Due to lack of its initiative China has resulted in the following strategies employed by the Western countries in curbing environmental degradation. China has partnered with Western countries, especially the United States on environmental issues. The Chinese blueprint in Environmental protection of 2013 was compiled in collaboration with the United States Department of Environmental Management. Initially, the Chinese market had been locked, such that it was not opened to the outside world. This collaboration will lead to opening and interaction of Chinese technology with those of other countries. The authorities responsible for the prevention of pollution in China will also take advantage of the imported knowledge to save its population from eminent environmental hazards. China is, however exposing itself to unfair competition from the West. China is home to a significant population of the globe, this means that there are a lot of market opportunities that are yet to be fully exploited. As it collaborates with the West, industries such as the pharmaceutical company will move with speed to exploit the untapped market in China’s population (Pong, 2009).

 

The west and especially in the United States companies that go contrary to the expected environmental regulations are heavily punished by fines, revocation of permits and possible shutdown. The law is clear, and it should be followed in the United States. In China, enforcement remains to be a tall order because the local authorities are supposed to articulate that mandate. Their inefficiency is brought about by their focus on economic growth and disregard of the environment (Pong, 2009). The pharmaceutical company is faced with a daunting task in interacting with enforcers of the law. The company is likely to face discrimination from the local authorities because it is a foreign company. Chinese tend to focus on the development of their brand only. Tougher penalties and heavy taxation may be slapped on the company, hence complicating its growth. Strategies put in place to safeguard the workers from any harm should be appreciated by everyone. This is because they are designed to ensure that the employees are always in full protective gear, properly insured and guaranteed of compensation in case of any tragedy.

In view of the above it is prudent to conclude that the American pharmaceutical company can relocate to the Peoples’ Republic of China only if there is properly structured agreement with the national government, and negotiated contracts with the local authorities. The company should dangle a carrot that will convince the Chinese government that the benefits will be to both American company and local jurisdictions. Reasons for this recommendation are as follows.

  • The Chinese market is far from being fully exploited, and entry of the American pharmaceutical company will guarantee good returns on the investment.
  • A new partnership between the West and China is guaranteed with the entry of the American pharmaceutical company. This will ensure effective transfer of technology in regard to the protection of the environment. The U.S Company will, for this reason, be a new frontier through which the West can establish its mark in the Chinese market.
  • The Chinese population will be presented with alternative product that they can compare from those offered by indigenous companies. This means that the U.S Company has a comparative advantage over its competitors and it is thus guaranteed of good returns.

 

 

 

 

References

Kutz, M. (2009). Environmentally conscious materials handling. Hoboken, N.J: Wiley

Bennett, J., Wang, X., & Zhang, L. (2008). Environmental protection in China: Land-use management. Cheltenham, UK: Edward Elgar

Lu, R. (1995). Handbook of regulations on environmental protection in China. Washington, DC: Resources for the Future.

Pong, D. (2009). Encyclopedia of modern China. Farmington Hills, MI: Charles Scribner’s Sons/Gale Cengage Learning.

 

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