China's growth canceled out

THE COSTS OF CHINA'S MODERNIZATION By Wenran Jiang

In a rare disclosure of the enormous hidden cost of China's rapid economic development, the Chinese government acknowledged last week that "sudden public incidents" such as industrial accidents, social safety accidents, and natural disasters are responsible for over one million casualties and the loss of six percent of GDP every year. Shocked by the recent explosion of a major petrochemical plant in Northeast China that caused large-scale pollution to the Songhua River and cut off water to over 10 million people for a week, and a series of large coalmine accidents, China is now debating not only how the system can better respond to disasters but also if the current development paradigm can be sustained.

According to a recently People's Daily online special, over 5 million "public accidents" occurred in 2004 alone, causing the death of 210,000 people, injuring another 1.75 million, and resulting in the immediate economic loss of over USD $57 billion (455 billion Chinese yuan). It is estimated that the direct annual cost of such disasters for China is more than USD $81 billion (650 billion yuan) on average, equal to six percent of the country's annual GDP. To state the obvious: most of China's economic growth each year is simply cancelled out by the immediate sacrifice of human lives and long-term damage to the environment.

(emphasis mine)

...tracking down who is responsible for taking precautions to prevent accidents—and for taking measures to deal with disasters once they occur—is a frustrating process...

To blame the system is not enough. Evidence has shown that many of the "public accidents" were in fact human errors that could have been avoided.

...China's infrastructure for disaster response is very weak. First, a lack of legislation that deals with different kinds of accidents and disasters has led to an unclear division of labor among different levels of government and different regions. Second, the flow of crisis information management has fatal flaws. The current system of reporting through vertical ministry/agency chains is too small to handle large volumes of information, slow to transmit information and decisions, and ineffective in meeting rapid response requirements.

Third, in recent years, China's social welfare system is collapsing while a primitive form of capitalism is taking over in the market place. According to China's labor and welfare protection authorities, among the more than 700 million employees nationwide, only 124 million people have medical insurance; 45 percent of the urban population and 80 percent of the rural population do not have any form of medical coverage and must pay from their own pockets for any medical treatment. The government has not invested in the education system for disaster prevention and related education. China is far behind other advanced industrialized countries in societal readiness to deal with large-scale disasters.

The author also notes that

the failure of the first-stage warning system has serious consequences: rural residents who were not informed on time may have drunk from the river, and the long-term ecological impact is yet to be fully estimated.

Too bad for them.