China’s Social Risk Assessment Mandate

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While the Chinese media focused on the outcome of the Chinese Communist Party’s 18th Party Congress last November, an announcement by Minister of Environmental Protection Zhou Shengxian mandating strict environmental and social impact assessments went largely unnoticed. But if implemented widely, the change will have far-reaching domestic and international implications.

The year leading up to the power transition was characterized by high-level political scandals and major protests. While much of the recent tension can be attributed to uncertainty over the leadership transition, China has seen a steep jump in environmental protests in the past decade. In 2012, thousands protested in Qidong, Shifang, and Ningbo – sometimes violently – against projects that they feared would affect public health.

The establishment of a social impact assessment system to prevent issues from arising unexpectedly is an attempt to stem protests. Four factors have contributed to a significant rise in mass incidents: beginning construction of major projects before assessing their impacts; the ineffective environmental assessment system; the differences between the central government’s policy and local implementation; and the weak foundation on which laws and systems regarding social impact assessments are based.1

To address these concerns, Minister Zhou emphasizes that all companies must perform social and environmental impact assessments in accordance with Chinese laws and make them publicly available. This is a significant policy change. Zhou notes that local governments must include members of the public in discussions to understand the costs and benefits of projects and mitigate any negative results.

Engaging with the populace is vital because protests are a challenge to domestic stability and the government’s legitimacy. The Communist Party bases its legitimacy on two premises: that it successfully liberated China from foreign control and that it improved the lives of the Chinese people. The second basis of legitimacy has come under increased criticism in recent years: despite the Communist Party’s success in bringing millions out of extreme poverty, inequality in China is rampant and environmental degradation forces many to question whether standards of living have increased. When combined with the belief that polluting industries are largely the result of corrupt officials, the rapid increase in protests is understandable.

Implementing these measures will be slow due to the size of the Chinese economy and the level of pushback from local governments. However, if social and environmental risk assessments are fully implemented and adequately engage the populace in identifying and resolving disputes related to development projects, China’s domestic stability may significantly improve. In the past decade, increased public awareness of environmental issues and a willingness to act on these through protesting or supporting environmental nongovernmental organizations has occasionally forced Chinese companies to halt projects, and some have begun to change their behavior as a result. The mandate that companies conduct social and environmental impact assessments and then make them public will speed this change.

The changes will be most clear domestically but could also have implications for Chinese companies that have expanded operations overseas. Many Chinese companies are not used to calls for engagement and transparency when operating abroad and normally prefer to engage with foreign governments rather than local communities. This sometimes leads to conflict: the suspension of the Chinese-funded Myitsone Dam in Myanmar is perhaps the most visible example of a failure.

Projects in other Southeast Asian and African nations have faced similar issues, resulting in accusations that Chinese companies as “neo-imperialist” and exploitative. As China’s economy and resource needs continue to grow, these sentiments will likely increase. Given that these investors are often the most visible representatives of the Chinese government in other countries, failing to address the negative impacts of their projects could have significant consequences for Chinese foreign policy.

Further engaging local communities through social and environmental risk assessments will be a step towards mitigating criticisms of China abroad. Currently Zhou Shengxian’s announcement only reflects a brief point of discussion as Xi Jinping and Li Keqiang take power in a climate of increasing concern regarding domestic social stability and the international environment. But the announcement is an important step in the right direction.

Addressing the root problems of domestic social instability is a stated priority for the new leaders. Implementing this initiative by the State Council and enforcing the inclusion of publicly available social and environmental risk assessments in major investments and infrastructure projects will ultimately reduce important sources of domestic instability and serve foreign policy goals.

1 Xinhua News, “Zhou Shengxian: China is in a sensitive time regarding the environment,” (Zhou Shengxian: zhongguo zai huanjing fangmian zheng chuzai mingan shiqi), Xinhua News, November 12, 2012, accessed March 13, 2013:

Photo Credit: Bert Van Dijk via Flickr

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