China’s Environment is Screwed and so is its Economy

China’s economy may be a growth miracle, but the externalities associated with that growth are certainly coming home to roost.

The infamous smog, that wonderful concoction of airborne pollutants and atmospheric conditions, made well-known during the run-up to the Olympics in 2008 has not gotten better. It’s gotten worse.

Recently, the U.S. embassy in Beijing—which has become a trusted source on the quality of the air in China—reported that its air quality index measuring so-called PM2.5 particles hit 545. A number greater than 300 is considered immediately hazardous to one’s health. The visibility in the city is expected to be reduced to less than 500 meters.

What does that look like? Here you go:

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Granted, the smog gets worse in the winter as atmospheric conditions and increased heating burden mix to create this lovely toxic stew.

However, the long term trend is that China’s air is so messed up that it will inhibit long term economic security. Why? People will not want to live there.

Businesses will not be able to locate themselves in China because no one will want to work there or will demand what amounts to hazard pay in order to relocate. Don’t believe it? Coca-Cola is offering its employees a so-called “environmental hardship allowance” for expatriate employees.

Panasonic is doing the same thing.

For Republicans or anyone who believes that air quality is a luxury remember that people like to breathe clean air. The lack of clean air will impact the economic viability of companies and countries. It looks like China is going to be the laboratory for this particular experiment in free market thinking. Here is to hoping the invisible hand of the market slaps the libertarians in the house.

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