Cleaning Up China

How do you spur change in an opaque autocracy where policy decisions move in predetermined five-year cycles? If you’re President Obama, you can try going straight to the top, as he did in recent meetings with China’s new leader, Xi Jinping. The U.S. wants China to shift its policies on everything from cybersecurity to human rights. But the truth is that change is already happening in China–not from the top down but from the bottom up.

I gained a fresh appreciation of that during a recent visit to Beijing, in a conversation with Ma Jun, China’s foremost environmental activist. Ma has already gotten multinational firms and their suppliers to enact big improvements. Now he is launching a more politically contentious campaign to take on China’s pollution Goliaths: the country’s state-owned enterprises (SOEs). And his chances of success are good. Ma has developed a playbook for how to be a disrupter in the Chinese context by cleverly co-opting the country’s technocratic tendencies and tapping into the concerns of its growing middle class.

Back in 2006, Ma founded the nonprofit Institute of Public & Environmental Affairs with the aim of cleaning up the air and water of a country that’s responsible for 25% of global carbon emissions. China had penalties for polluters, but as Ma says, companies found it “easier and cheaper to simply pay fines for polluting than to clean up their acts.”

Working with two staffers (he now has 10) in a tiny Beijing office suite, Ma found a creative way forward. Rather than overtly pressuring the government–a strategy that rarely succeeds in China–he embraced the government’s data as a tool. Ma cut a deal to put China’s records about pollution by Western firms and their suppliers online, then used that information to quietly pressure the companies. The results have been remarkable. A 2011 report on Apple, for instance, resulted in a major effort to clean up environmental violations in the company’s supply chain.

Ma hopes for even more impact with his new action against the huge power and energy companies that are responsible for the lion’s share of China’s pollution. Because they are largely owned by the Communist Party and funded by state-owned banks, they’ve traditionally been off-limits for criticism. But buoyed by his wins with Western corporate giants, Ma recently announced plans to compile a similar database on these SOEs. “It’s a much more delicate issue,” he says with a somewhat nervous smile. “We’re not sure yet how it will all work out.”

Ma’s leverage this time is that the government is increasingly concerned about the environment. Leaders know the issue has the potential to galvanize mass protests, bringing out everyone from rural farmers whose land is contaminated by heavy metals to soccer moms worried that their children will get asthma from playing outside their schools in the Beijing smog. The initial goal is to coax the SOEs to grab the low-hanging fruit–retrofitting coal-fired power plants to reduce the worst emissions or stopping overproduction of steel. (China churns out 1 billion tons of it a year even though total global demand is only 1.7 billion tons.)

But Ma is also playing a longer game. By showing that some of the worst pollution in China is created by SOEs, he wants to highlight the costs of the country’s economic model, which is driven by government investment. Rebalancing China’s economy away from heavy industry and massive infrastructure projects and toward services and consumer spending is a goal for both China and the U.S. It would help not only cut pollution but also reduce the U.S. trade deficit and encourage global growth.

“In America, you complain about job losses because of China, but here we carry all of the environmental costs,” says Ma. He hopes his efforts will force the government to open up discussions about where new factories are built and to think more carefully about the metrics used for the promotion of regional leaders. (Currently they are judged mainly on the basis of GDP, which incentivizes growth at any environmental cost.) “We want more transparency and to give people more participation in the system,” he says.

That, of course, sounds like change of a democratic sort. “We want to use the environment to shift the way our society works,” says Ma. There’s already been movement. In March, Ma got a group of large Chinese companies to support his efforts to make environmental data public. Some big SOEs, like Sinopec, are starting to release corporate social-responsibility reports. “It’s like acupuncture,” Ma says. “You press one spot and see the results elsewhere.” It’s an apt way to describe this uniquely Chinese style of activism that’s effecting real economic–and social–change in the Middle Kingdom, from the bottom up.