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Main Industrial Development Issues and Challenges

Environmental problems

China’s rapid development, with its resulting energy needs and consumption, has caused serious pollution and degraded natural resources. According to a WHO report on air quality, seven of the world’s ten most polluted cities are in China. Almost all of the country’s rivers are polluted, chiefly by improperly treated industrial, agricultural, and urban waste. Soil erosion and deforestation threaten Western provinces’ natural resource base and its biodiversity. 

Studies estimate that pollution results in substantial costs to the Chinese economy. Premature mortality and health effects from air pollution, crop damage by acid rain and polluted irrigation water, groundwater depletion and exacerbated water shortages all has a direct economic impact. Conservative World Bank calculations, using the adjusted human capital approach widely seen in Chinese literature, determine the cost of pollution to be 2.68 percent of GDP. Different World Bank calculations place the cost at a much higher 5.78 percent, while other studies claim that up to 7-10 percent of GDP is lost due to environmental damage.