China in 2018: Tackling pollution and poverty
Every January, Gordon Orr publishes a widely watched list of predictions for the Chinese economy. I sat down with Gordon recently to discuss his annual predictions in a series of short video clips. In this fourth of four videos, we discussed how China is tackling pollution and poverty.
Gordon was a Senior Partner and was also Asia Chairman of McKinsey & Company for several years. Now a Senior Advisor to McKinsey, Gordon is a Board member of both Lenovo Corporation and Swire Group.
Click here to watch the first video on the continued globalization of Chinese companies in 2018.
Click here to watch the second video on the coming shake-out in China's electric vehicle market.
Click here to watch the third video on the rise of the Greater Bay Area.
Please follow me so you can be notified of the next installments in this video series. You can also read Gordon’s entire list of predictions on our website here.
Watch our conversation here:
Joe Ngai: So Gordon, let's talk about the last piece of your predictions, which is around these lasting and social issues that we talk about in China: Pollution and poverty. What is your prediction around pollution in China. Beijing’s air has not improved that much in the last couple years right, so is it going to get better in 2018?
Gordon Orr: Interesting though, as we look out the window here in Hong Kong today, and I checked my little app before we came in here. Pollution in Beijing today is a quarter the level in Hong Kong, so let's not throw stones too far.
Joe: That happens a few days a year, but yes, we'll give you that.
Gordon: In reality, Beijing has clearly turned a corner. We're 25-30 percent lower pollution levels on average compared to a couple of years ago and it's going to continue.
The levers have always been known. It's been a case of, do we have the will to pull the levers and clearly we do this year. And in many ways, perhaps even overshot by forcing people to stop burning coal and to use gas that wasn't available. But just on that, we've got another eight weeks, perhaps, of winter to go. I guarantee that by the time we get to October next year, the gas infrastructure across Beijing and greater Beijing is going to be complete and we will not have shortages of gas in Northern China again next year.
Joe: By the end of 2018, we'll come back and let's talk about pollution there. I am seeing a lot better feedback from all of our colleagues who work in Beijing. I feel like it's actually better now relative to six months ago.
Gordon: It may be too aggressive to say that people are excited to move to Beijing yet, but certainly the people who are living in Beijing now are much more comfortable about being based there and that in and of itself is really great news.
Joe: So let's say that we have confidence that Beijing will fix pollution and then the rest of it will happen just fine. But in the more inner provinces in China and outright, the poverty and the growing gap between the coastal area and inland.
Obviously that's a big priority for the current administration to fix. Last week I was in actually in a provincial government and all of them had to adopt a few cities out there where they actually had to help alleviate poverty. I thought that was a fantastic way for them to get involved. But what do you think is going to happen this year around the more inner areas in China and also for multinationals looking at this. What's the significance to them?
Gordon: Well I think that for multinationals, it's a good point, Joe, because I think it's a bit of a change of mindset. Multinationals of scale in China have had corporate responsibility programs, sponsored schools in the cities that they're in and the like.
I think that it's a new thing that they need to do if they're really thinking about creating visible impact on poverty and getting credit for it from the government, and that's looking to make real business investment in the least developed provinces.
I think that quite a lot of the multinational tech companies have really taken this on board. If you go down to Guiyang and you look at the data center industry that's developing there. Apple's there, Intel's there; there's a whole host of multinationals, down there making real investment and creating investment around their facilities there.
Inner Mongolia, the same is happening, and I think there'll be three or four provinces where multinationals will say, "Yep I see what's expected", and they can differentiate themselves from their peers by doing this.