Chinese Pollution as a Negative Externality

Newsday posted an article entitled "Beijing Releases Pollution Data; US Figures Higher" talking about the pollution problems in China that have been occurring for quite some time. China had released stats about the air pollution produced by their country after numerous requests were made. The problem is that the US figures taken over previous years are much higher. The argument is made that most of the pollution wasn't present when China took the measurements because the skies were clear. Where the pollution measurements were made is also an issue. Normally China's skies are filled with smog from the pollution, especially in the bigger cities. Whether or not the sky was clear when the measurements were taken is irrelevant because the Chinese should've taken numerous measurements to get a more accurate reading.

Chinese pollution has been a big topic of controversy lately. There biggest issue is that they still use coal in much of their manufacturing processes. The need for China to check their pollution is greater now that more health issues associated with air pollution are coming to light. Some of the pollutants in the air can be very damaging to people's lungs. Another issue is the more obvious environmental effects. Chinese air pollution creates acid rain in distant countries because the pollutants are carried away from China before they create acid rain that destroys much natural wildlife.

The economic viewpoint shows that Chinese manufacturing creates a massive negative externality, pollution. This pollution could lead to poor health an acid rain. Ways to account for this externality could be applications of Pigouvian taxes, regulations, or the Coase theorem. The problem with regulation is that international law is tough to enforce. Chinese manufacturing plants answer to the Chinese government which may see the coal use as a cheap way to produce that doesn't directly effect them. This makes regulation tough because without China regulating itself, there is little that other countries can do to regulate them without going to war. Regulation could work if the US applies it to its own producers. Much of US manufacturing is currently happening in China, so the US could make it a law to not allow US producer-or any producers for that matter-to sell their goods in the US unless they are made in a more eco-friendly manner. A Pigouvian tax is also tough to implement because it is usually set up by the domestic government. Countries that import Chinese goods may be able to add a Pigouvian tax on imports if they want to cover the damages made by the negative externalities. The Coase theorem seems to be the most easy to applicate in theory, but transaction costs may be too high, and property rights may not be well defined if foreign companies are using Chinese soil to produce. Therefore, Chinese pollution is a devastating negative externality that is tough to take care of for many reasons.