Don't be fooled by the tranquil facade of the Taihu Lake district. One of the most powerful transformations in China is underway behind its veneer of serenity, showing the way for environmental redemption to private enterprises and the authorities in other industrial districts.

Taihu Lake, which was tainted by blue-green algae in May 2007

It has been 10 months since the blue-green algae outbreak in the Taihu Lake disrupted water supply to 2 million residents in Wuxi, Jiangsu province. Much water has flown down the Taihu since. Many manufacturing enterprises, at the urging of the provincial and city governments, have taken difficult and costly measures to cut down on industrial pollution that was said to have contributed to the algae crisis, their efforts seen as an example for others to remedy decades of environmental abuse and neglect.

"Excessive industrial development along the Taihu Lake area has taken a deadly toll on the environment," says Li Yuanchao, head of the Organization Department of the Central Committee of the Communist Party of China and the former Party Secretary of Jiangsu province. "Strict environmental standards should be enforced to reduce pollution, even if that means a slowdown in growth. It's the cost we have to pay."

While going all out to crack down on the enterprises held responsible for the pollution, the Jiangsu provincial environmental protection bureau issued what is considered the strictest environmental standard in the nation - DB32 Discharge Standard of Main Water Pollutants for Municipal Wastewater Treatment Plant and Key Industries of Taihu Area - which took effect at the beginning of this year. DB32 leaves little room for compromise: enterprises either comply or get out.

As a cradle of China's industrial resurgence in the early 1900s and that of the "south Jiangsu model" featuring village and township industry in the end of the 1970s, Wuxi has played host to one of the nation's most advanced and developed modern industrial zones. It enjoys a long history of industrial development, especially in textile and machine manufacturing, while printing, dyeing, plating and chemical industries mushroomed in the 1980s.

These manufacturing industries have brought unprecedented wealth to the region in the past two decades, but at a high cost. Growing environmental problems in recent years, such as the algae outbreak, have sounded a serious warning that the old pattern of growth simply can't be sustained.

Industrial restructuring

Although Wuxi's manufacturing output ranks among the nation's top 10, its industrial structure is heavily skewed toward the chemical sector. Small chemical companies dot the city's 3,000-plus watercourses and rivers. Many of these companies have been discharging waste directly into the nearby rivers that eventually flow into the Taihu Lake.

Things are changing, however. Statistics from the municipal economic and trade committee show some 600 small chemical companies were closed down in 2007. Other sectors like metallurgy, printing and dyeing, plating and cement are also facing the heat.

The city's environmental protection bureau has ordered the closure of sewage drain outlets along the river channels into the lake so that companies are forced to discharge their wastewater into the city's sewer pipes that ensures their treatment in the sewage plant.

"Companies will have to do preliminary treatment if the content of pollutants in the wastewater proves high," says Qin Jueming, chief of staff of the environmental watchdog. "If they don't do it, they will simply be shut down."

The local government has also been relocating environmentally hazardous companies from the city proper to industrial parks since 2003 to minimize pollution through centralized management and promote their industrial upgrading with tougher restrictions. The algae crisis has only accelerated this process. Textile, plating, mechanical and electrical sectors have all seen the construction of industrial parks in the city's suburban areas.

The tough measures after a decade-long mad rush for GDP growth reflect the realization that industrial restructuring and upgrading is the key to achieving both higher profits and environmental protection. Wuxi is thus turning to hi-tech and modern services industry as its new drivers. In five years, software and service outsourcing are expected to become the city's pillar industries.

Rising costs

Policy adjustments are pushing up costs substantially for enterprises in the region. Liu Qun, director of the environmental protection department of Wuxi Resin Factory of Bluestar New Chemical Materials Co Ltd, says the company has spent over 10 million yuan since 2007 to upgrade its wastewater treatment facility, which now has the capacity to treat 120-150 tons of sewage per hour. Squeezed by increasingly stringent environmental standards, the company added to its sewage treatment portfolio a 2000 m3 wastewater pool for emergency use last year.

Apart from initial construction costs, the company has to pay an additional 6 million yuan every year on wastewater treatment in its own facility and 2 million yuan as pollution discharge fees to the government.

"(Discharge) fees for COD (chemical oxygen demand) will have a 50 percent increase when a new standard comes into effect from June," says Liu. "Which also reduces the maximum amount of COD discharge by half. We are thus forced either to cut down on production or improve technology."

Established in 1958, the company is the largest epoxy resin manufacturer in China as well as an important production base for new chemical polymer materials. Aware of the devastation pollution can wreak both on the environment and the company itself, it has been trying out different ways to minimize environmental hazards. It has worked out new manufacturing methods that allow for less consumption of water, thus reducing the amount of wastewater.

"We also recycle chemicals like ECH, phenol and toluene from wastewater which can be used as materials in manufacturing epoxy resin. It can not only reduce organic pollutants in the wastewater and save costs in treatment, but can also bring about nearly 7 million yuan in sales," Liu says.

Wuxi Resin Factory is apparently not the only one benefiting from such recycling technique, which is gaining increasing recognition from enterprises as the key to sustainable development.

With a yearly production capacity of 50,000 tons of citric acid, DSM Citric Acid (Wuxi) Ltd has developed a recycling model that saves both costs and reduces pollution. Marsh gas coming out of the wastewater treatment facility is burned to produce energy for heating mycelium, a waste from the production of citric acid. The dried mycelium is then processed into feed for animals, which in turn generates additional sales for the company.

"We have put in more than 47 million yuan to upgrade the wastewater treatment facility since its construction in 1998," says Zhu Linying, general manager of the company. According to Zhu, the drainage outlet of the facility is equipped with a monitoring system connected to the city's environmental protection bureau, which means the government can keep a daily record of its pollutant discharge.

"In all, we have to pay over 5 million yuan for wastewater treatment and discharge every year, which is much more than what could be made from recycling," Zhu says. "However, as a socially responsible company, we think it necessary to do whatever we can to protect the environment. Moreover, it can improve our image as an internationally competitive company."

(China Daily March 24, 2008)