Special Reports

In China's clouds of pollution, Washington sees a silver lining

A treatment pond at a Chinese chemical factory overflowed this summer, sending a gray wave of toxic sludge down a hillside and into a nearby village. (Photo Gallery | Special Section)

The flood flattened five houses and killed four people, including two children.

The disaster would have been major news most places, but it rated only three lines in China Daily, the country’s national newspaper. The paper didn’t even bother mentioning the village’s name.

Environmental disasters are not unusual in China. The country’s dramatic leap into the 21st century has been accompanied by horrific pollution.

According to the World Bank, China has 16 of the world’s 20 most-polluted cities. Bad air from its industries and coal-fired power plants pollutes the entire planet. An estimated 400,000 Chinese citizens die each year from diseases related to air pollution.

As hundreds of millions of Chinese continue to trade bicycles for cars in the next few years, the situation stands to get far worse.

If there is a bright side, it is this: China’s central government appears highly motivated to clean up its act. That creates a gold-rush opportunity for Washington companies that specialize in environmental technology and conservation systems.

“Washington cannot only sell apples and wines, but it also can sell environmental technology products and services,” says Kent Mao, a Seattle-based businessman who specializes in helping Washington environmental companies do business in China. “I believe this will be the future trend for foreign investment in China.”

Sharpe Mixers, a South Seattle company that makes industrial mixing equipment, discovered China’s booming environmental market 18 months ago, and the company has been transformed by the demand it found.

Sharpe makes industrial mixers of all kinds, from little quarter-horsepower machines for pharmaceutical companies to 300-horsepower behemoths.

The equipment Sharpe makes is ideal for the scrubbers used to clean pollutants out of the exhaust of coal-fired power plants. When China began requiring scrubbers on new plants, Sharpe found itself ideally situated to profit.

The company has provided mixers to 25 coal-fired power plants in China in a little over one year, said Steve Drury, Sharpe’s applications engineering director. Chinese sales now account for 30 to 40 percent of Sharpe’s total sales.

The company employed 19 people in 2003. Now it employs 26.

“It’s just amazing,” Drury said. “When we found out, we were all sitting around like deer in the headlights. At first we were thinking, ‘How can we even manage this?’ We’ve put on a second shift because we had such a huge increase in business.

“Besides the second shift, we have more engineers, more administrative people,” Drury said. “We now are forced to go to outside shops, machine shops. All these wonderful things have happened.”

Makers of niche products, like Sharpe, stand to profit from China’s cleanup. So do some high-tech manufacturers.

Federal and state environmental regulations enacted in the United States over the past 30 years led to the creation of the most advanced pollution control and energy conservation technology in the world.

Those products and processes are now in great demand in China.

“It is a huge market,” said Dipeng Sun, a Shanghai-based business consultant who formerly was the chief financial officer for the China steel giant, Baosteel.

“The Chinese people had clear air and water 100 years ago,” he said. “Now it’s polluted, and they want to improve their life quality.”

America cannot compete with China in manufacturing everyday products like clothes and shoes, Sun said. China’s labor costs are too low.

“Technology,” he said. “This is your opportunity.”

MOtivation for cleanup

China’s environmental problems are obvious.

Clouds of pollution hover over cities like shrouds. The air is so laden with particulates that cars parked outside are quickly covered with a layer of fine soot.

From the top of Shanghai’s 88-story Jin Mao Tower, the tops of high-rise buildings emerging from the polluted gloom look like a scene from a post-apocalypse disaster movie.

China’s central government wants a cleaner environment not only to improve public health but also to preserve its growing tourism industry. The country urgently wants cleaner air in Beijing, the world’s fifth most-polluted city, in time for the 2008 Summer Olympics.

And in Southwest China’s Sichuan Province, where tourism is one of the great economic hopes, two popular attractions are threatened by environmental problems. A 233-foot Buddha, carved into a cliff at Leshan 1,200 years ago, is being eaten away by acid rain. And habitat is disappearing for the province’s beloved giant panda bears.

China is reacting with stricter laws and penalties, plus a major public relations campaign. Parks and public squares in China’s cities are heavily posted with signs urging water conservation and responsible waste disposal.

In some cases, the government is providing large subsidies to see that the job gets done. For example, it recently established a $1.5 billion fund to help build 330 medical-waste incinerators across China.

“What got their attention on medical waste was SARS,” Mao said of the respiratory epidemic that killed hundreds of people in Asia two years ago.

“Cotton waste from hospitals was being recycled into products that were still contaminated,” he said. “Now, people at the highest levels are motivated.”

Opportunity won’t last

Washington’s environmental firms give the state an opportunity to help swing back the trade balance skewed by manufacturing, Sun said recently in an interview in Shanghai. Opportunities exist not only in environmental cleanup, he said, but also in other aspects of creating a greener China.

Sun noted that one of the most critical of China’s industrial needs is maintaining an adequate supply of electrical power. According to the country’s environmental protection administration, 26 of 31 provinces endured brownouts from power shortages last year.

When demand spikes, factories sometimes must slow production. This is counterproductive, Sun said.

Instead, building’s efficiency should be improved through better design and materials. American firms are the experts in these conservation techniques, he noted.

“China consumes huge amounts of energy,” he said. “How to save the energy, this technology, these materials, this management, can show us how to save 20 percent, 30 percent, even 50 percent.

“It’s not only technology, but also management. This is a system.”

The Weyerhaeuser Co. already is providing expertise to help China establish a sustainable forest industry, according to the company’s China manager, Renren Zhang. Last year Weyerhaeuser cooperated with the central government to sponsor a lecture series on soil and water management and sustained forestry practices.

China’s strategies for dealing with its environmental problems include privatizing state-run power generation plants, landfills and sewage treatment systems. (Nearly one-third of nonindustrial sewage in China’s cities went untreated last year, according to China’s environmental protection administration.)

The government sells the operations, usually antiquated and inefficient, to foreign investors who believe they can clean them up and operate them at a profit.

Mao has put together successful partnerships that have taken over two coal-fired power plants in China. Now the Seattle businessman has his eye on the $1.5 billion medical waste fund with a partnership that uses a Bellingham company’s incineration technology.

Some highly specialized environmental companies are afraid to participate in the China market for fear their technology will be ripped off, Mao said.

Others, like Sharpe Mixers, which make less technical products, want to make hay while the sun shines.

The good fortune will not last forever, Drury said.

“The type of equipment we make is not rocket science,” he said. “Anyone with any common sense can make a mixer. Basically, all you do is put a paddle on a shaft and turn it fast.

“The Chinese are brilliant people, hardworking as heck and there’s millions of them,” he said. “I’m sure there are some trying, as we speak, to duplicate what we do.”

“Our attitude is, we might as well take advantage of it for as long as it lasts.”

Rob Carson: 253-597-8693