China Is Set to Lose 2% of GDP Cleaning Up Decades of Pollution -- Bloomberg

This report from Bloomberg finds that "China, the world’s worst polluter, needs to spend at least 2 percent of gross domestic product a year -- 680 billion yuan at 2009 figures -- to clean up 30 years of industrial waste, said He Ping, chairman of the Washington-based International Fund for China’s Environment. Mun Sing Ho, a senior economist at Dale W. Jorgenson Associates and a visiting scholar at Harvard University in Cambridge, Massachusetts, put the range at 2 percent to 4 percent of GDP.

Failure to spend that much -- equivalent to the annual GDP of Vietnam -- may cost the Chinese economy half as much again in blighted crops, health costs and pollution-related expenses, He said: “The cleanup can’t catch up with the speed of pollution” if spending is less.

A double-edged approach by China to undo previous contamination and enforce stricter laws against new pollution would raise costs for companies in metals smelting, such as Hunan-based Zhuzhou Smelter Group Co. and Henan Yuguang Gold & Lead Co. in Henan. It would also benefit companies involved in environmental control, like Beijing Originwater Technology Co. and Shenzhen Green Eco-manufacture Hi-tech Co., said Chen Junpeng, an analyst at Donghai Securities Co. in Shanghai."