2019 State Of Ecology & Environment Report Review

By China Water Risk 18 June, 2020

2019 was a crucial year for the war on pollution. How did water do? Find out in our review of the report

On 2 June 2020, the Ministry of Ecology and Environment (MEE) released the 2019 State of Ecology and Environment Report (SOEE), reporting the “continuous improvement of water and ocean quality” as well as the “overall improvement of national ecological environment”. The report also noted that 2019 was a crucial year for the war on pollution and improving ecological environment, as it marked the 70^th anniversary of the founding of New China.

Here are some key highlights from the 2019 report:

RMB53.2bn spent on integrated management: Central government allocated RMB53.2bn to promote integrated management of air, water, soil and rural environment. It also promoted the establishment of a national green development fund.

High rectification rates achieved:

• >99% or 3,624 of 3,626 problems in 899 provincial water sources were rectified;
• 82% or 2,513 of 2,899 black and odorous water bodies were rectified.

Yangtze River Economic Belt (YREB) actions:

• 82% or 134 of 163 ecological problems in YREB were rectified;
• 95% of provincial-level (or larger) industrial parks along the YREB have built wastewater treatment facilities with automatic monitoring facilities; and
• Grade V water in the basin cross-section has been reduced from 12 to 3.

Violation fines & cases have fallen: Both total environmental violation fines and cases have decreased by 22% and 12% respectively.

Although violations fines and cases have fallen, we are of the view that these trends likely point to increasing compliance of the private sector rather than a slowdown in enforcement. This is indicated as the overall level of surface water resources have improved significantly with Grade V+ water falling by 50% to 3.4%.

Surface water quality on the rise but groundwater still stubborn

That said, groundwater quality improvement still remains very stubborn and some major rivers have yet to meet the Water Ten quality targets, while the water quality in key lakes and reservoirs have continued to improve.

We deep dive into the performance of various water bodies below…

Groundwater & shallow groundwater still very far from targets

Overall groundwater quality has a long way to go with 85.7% of groundwater stations falling in Grade IV and Grade V categories; leaving only 14.4% as Grade I-III, or fit for human touch. Shallow groundwater quality is even worse off with 46.2% falling in the Grade V category. However, it fares better with 23.7% in Grade I-III categories water.

Grade I-III shows improvement…

…but still 85.7% groundwater & 76.2% shallow groundwater unfit for human touch

Actually both Grade I-III and Grade IV categories for overall groundwater quality saw some gains in 2019. As shown in the chart below left – Grade I-III has improved slightly from 13.8% to 14.4%, and Grade IV has improved from 70.7% to 66.9%. However, these gains were offset by the deterioration in Grade V groundwater from 15.5% to 18.8% – this is still far from the Water Ten Plan of 15% by 2020.

As for shallow groundwater, the status remains largely the same as 2018 across all three categories as shown in the chart below right.

Mixed results show how difficult it is to clean up groundwater…

Although no reasons were given for the drastic plunge in overall groundwater quality in 2018, we said last year that the fall was likely attributed to the unprecedented rise in the number of groundwater monitoring stations, therefore reflecting a truer state of groundwater. As there has been no further increase in monitoring stations in 2019, the overall groundwater quality between 2018 and 2019 are comparable – the mixed results for 2019 show just how difficult it is to clean up groundwater pollution.

…detailed plan on groundwater protection & treatment expected before end of 2020

To tackle this, a detailed plan is expected to be released by the Ministry of Ecology & Environment before the end of 2020 to outline key tasks and steps for groundwater pollution protection and treatment for 2021-2025. Ahead of this, the Chinese government has started groundwater pollution control pilots in various locations in 2019.

National surface water quality continues to improve

While groundwater challenges pervade, national surface water quality continues to improve across all categories since 2015 as shown in the graph below:

• Grade I-III national surface water quality has steadily improved from 64.5% to 74.9% in 2019;
• Grade IV-V has improved from 26.7% to 21.7%; and
• Grade V+ has continuously improved from 8.8% to 3.4%.

National surface water quality continues to improve…

…Grade I-III up to 74.9% from 64.9% & Grade V+ drops from 8.8% to 3.4%

Now, we take a close look into the performance of two key components 1) key lakes and reservoirs and 2) each of 7 major rivers to see where improvements were made and what needs to be done to further improve the water quality…

Key Lakes & Reservoirs – overall quality continues to improve

Y-O-Y improvements of water quality of key lakes and reservoirs can be seen for both Grade I-III water (66.6% in 2018 to 69.1% in 2019) and Grade V+ water (8.1% in 2018 to 7.3% in 2019).

We expect the quality of these 110 key lakes and reservoirs monitored to steadily improve.

Significant improvement of the 7 major rivers quality

The overall surface water quality of the main river basins has seen gradual improvement with Grade I-III water improved from 74.3% in 2018 to 79.1% in 2019; Grade IV-V slightly improved from 18.9% to 17.9%; and Grade V+ drastically improved from 6.9% to 3%, as seen in the chart below left. The water quality has been steadily improved since 2015 in the chart below right.

However, a closer examination revealed that all Northern rivers still fall short of either one of the Water Ten targets (Grade I-III >70% & Grade V+ <5%). The Hai and Liao Rivers warrant most attention as they fail to meet North Water Targets by significant margins.

All Northern rivers still fall short of either one of the Water Ten targets…

…Hai & Liao Rivers warrant most attention

Breakdown of 7 major river basins

We are right! Yellow River becomes the 1st Northern river to meet the target

Last year, we said the Yellow River will become the first northern river to meet the Water Ten target of 70% in Grade I-III water – and we are please to say we are right!

Its Grade I-III water quality has improved from 66.4% in 2018 to 73% in 2019. However, pollution is still rampant – despite improvement of Grade V+ water quality from 12.4% to 8.8%; it still falls short of the Grade V+ target of <5%.

Yellow river = 1st Northern river to meet target but still falls short of the Grade V+ target of <5%…

…we expect the govt to apply its successful YREB pilots to the Yellow river

Home to 150 million people and key to sustaining China’s food, energy and ecological security, President Xi has reiterated the Yellow River’s importance in this year’s New Year speech. As we said in March, China has grand plans to become beautiful and the government is already working on a draft, “Water Resource Special Plan for Ecological Protection and High Quality Development of the Yellow River”. In the last few weeks, China announced it would map and monitor all sewage outlets in the Yellow River to fight pollution, as well as its Supreme People’s Court vow to punish criminal acts damaging the ecological environment in the Yellow River Basin.

Going forward, we expect China to apply its successful YREB pilots to the Yellow River – more on this in 5 Trends For The Year Of Rat. Also, click here  to get up to speed on the various policies in the Yellow River introduced by Dr Dong from the Chinese Academy for Environmental Planning.

Yangtze & Pearl achieve both Water Ten targets

Similar to previous years, Southern rivers (Yangtze and Pearl) have continued to outperform the Northern ones and show improvement in both Grade I-III and V+ water. In particular, Pearl has joined Yangtze to become the only 2 rivers that met their Water Ten targets.

Yangtze – The Yangtze River is China’s socio-economic powerhouse. As such, China has set a much higher water quality standard for the river back in 2018 when it legislated the “Yangtze Action Plan” which requires Grade I-III water to attain 85% and Grade V+ to be less than 2% by 2020.

Policies taken by the government are clearly effective as the river’s Grade I-III water quality improved from 87.5% in 2018 to 91.7% in 2019 and Grade V+ water improved from 1.8% to 0.6% – meeting both targets.

Going forward, we expect China to continue to improve the Yangtze’s water quality. The “Yangtze River Protection Act“ has already been submitted to the Standing Committee of the National People Congress for review and legislation. More on Yangtze’s development in our report Yangtze Water Risks, Hotspots & Growth.

Pearl – Grade I-III water quality reversed the deteriorating trend in 2017-18 and improved from 84.8% in 2018 to 86.1% in 2019; Grade V+ water quality improved from 5.5% to 3%. Going forward, all eyes are on the Pearl River to deliver growth in the GBA. More on this here.

Yangtze & Pearl both achieve Water Ten targets…

…Yangtze Grade V+down to 0.6% & Pearl to 3%

Songhua & Huai – almost there on meeting both targets

Both Songhua and Huai have met their Grade V+ Water Ten target (<5%) by achieving 2.8% and 0.6% respectively. However, they still fail to elevate their Grade I-III water to 70%.

Songhua River – Grade I-III water quality reversed the deteriorating trend in 2017-18 and improved from 57.9% in 2018 to 66.4% in 2019. Meanwhile, Grade V+ water quality drastically improved from 12.1% to 2.8%, propelling Songhua to meet the Water Ten target of Grade V+ water quality.

Huai River – Grade I-III water quality continue to improve from 57.2% in 2018 to 63.7% in 2019 as did Grade V+ water quality from 2.8% to 0.6%. Note that the Huai and Yangtze rivers now have the lowest Grade V+ category performance at 0.6%.

Songhua & Huai rivers almost there on Water Ten targets…

…Songhua Grade V+ down to 2.8% & Huai to 0.6%

Liao & Hai – significant progress in curbing pollutions but still a long way to go

Liao River – Grade I-III water quality continued to improve from 48.9% in 2018 to 56.3% in 2019, while Grade V+ water quality managed to reverse the deteriorating trend to drastically improve from 22.1% to 8.7%.

Hai River – Grade I-III water quality continued to improve from 46.3% in 2018 to 51.9% in 2019 as did Grade V+ water quality from 20% to 7.5%. Note that the Hai is the worst performer in categories of Grade I-III. However with the focus on Beijing waternomics, we can expect to see the river to make marked improvement. More on this here.

Liao & Hai rivers still a long way to go on pollution…

…Liao Grade V+ at 8.7% & Hai at 7.5%

Further Reading

• 2018 State Of Ecology & Environment Report Review – It is one year on since the Ministry of Ecology and Environment (MEE) reform, has it impacted China’s water? What has worsened & what has improved? We review the latest 2018 report
• Greening The Yellow River For A Beautiful China – As President Xi reiterates the Yellow River’s importance, Dr Zhanfeng Dong from the Chinese Academy for Environmental Planning expands on policies for “黄河宁，天下平” – a stable Yellow River, peace in China
• Too Big To Fail! Protect At All Costs – Multiple policy innovations have been unleashed to protect the Yangtze River as it is too big to fail – corporates and investors need to get on top of the YREB to avoid regulatory shocks
• Becoming Beautiful: Property Rights For Natural Resources – The Ministry of Natural Resources is creating a landmark rights system for each natural resource, from coal and gas to forests and water. What does this mean and where are the pilots? Find out in our review
• Capital Two Zones: Protecting Beijing’s Upper Watershed – The Capital Two Zones plan is set to protect Zhangjiakou, upstream of water stressed Beijing & host of the 2022 Winter Olympics – how will this impact industry and development? China Water Risk’s Yuanchao Xu explores
• 5 Trends For The Year Of The Rat – Will the rat bring more outbreaks or will we get sunk like a drowned rat by water and climate risks? Or can we stay ahead with our wits and cunning to win the rat race? Find out what the lunar new year has in store for us in our 5 trends
• Thirsty And Underwater: Rising Risks In Greater Bay Area – How will water & climate risks, including rising sea levels & droughts, threaten the already water-stressed Greater Bay Area (GBA)? CWR’s Tan & Mirando explain in their latest CLSA report and highlight companies’ failure in climate risk disclosures

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