Skip over navigation

News · 新闻

Does Foreign Investment in China Contribute to a "Race to the Bottom" in Environmental Standards?

On 26 April 2007, Phillip Stalley, Visiting Research Fellow in the China and the World Program at Princeton, gave a talk entitled, “Foreign Firms and Environmental Governance in China.” His presentation addressed the concerns of scholars who fear that the increasing mobility of global capital and growing reliance of developing countries on foreign investment is shifting power from governments to firms and contributing to a “race to the bottom” in environmental standards. Focusing on the race to the bottom argument, Dr. Stalley discussed how China’s reliance on foreign investment influences patterns of enforcement and compliance in China. He argued that, while on paper China has strengthened environmental regulation related to foreign investment, there remain considerable lapses in enforcement, chiefly in industrial parks designed to attract foreign investment. These enforcement lapses are partially driven by the competition to lure foreign capital. At the same time, based on a survey of manufacturing enterprises, Dr. Stalley indicated that compliance with environmental regulation varies widely across foreign firms. Enterprises from developing Asian countries, which typically have weak environmental governance systems, tend to display poor environmental practices. The conclusion is that the China case coincides with the expectations of those concerned with a “race to the bottom”, but only under limited scope conditions. China’s race to the bottom is limited by jurisdiction (special industrial zones), regulation (enforcement rather than standard-setting), and firm (from developing rather than developed countries). (Phillip Stalley)