A Break in China’s Smog: Will environmental concerns help deliver consumer rights to China?

Dr Ying Yu, Research Fellow at Wolfson College, University of Oxford
17 Mar 2015
China’s spectacular economic growth has arguably been the most significant development in the twenty-first century thus far, with experts predicting a Chinese Century in which it will overtake the US as the world’s largest economy. Yet such growth, driven by exports and the consumption of China’s huge population, has far outstripped the protections in place for these consumers against bad practice and rogue traders, where China lags far behind developed countries, or, indeed, many developing countries around the world. 
 
But growing dissatisfaction over levels of pollution in China could provide a much-needed opportunity to introduce new laws to help protect the rights of over a billion consumers in the world’s most populous country.  
 
Between 1949 and 1979, ordinary people in China relied on the government to meet basic survival needs for food, clothing, and shelter. People could scarcely dream of consuming goods and services that went beyond basic necessities, let alone make claims regarding their consumer rights. Nowadays, thanks to Deng Xiaoping’s reform policies in the late 1970s and the policies that followed, the average citizen no longer struggles just to fulfill basic survival needs. Instead, they are increasingly attracted to luxury products, and many people can afford spacious houses and expensive cars. 
 
The goal of Deng’s approach (known as ‘Socialism with Chinese Characteristics’) was to achieve rapid yet stable economic development. There were two crucial components of Deng’s reforms: achieving export-led growth and allowing some people to become rich. Deng used the term ‘Xiaokang society’ to offer a vision of Chinese society in which most people were moderately well off and belonged to the middle class. The export-led economy has dramatically shrunk the technological gap between China and developed countries and increased the size of the Chinese middle class.
 
Paradoxically for a country built on a rejection of bourgeois values, the Chinese government has increasingly encouraged ordinary people to enjoy access to ‘modern’ products and to spend time shopping. Western visitors are often astonished by the scale of the modern shopping malls that have sprung up over the last two decades. According to The Economist magazine, half of the world’s new shopping malls are in China, which is also the world’s biggest e-commerce market.
 
China’s policy to stimulate the market for consumer goods contrasts with the path taken by the Communist regime in the former Soviet Union, where the government suppressed popular access to Western products, which thus acquired an aura of ‘forbidden fruit’. The present Communist government of China has taken a strategic decision to improve access to products (both international and domestically produced) in the belief that it will make consumers satisfied, and, in view of the progress relative to the deprivations of past generations, less likely to press for political change. For example, in March 2014, the prime minister said that China should ‘fully tap the enormous consumption potential of more than a billion people’. Retail sales have been holding up well, with 11.6% growth in 2011, 12.1% in 2012, and 11.5% in 2013. (The Economist, China: Building the Dream, 19 April 2014). 
 
The Communist government has taken a strategic decision to improve access to products in the belief that it will make consumers satisfied, and, in view of the progress relative to the deprivations of past generations, less likely to press for political change
 
There are limits, of course, to this ‘safety valve’ strategy, as fears over water quality, and, most conspicuously, air quality, raise questions about the viability of the new culture of the pursuit of affluence. It is predictable that concerns regarding these basic environmental necessities will be raised with greater urgency. Indeed, that has already happened with respect to the issue of air quality, and the government is set to conduct a major review of prices for the basic services of water and energy. So, while consumer preferences seem to be directed towards material goods such as cars and houses, pressure is increasing for this priority to change. 
 
Although China’s ‘new rich’ have transformed the country into the biggest luxury goods market in the world, the vast majority of Chinese consumers want to avoid the problems that plague people in other developing nations — food adulteration, unsafe products, air and water pollution — while improving their access to basic goods and services.
 
The confidence of Chinese consumers in domestic products has been shaken by several food adulteration scandals, most notably the 2008 Chinese milk scandal in which milk powder adulterated with melamine affected an estimated 300,000 people. Six infants died from kidney stones and other kidney damage, and 60,000 babies were hospitalized. (The disbursement of the victims’ compensation fund remains a mystery.) 
 
Little by little, health and safety breaches such as that seen in the milk scandal will undermine Chinese products and diminish consumer confidence. Citizens now have so much access to electronic media that it has become impossible for the government to suppress stories across the entire population of 1.35 billion people. Instead, it chose to tolerate, even to encourage, exposure of such scandals in the knowledge that people will come to know about them anyway, judging that the identification and prosecution of guilty parties will help to redirect the build-up of any resentment against the government itself.
 
Perhaps because the government cannot completely control informal dissemination of news by electronic media, it has tolerated free expression of critical points of view in relation to issues of consumer protection... up to a point, at least. At conferences and in academic institutions there can be remarkably frank criticisms of the status quo. At Wuhan University in March 2013, for example, many Chinese speakers were fiercely critical of financial institutions, including those controlled by the state. There is also vigorous debate within China regarding the country’s serious environmental problems. And government, in turn, is prepared to denounce failures of public administration. But direct criticism of government (as opposed to individual officials) is rare. 
 
Perhaps because the government cannot completely control informal dissemination of news by electronic media, it has tolerated free expression of critical points of view in relation to issues of consumer protection... up to a point, at least.
 
Chinese consumers — taking for granted that they cannot collectively assert their rights to safety, education, redress, and a healthy environment — have largely employed individual strategies to address health and safety concerns. One strategy is to shun domestic products in favour of imported ones. Chinese consumers assume that consumer protections in developed countries function better than those in China, and therefore they are firmly convinced that the quality of products produced by developed countries is better than that of local products. 
 
A second individual strategy is to lodge consumer complaints. Here, the role of the Chinese Consumers’ Association (CCA), a large, quasi-governmental consumer organization with offices throughout China, is crucial. During 2013, CCA provided a significant public service by handling some quarter of a million cases. CCA’s 2013 annual summary reports that 92% of complaints were resolved. The result was 5 billion RMB (about $750 million) in refunds to consumers in 2012. While the complaint-resolution activities of CCA are impressive, it is important to point out that if a business does not cooperate with the CCA then it is extremely difficult for a case to be resolved. This results in a certain degree of cynicism among the public. 
 
As a quasi-government institution, CCA is not only restrained by its institutional competences; it is also inhibited from activities that might damage the reputation of the government. CCA is supposed to be adequately funded by the State Administration for Industry & Commerce. However, CCA and its regional branches are constantly frustrated by insufficient funding necessary to organize teams of experts capable of lobbying for consumer rights. 
 
Overall, the CCA’s complaint-handling activity does not amount to genuine consumer activism because CCA does not synthesize the complaints into policy themes nor mount campaigns for reform. Other than sporadic, localized consumer protests, the label of ‘activism’ is more accurately applied to the activities of environmental organizations, and it will be interesting to see to what extent consumer interests will move in that direction, for example, regarding water quality or measures to reduce pollution.
 
Domestically, there is relatively little collaboration as yet between ‘consumer activists’ and people pursuing other causes such as environmentalism. This may be because of the potential tensions between environmental and consumer organizations concerning the increased cost of consumer goods associated with measures to reduce pollution. 
 
Paradoxically, the gravity of the environmental problems faced by China and the fact that incomes have risen so dramatically in recent years may lead to an acceptance by consumers of the need for corrective measures, even ones that increase prices. But assistance may need to be offered to the poorest in society to cope with the inevitable price rises. In any event, concerns over pollution in China are now so pressing as to make it highly likely that common cause between consumer and environmental activists will be made at some level in the near future.
 
Concerns over pollution in China are now so pressing as to make it highly likely that common cause between consumer and environmental activists will be made in the near future
 
Chinese consumer organizations are in touch with evolving international debates regarding consumer rights and consumer policy. CCA is a member of Consumers International, and the organization has easy access to influential consumer bodies in Hong Kong and Taiwan. However, CCA has few opportunities to develop the approaches adopted by these agencies into policy in China, as its terms of reference are restricted to dispute resolution. 
 
A recent development of some significance is the provision for class action lawsuits under the recently enacted Consumer Protection Law, which came into force on 15 March 2014, or World Consumer Rights Day, known as san yao wu in China. For the moment, however, only government-affiliated consumer associations, such as CCA, are allowed to launch such lawsuits. The extent to which this change was brought about by ‘activism’ or by the damage inflicted on the government’s reputation by incidents such as food contamination is open to debate. The answer is probably that generalized discontent among the public rather than identifiable activists provided the impetus for change. 
 
In sum, most activity on behalf of consumers in China cannot be described as ‘activism’ in the sense the term is used in most countries. Rather, the government controls most aspects of consumer affairs, restricting its activity to assistance in complaint resolution. The environmental challenges facing the country may change this situation. Environmental problems cannot be ignored or suppressed from the Chinese public, since they assault the senses in any big city. Consumer and environmental concerns are converging, and both suggest the need for citizen pressure for remedial action. 
 
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Dr Ying Yu is a Research Fellow at Wolfson College, University of Oxford. She directs a FLJS programme on Consumer Rights in China.
 
A full version of this Opinion Piece is forthcoming in The Encyclopedia of Consumer Activism in the United States.