Much of the year, the air in Beijing hangs as thick as egg-drop soup. Even the billboards promoting a "green Olympics" in 2008 are covered in grime. And this ancient city, where a traffic policeman's life expectancy hovers around 40 years, is hardly alone. The World Bank calls China home to 16 of the 20 most polluted cities on earth, making the country's blighted environment a cautionary corollary to its economic success. Environmental degradation robs the nation of up to 12% of its GDP, according to the World Bank, and each year 300,000 Chinese die prematurely of respiratory ailments. "The rest of the world doesn't understand how big China's environmental problem is," says Sheri Liao, head of the Global Village of Beijing, an NGO dedicated to environmental education. "But they need to pay attention because our problem is becoming their problem too."
"Made in China" is synonymous with cheap products, but the country is exporting something far costlier: environmental degradation. Already, crops in Japan and South Korea are withering from Chinese acid rain, which poisons a quarter of the Chinese landmass. Toxic dust from Chinese sandstorms, the result of grassland erosion and logging that have helped turn 27% of the country into desert, travels as far as U.S. shores, obscuring visibility in national parks and raising mercury levels in fish. Although the U.S. still produces far more greenhouse gases, particularly in per capita terms, China is the world's second largest polluter. A U.N. report found that emissions from China nearly doubled from 1994 to 2002. "In the next 10 years the problem will become even more serious," predicts Zhu Tong, an environmental-science professor at Peking University, who notes that China's skyrocketing car ownership and lax implementation of power-plant-emission regulations could be an asphyxiating mix for global air quality.
Nor is disaster carried only by trade winds. With China's economic engine requiring ever more energy, the country is damming a significant part of its length of the Mekong River, threatening fishing and transportation in the five nations downstream. In 1998, China banned some domestic logging to protect its dwindling forests, but the Asian giant's appetite for disposable chopsticks and plywood furniture has hardly abated. Log imports--second only to the U.S.'s--more than quadrupled from 1996 to 2003, according to the World Wildlife Fund. China's appetite for resources extends even to the Amazon. By the middle of next year, Brazil and Peru hope to have built a transcontinental highway that cuts straight through virgin rain forest. Why? In part, to export to China soybeans grown on recently cleared jungle land. China's dirty secret is out, and the rest of the world has little choice but to share it. --By Hannah Beech/Beijing