Hongxing Xie

Building Sustainable Supply Chains: A Tool to Improve the Effectiveness and Efficiency of China's Environmental Policies

Hongxing Xie

Building Sustainable Supply Chains: A Tool to Improve the Effectiveness and Efficiency of China's Environmental Policies

While bestowing China with unparalleled rates of economic growth, globalization has also resulted in unprecedented environmental degradation. Severe environmental pollution not only has taken a heavy toll on China, but also threatens other parts of the world in terms of environmental pollution, adverse health, and economic instability. Since China’s pollution is mainly caused by industrial sources, inadequate environmental legal infrastructure (e.g. lax legal enforcement, low violation penalties, and inadequate level of transparency) is the root cause of unfettered pollution emissions. In order to improve enforcement of China’s environmental policies, this dissertation presents an innovative mechanism to build upon the existing domestic legislative framework, and re-distribute monitoring and enforcement responsibilities from the government regulatory system into corporate supply chain management systems. The proposed mechanism has three distinguishing features: First, this toolkit seeks to incorporate purchasing power leverage and private sector cooperation into supply chain emissions control; second, this toolkit adapts to comply with existing domestic environmental regulations, rather than mandating international compliance codes, thus combining efforts from both local government and private sectors; third, the mechanism helps to create a level playing field and stop global procurement’s “race to the bottom” for the most un-regulated production locations. The rationality of the proposed mechanism is tested by Game Theory, focusing on positive outcomes, and the feasibility of the toolkit is addressed using a real case: the Green Choice Alliance Program recently launched in China. Application of the proposed mechanism in climate change policy design in China is also discussed.