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China’s Yangtze River Basin Represents the World’s Third-Largest Economy—and It’s at Great Risk

The Yangtze River is China’s most vital domestic waterway, but it also has global importance. The Yangtze River Economic Basin is a powerhouse of industrial output for multinationals like Apple, Walmart, and Dupont as well as huge fashion brands like Nike, H&M, and Uniqlo. Some 175 cities are located near its banks. All told, the region generates nearly half of the country’s GDP.

The Yangtze is “the heart of the global supply chain,” said Debra Tan, director of the think tank China Water Risk, at Fortune’s Global Sustainability Forum in Yunnan, China on Wednesday. By GDP, the Yangtze River Economic Basin is the third-largest economy in the world—bigger than those of Canada and Japan.

But decades of intense agricultural and industrial production have taken their toll on the river’s ecology and environment. Factory pollution, sewage, and waste dumping are damaging water quality—a huge risk for a river that supplies seven out of every ten cups of water consumed in Beijing and along which run 242 coal-fired power plants and 600 hydropower facilities.

“The Yangtze is too big to fail,” Tan said. Nevertheless, both the Chinese government and the multinationals with supply chain dependency on the Yangtze recognize that cleanup efforts are needed. Public and private sources have set aside a combined $2.1 trillion for such projects.

According to Tan, the Yangtze River Economic Basin be a leader in China and globally for green growth; it represents “a huge opportunity to green the supply chain.” As climate change increases the uncertainty of resource availability, protecting water sources like the Yangtze becomes all the more vital for sustained economic growth. Prioritizing a circular economy with less waste “becomes a ‘must,’ as opposed to a ‘should have,’” Tan said.

 “We’re carrying the water for the world,” Ma Jun, the founding director of the Institute of Public & Environmental Affairs, a Beijing-based nonprofit organization, said at the forum. Ma said there is hope for future development in the Yangtze River Economic Basin, but at the moment, “the river is not in good shape.”

“In China, […] the factory of the world, we learn the hard lessons, that when we don’t value our water, when we even sometimes relax our environmental control as a way for competitive advantage, you know, we are suffering so tremendously, so badly from it.” Ma said.

Ma added that it may be difficult for businesses to prioritize environmental regulation when the rules of the market urge businesses to put low-cost production and competitiveness first, “but together”—meaning businesses, the government, and nonprofits—“we can change the rules.”

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