GWEN IFILL: Next, China tries to combat pollution, while keeping up with its phenomenal industrial growth.
From southern Guangdong Province, special correspondent Jeffrey Kaye reports for our Global Health Unit.
JEFFREY KAYE: It's not easy for visiting foreign journalists to gain admission to Chinese factories.
YUGAO ZHANG, Esquel Textiles: It's good, very good protection for the workers, because they see the covers.
JEFFREY KAYE: The hood?
YUGAO ZHANG: The hood.
JEFFREY KAYE: But Yugao Zhang is so proud of what his company, Esquel Textiles, is doing to protect workers and the environment that he was eager to show us around a company plant in China's southern province, Guangdong.
Esquel Textiles takes in a billion dollars a year and is China's largest exporter of shirts. Customers include Abercrombie & Fitch, J.C. Penney, Nike and Polo.
With 54,000 employees, this massive plant functions almost as a minicity. Executives tout their environmental commitment to recycling water and lowering energy use. The factory has an on-site power plant that generates electricity and produces steam for heating.
Other power plants release steam into the air.
YUGAO ZHANG: Well, it can balance the power generation and the steam generation based on our factory need. When we need more power, then we can generate more power.
JEFFREY KAYE: And then you also contribute to the grid when you generate power when you can.
YUGAO ZHANG: Yes, we can contribute also to the grid if we have extra power.
JEFFREY KAYE: Using lime in its coal-fired power plant cuts down pollutants but does not eliminate them.
The growing company serves as an illustration not only of China's increasing environmental consciousness but of the country's challenges. The size of China's economy is second only to the U.S., but the country relies mainly on coal to drive its furious industrial expansion.
And that has made China the world's largest emitter of greenhouse gases. While China strives to clean up pollution, it's also set ambitious goals for economic development and growth. The question is whether those aims are compatible.
Following the recently concluded meeting of China's Parliament, Premier Wen Jiabao addressed the issue.
WEN JIABAO, Chinese premier (through translator): We need to unceasingly increase the size of our economy, but not at the cost of excessive consumption of resources and energy and environmental pollution. That would not only be unsustainable. It would also affect future generations.
JEFFREY KAYE: Guangdong Province speaks to both pollution and promise. Sometimes referred to as the world's factory floor, the area's colossal growth has come at an enormous cost. Its waterways have been ravaged by industrial contamination. Its consistently smoggy skies are evidence of chronic air pollution.
China is investing increasing amounts in cleanup efforts. Its recycling industry of metals and of paper is also growing. One effort to promote environmental stewardship is the Environment Health and Safety Academy at Sun Yat-sen University in the provincial capital of Guangzhou.
The two-and-a-half-year-old academy trains managers in manufacturing companies. It provides courses on environmental regulations, health hazards and risk assessment. It has support from the U.S. government, major transnational corporations, and a Vermont-based foundation, the Institute for Sustainable Communities, represented in Guangdong Province by Wan Yang.
WAN YANG, Institute for Sustainable Communities: We are delivering some courses, some training to, you know, change the behavior of the workers, change the awareness and mind-set of their managers, their CEOs, and finally, help to, you know, to protect the environment, help to address the global climate-change issues.
JEFFREY KAYE: One company Wan has worked with is Kaibang Motors. Its products, exported around the world, power electric devices, such as elevator doors, washing machines and air conditioners. It employs 5,000 workers at its plant in the Zhuhai on the southern coast.
General manager Huang Shijie says his company's output grows by about 40 percent each year. Energy consumption is also rising but at a lower rate than production.
HUANG SHIJIE, Kaibang Motors (through translator): We're trying to reduce the amount of electricity that we're using. We're trying to adjust our equipment to make it more efficient. And, third, we're trying to switch all of our light bulbs to the more efficient kind.
JEFFREY KAYE: Huang says the factory has also started to recycle water used for cooling, instead of discarding it.
The water treatment attached to the Esquel textile factory is much more elaborate. Esquel recycles 60 percent of the water used to dye textiles and wash shirts. After various stages of filtration, dirty water comes out clean.
Company executive Yugao Zhang says, while Esquel may be taking the lead, he is optimistic about China's efforts as a country to clean up the environment.
YUGAO ZHANG: China is changing. More and more people and more and more companies are paying much more attention to the environmental protection. The environmental protection is getting better and better.
JEFFREY KAYE: But not at the pace some would like to see.
Ma Jun, a former journalist, directs the Beijing-based Institute of Public and Environmental Affairs. The nongovernmental organization maps water pollution to try to expose the most polluting businesses.
MA JUN, Institute of Public and Environmental Affairs: To change current status quo is not easy, because some of the stakeholders benefited through these, you know, lower standards on the environment and labor.
JEFFREY KAYE: By shining a spotlight on polluters, Ma tries to pressure large companies to clean up their supply chains. Ma says corporate polluters have taken advantage of lax governmental regulators in China.
MA JUN: The enforcement of all these environmental standards and the standards on occupational health and safety remains to be weak in this country. And the cost of violations are still lower than the cost of compliance.
JEFFREY KAYE: We have been told the calculation of the companies is, it's easier, it's cheaper for us just to pollute, pay the fines and get on with our business than it is to clean it up.
WAN YANG: I think it's a dynamic process. It's a training process. The government of China, they are imposing more and more strict regulations. And the risks are becoming higher than before.
JEFFREY KAYE: The risks?
WAN YANG: Yes. And also, the buyers, I think they are more strict with their suppliers.
JEFFREY KAYE: So, they have got to pay attention?
WAN YANG: Yes, yes, if they want to still stay in this business.
JEFFREY KAYE: The process of reversing environmental degradation and preventing future pollution comes as China steps up its demand for energy. Chinese officials argue Western companies with factories in China, as well as consumers who buy Chinese-made goods, should bear part of the responsibility for cutting China's pollution.
Chinese authorities say they plan to raise taxes on the export of goods whose production is energy-intensive or highly polluting.
JUDY WOODRUFF: Jeff's next reports look at China's efforts to reform its health-care system and the human costs of manufacturing the electronic gadgets we all love.