The People’s Republic of China (hereafter “China”) is exposed to all types of natural hazards, including floods, tropical cyclones, droughts, earthquakes, heatwaves, landslides and wildfires, and is one of the most affected countries globally, with 371 disasters having been recorded from 2009 to 2023. However, direct economic losses expressed as a percentage of GDP have been decreasing, as have disaster mortality rates (GFDRR, 2020[1]).
Economic Outlook for Southeast Asia, China and India 2024
Developing amid Disaster Risks
Economic Outlook for Southeast Asia, China and India
China
Introduction
China: Disaster occurrences (from 1981 to 2023) and WorldRiskIndex
Source: EM-DAT and WorldRiskIndex.
The hazardscape
Two-thirds of China’s population is exposed to risk of flooding (GFDRR, 2020[1]). Much of the flooding occurs in densely populated areas in the low-lying eastern plains, with the most impactful flood disasters occurring in the middle and lower parts of the Yangtze River and in the Yellow River Basin (Du et al., 2016[2]; Wang et al., 2019[3]). In recent decades, reductions in socio-economic vulnerability, along with improvements in flood risk management and implementation of both structural and non-structural flood prevention measures, have led to a large reduction in flood fatalities (Ding et al., 2022[4]). However, floods continue to inflict significant socio-economic losses, and in many years flood fatalities have exceeded 1 000, and floods have caused more than USD 10 billion in economic losses (Kundzewicz et al., 2019[5]). Both flood risk and flood-induced economic losses have been increasing in much of China, largely as a consequence of sharp rises in exposure due to population growth, socio-economic development and rapid urbanisation, but also due to changes in weather patterns (Du et al., 2016[2]; Kundzewicz et al., 2019[5]). Flood frequency and intensity have been increasing in central, northwest and southwest China, and further increases are projected in many Chinese regions (Kundzewicz et al., 2019[5]; Zhang et al., 2015[6]).
Regional droughts occur almost every year somewhere in China. The droughts often strike the northeast, north, and northwest, with severe droughts also occurring in the southwest and south (GFDRR, 2020[1]; Wang et al., 2019[3]). The decomposition of drought risk suggests that high drought hazard is concentrated in arid areas: high vulnerability is estimated for the Junggar Basin and Inner Mongolia Plateau, and high drought exposure is observed in the Loess Plateau and in southern coastal areas (Chou et al., 2019[7]). In the past 30 years, a regional warming and drying trend has been observed in northern China, and future increases in drought frequency, duration and intensity are expected in parts of southwestern China (Leng, Tang and Rayburg, 2015[8]; Ye et al., 2016[9]). The expansion of agriculture is linked to increasing drought vulnerability, especially since agricultural production is concentrated primarily in drought-prone regions with limited water resources. Rapid urbanisation and industrialisation also increase the drought vulnerability of some regions through increased water demand from urban areas for personal consumption and manufacturing (Ye et al., 2016[9]).
China is located in a tectonically active area and faces frequent earthquake activity. Most of the earthquakes are continental, amounting to one-third of all damaging continental earthquakes globally (GFDRR, 2020[1]). Urban earthquake risk is especially high, with 22 provincial capital cities and two-thirds of large cities located in regions with a high seismic hazard (Xu et al., 2016[10]). Between 1993 and 2016, earthquake-related direct economic losses and human deaths were on a rising trend, even without taking the catastrophically destructive 2008 Sichuan earthquake into account (Li et al., 2018[11]). Cumulative earthquake impact is highest in western China, but central China appears to be the most vulnerable, if confronted with an earthquake of the same magnitude (Li et al., 2018[11]).
2008 Sichuan Earthquake in numbers
Source: ADRC (https://www.adrc.asia/view_disaster_en.php?NationCode=&Lang=en&Key=1153) and CATDAT Damaging Earthquake Database (https://nhess.copernicus.org/articles/11/2235/2011/nhess-11-2235-2011.pdf).
Typhoons (tropical cyclones) constitute another impactful hazard. Typhoons frequently affect the eastern seaboard regions, with an average of seven typhoons hitting these areas annually (GFDRR, 2020[1]). The typhoon hazard is highest in southeastern coastal regions and gradually decreases to the northwest. Population and asset exposure to typhoons is high, as the coastal regions are characterised by high population density and economic development. Between 2000 and 2014, typhoons affected more than 37 million people per year, causing average annual economic losses of USD 8 billion as well as 244 deaths (Zhang et al., 2017[12]). Between 2011 and 2020, increased cyclone frequency and precipitation, along with greater disaster losses, were seen in the north, especially in northeast China, areas that have historically been less affected (Li et al., 2023[13]).
China is also exposed to landslides and debris flow, mainly in the mountainous and hilly regions, with the frequency of these events increasing as well. The landslide hazard is highest in southwest China, where the risk is exacerbated by the fact that the development expands into mountainous areas, in vulnerable locations (Han et al., 2016[14]; Wu et al., 2016[15]).
Climate change perspective
Extreme weather events – floods, droughts and typhoons – are all increasing in frequency (Guan et al., 2014[16]; Han et al., 2016[14]). These events lead to significant impacts on the agricultural sector in most regions of China, with the impacts of droughts being most severe (Guan et al., 2021[17]). Agricultural losses from disasters constitute more than 80% of average annual losses, despite agriculture only accounting for approximately 9% of China’s GDP (UN.ESCAP, 2020[18]). Crop failure induced by extreme weather events occurs on approximately a third of the country’s 120 million hectares of agricultural land annually (ADB, 2015[19]). Flood-related agricultural impacts are mainly concentrated in the southwest, central-south and east. Drought-related agricultural losses are observed mainly in the north, northeast and northwest, while both floods and droughts severely affect agriculture in the northeast (Guan et al., 2021[17]).
Approximately half of China’s population and more than 70% of its cities are located in hazard-prone zones (GFDRR, 2020[1]). More than 150 million people reside in low-elevation coastal areas associated with flood and cyclone exposure (ADB, 2015[19]). China’s exposure to future sea-level rise is also among the highest in the world; nearly a quarter of the global population projected to be affected by sea-level rise by 2100 resides in China (Hanson et al., 2010[20]; UNDRR, 2022[21]).
However, overall disaster vulnerability in China has decreased in recent decades due to the country’s economic development, increases in living standards and improvements in disaster management practices (World Bank and ADB, 2021[22]). Vulnerability is relatively lower in the eastern coastal regions, largely because these regions are more prosperous. Vulnerability is highest in more remote rural areas, which are also significantly poorer than elsewhere in the country (Sim and Yu, 2018[23]; Wu, Ma and Li, 2023[24]; Wang et al., 2019[3]).
Rapid urbanisation is increasing the exposure of the population and assets sharply. Approximately half of the new urban residents reside in cities that are drought- or flood-prone. More than 25 million urban residents already reside in areas of high or extremely high flood occurrence (Cai et al., 2017[25]). Between 2000 and 2030, the urban areas in high-frequency flood zones and in drylands are projected to expand by 3.9 and 3.1 times, respectively (Güneralp, Güneralp and Liu, 2015[26]). For example, in Zhengzhou City, the proportion of very high and high flood risk areas increased from 1.4% in 2000 to 24.2% in 2020 (Guoyi, Liu and Shao, 2023[27]). Given these dynamics, the country’s urban flood risk has become a key concern.
Challenges for disaster risk management policy
Since 1998, China’s disaster risk management activities have largely shifted from a response-based approach to a more proactive ex-ante risk management, with a focus on reducing mortality and economic losses (Ding et al., 2022[4]). The disaster risk management reforms following the catastrophic 2008 Sichuan earthquake have strengthened the country’s capacity and allowed it to develop efficient practices. Still, challenges remain, such as the need to increase budgetary provisions for disaster risk reduction, the need for closer international co-operation, substandard construction that still exists, insufficient collection and quality of the data about risks, risk assessment processes, and emergency response mechanisms (Renwick, 2017[28]).
As regards flood prevention and mitigation, the current use of resistance-based strategies should be complemented by adaptive approaches (Cai et al., 2017[25]; Ding et al., 2022[4]). Improvements are also needed in areas such as flood risk, flood uncertainty analysis, and spatial planning. The opportunities to improve drought risk management and reduce drought-induced losses include enhancing water conservation capacity, increasing protection of cultivated land by reclaiming forests and pastures from cropland, adjusting planting structure, and using water-efficient crops (Zhao et al., 2020[29]).
China’s disaster management legislation is fragmented as disaster-related laws are the responsibility of many different administrative departments and levels of government. Emergency response plans vary across cities and provinces, and the implementation of these plans below the provincial level is ineffective (Ding et al., 2022[4]). China has complemented traditional ex-post disaster funding mechanisms with ex‑ante financing, including disaster insurance mechanisms (ADB, 2022[30]). For example, the China Earthquake Insurance Pool covers losses from earthquakes of a magnitude above 5.0. The China Earthquake Catastrophe Reinsurance Scheme then covers insurers from major earthquake losses (Singh and Jha, 2023[31]). Since 2014, regional disaster insurance pilots have been launched in several locations, including in Shenzhen, Ningbo, Yunnan, Sichuan, Guangdong and Heilongjiang (Kong and Wang, 2022[32]). Still, the coverage of disaster insurance is nevertheless limited and much lower than in high-income countries. The share of insured losses in total disaster damage is sometimes less than 1% (Kong and Sun, 2021[33]). For the severe floods in southern China in 2022, for example, only 6% of losses were insured (Xue, 2023[34]). Improvements in supporting technologies such as catastrophe risk models and implementation of localised insurance schemes based on each region’s needs and disaster profiles would increase insurance uptake (GFDRR, 2020[1]).
New disaster insurance funds could be set up in specific regions and for specific disaster types, for example a provincial typhoon disaster insurance fund for the southeastern coastal provinces, or a provincial earthquake disaster insurance fund for the earthquake-prone southwestern provinces. The potential for public-private partnerships for the establishment of disaster insurance schemes could also be explored (Kong and Wang, 2022[32]). Since the mid-2000s, China has increased its efforts to develop agricultural insurance systems, and agricultural insurance has been growing rapidly and playing an increasing role in protecting agricultural producers from disaster losses (GFDRR, 2020[1]). The potential for an increased use of parametric insurance should also be explored, especially in the context of public disaster financing (e.g. the public financing of Yellow River and Yangtze River Basin flood relief and the disaster responses of municipal and local governments) (ADB, 2022[30]). Similar arrangements have been developed in Mexico and the Philippines. The use of parametric insurance could provide the government with more certainty regarding its contingent liabilities and help in long-term fiscal planning.
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