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Cleaner rivers and bluer skies mean progress, not poverty
By Dan Steinbock |
December 24, 2012, Monday
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Print Edition
Print Edition
IN the past, rapid growth often occurred at the cost of the environment. In the future, Chinese prosperity will mean both rising living standards and a beautiful environment.
At the 18th National Congress of the Communist Party of China, Chinese leader Hu Jintao emphasized the importance of ecological progress and spoke for building a "beautiful" China. As Xi Jinping became the new general secretary of the CPC Central Committee, he seconded President Hu's environmental quest. In turn, Vice Premier Li Keqiang argued recently that clean rivers and blue skies should not be synonymous with poverty, and that China is seeking both prosperity and a better natural environment.
In the past three decades, high growth was fueled by investment and exports. After China's membership in the World Trade Organization in 2001, this growth model accelerated. It was driven by Chinese exports abroad and foreign direct investment in the mainland.
In the aftermath of the global recession of 2008-9, export-led growth has been stagnating worldwide, which has shifted momentum toward investment in China. But that's not sustainable in the long-term.
In the coming years, China will gradually move from exports and investment toward consumption. As the great "world factory" will morph into a new "world demand" engine, industry changes from heavy and energy-intensive to lighter and high value added, and becomes more energy-efficient.
But Chinese aspirations do not just reflect the shift from an industrial economy to a service society and the parallel move from energy intensity to energy efficiency. The objectives are more ambitious. The goal is not only to support environmental industries, but also to transform them into a huge market that will allow China to complete its industrialization and urbanization.
What Detroit's car industry meant to America's industrialization in the first half of the 20th century, environmental technologies will mean to China in the early 21st century.
Larger domestic market
"Take the photovoltaic industry as an example," Li Keqiang said recently. "Domestic installation accounts for only less than 10 percent of the total output. We will support the solar power industry in the future to promote its sustainable and healthy development, opening up a larger domestic market for it. In 2020, the country's photovoltaic power installed capacity will reach 50 million kilowatts."
On the one hand, the solar power industry is driven by bottom-up market forces. But on the other hand, it is an emerging industry that requires public support - the importance of applying more legal means to regulate behaviors and norms related to environmental protection and international cooperation, as Li emphasized.
These objectives are neither marginal nor niche areas for the economy. The State Council is working on a plan to develop a recycling economy by 2015. Reportedly, it includes the establishment of recycling systems in industry, agriculture and service sectors. It formulates the construction of model cities, model enterprises and model projects of a recycling economy.
The green future will be neither easy nor inevitable. In effect, the huge dependence on coal as part of the fuel mix remains a great challenge in both China and India. Indeed, coal is likely to remain a significant proportion in 2020, despite both countries making extensive investments in renewables. As a consequence of high economic growth, energy consumption is forecast to increase 40 percent to 50 percent.
Conversely, recent discoveries of shale gas are dramatically shifting energy equations worldwide. While the US may benefit most in the short- and medium-term, China also has great potential in the natural gas, although it must cope with more difficult extraction challenges. Further, the shale gas potential goes hand in hand with increasing environmental risks.
Top ranking
China is already at the top of the Ernst & Young all-renewable index, which ranks the attractiveness of renewable energy markets across 40 countries worldwide. It is followed by the US, Germany, India, UK and France.
Further, while the country is still challenged by oversupply of wind turbines and solar panels, there are signs that the country is taking action to address the grid transmission issues.
There are other pressing motives to move fast into the clean technology sector. First of all, energy resources are not infinite, but increasingly costly. When the currently advanced economies industrialized, energy resources still seemed to be abundant. That is no longer the case today. In the long term, cooperative scenarios are the only viable option for the advanced world to retain its existing energy needs and for the emerging economies to ensure energy for modern growth.
In the future, the challenge of the major advanced nations is to shift to sustainable growth, while reducing their debt and coping with aging populations.
Conversely, the challenge of many large emerging economies is to shift from industrialization to market growth, while others are still transitioning from preconditions to industrial growth.
In the process, energy resources will become harder to access, more expensive, and less abundant.
Despite stagnation after the global crisis, the long-term trend of the world economy is poised for further growth.
The expansion of the emerging economies will continue to shape the modern energy economy, through industrialization, urbanization, and motorization.
Dr Dan Steinbock is research director of International Business, India, China and America Institute (USA); visiting fellow, Shanghai Institutes for International Studies (China); and visiting fellow, EU Center (Singapore). Shanghai Daily condensed the article.
At the 18th National Congress of the Communist Party of China, Chinese leader Hu Jintao emphasized the importance of ecological progress and spoke for building a "beautiful" China. As Xi Jinping became the new general secretary of the CPC Central Committee, he seconded President Hu's environmental quest. In turn, Vice Premier Li Keqiang argued recently that clean rivers and blue skies should not be synonymous with poverty, and that China is seeking both prosperity and a better natural environment.
In the past three decades, high growth was fueled by investment and exports. After China's membership in the World Trade Organization in 2001, this growth model accelerated. It was driven by Chinese exports abroad and foreign direct investment in the mainland.
In the aftermath of the global recession of 2008-9, export-led growth has been stagnating worldwide, which has shifted momentum toward investment in China. But that's not sustainable in the long-term.
In the coming years, China will gradually move from exports and investment toward consumption. As the great "world factory" will morph into a new "world demand" engine, industry changes from heavy and energy-intensive to lighter and high value added, and becomes more energy-efficient.
But Chinese aspirations do not just reflect the shift from an industrial economy to a service society and the parallel move from energy intensity to energy efficiency. The objectives are more ambitious. The goal is not only to support environmental industries, but also to transform them into a huge market that will allow China to complete its industrialization and urbanization.
What Detroit's car industry meant to America's industrialization in the first half of the 20th century, environmental technologies will mean to China in the early 21st century.
Larger domestic market
"Take the photovoltaic industry as an example," Li Keqiang said recently. "Domestic installation accounts for only less than 10 percent of the total output. We will support the solar power industry in the future to promote its sustainable and healthy development, opening up a larger domestic market for it. In 2020, the country's photovoltaic power installed capacity will reach 50 million kilowatts."
On the one hand, the solar power industry is driven by bottom-up market forces. But on the other hand, it is an emerging industry that requires public support - the importance of applying more legal means to regulate behaviors and norms related to environmental protection and international cooperation, as Li emphasized.
These objectives are neither marginal nor niche areas for the economy. The State Council is working on a plan to develop a recycling economy by 2015. Reportedly, it includes the establishment of recycling systems in industry, agriculture and service sectors. It formulates the construction of model cities, model enterprises and model projects of a recycling economy.
The green future will be neither easy nor inevitable. In effect, the huge dependence on coal as part of the fuel mix remains a great challenge in both China and India. Indeed, coal is likely to remain a significant proportion in 2020, despite both countries making extensive investments in renewables. As a consequence of high economic growth, energy consumption is forecast to increase 40 percent to 50 percent.
Conversely, recent discoveries of shale gas are dramatically shifting energy equations worldwide. While the US may benefit most in the short- and medium-term, China also has great potential in the natural gas, although it must cope with more difficult extraction challenges. Further, the shale gas potential goes hand in hand with increasing environmental risks.
Top ranking
China is already at the top of the Ernst & Young all-renewable index, which ranks the attractiveness of renewable energy markets across 40 countries worldwide. It is followed by the US, Germany, India, UK and France.
Further, while the country is still challenged by oversupply of wind turbines and solar panels, there are signs that the country is taking action to address the grid transmission issues.
There are other pressing motives to move fast into the clean technology sector. First of all, energy resources are not infinite, but increasingly costly. When the currently advanced economies industrialized, energy resources still seemed to be abundant. That is no longer the case today. In the long term, cooperative scenarios are the only viable option for the advanced world to retain its existing energy needs and for the emerging economies to ensure energy for modern growth.
In the future, the challenge of the major advanced nations is to shift to sustainable growth, while reducing their debt and coping with aging populations.
Conversely, the challenge of many large emerging economies is to shift from industrialization to market growth, while others are still transitioning from preconditions to industrial growth.
In the process, energy resources will become harder to access, more expensive, and less abundant.
Despite stagnation after the global crisis, the long-term trend of the world economy is poised for further growth.
The expansion of the emerging economies will continue to shape the modern energy economy, through industrialization, urbanization, and motorization.
Dr Dan Steinbock is research director of International Business, India, China and America Institute (USA); visiting fellow, Shanghai Institutes for International Studies (China); and visiting fellow, EU Center (Singapore). Shanghai Daily condensed the article.
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