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Economy

Sustainability with Chinese Characteristics

Sep 27 , 2019

In the here and now of climate change, it is easy to lose sight of important signs of progress. China, the world’s biggest emitter of greenhouse gases, is a case in point. By changing its economic model, shifting its sources of fuel, developing new transportation systems, and embracing eco-friendly urbanization, China’s sustainability strategy is an example of global leadership that the rest of the world should consider very carefully. In the rush to demonize China over trade, the West has missed this point altogether. 

In the past 12 years, China’s economic structure has shifted dramatically from excessive reliance on smokestack manufacturing industries to low-carbon services. Back in 2006, the so-called secondary sector of GDP – largely manufacturing but also including construction and utility production — accounted for 48% of Chinese GDP, while the tertiary, or services, sector accounted for just 42% of GDP. By 2018, the shares had been reversed – 41% of GDP for the secondary sector and 52% for services. For large economies, structural changes of this magnitude in such a short period are virtually unprecedented. 

This shift was no accident. In March 2007, former Premier Wen Jiabao famously warned of a Chinese economy that was becoming increasingly “unstable, unbalanced, uncoordinated, and unsustainable.” This sparked a vigorous debate over sustainability risks that had a major impact on China’s most recent five-year plans and reforms. The leadership concluded that the Chinese economy could no longer afford to stay the energy- and pollution-intensive course set by Deng Xiaoping’s hyper-growth gambit in the early 1980s. 

Consistent with this dramatic structural transformation, China has been aggressive in shifting the mix of its fuel consumption away from carbon-intensive coal to oil, natural gas, hydro, and renewables. Although coal still accounted for 58% of China’s total primary energy consumption in 2018 – more than three times the 18% share in the rest of the world – that is down sharply from 74% in 2006, the year before Wen’s “Four Uns” first drew serious attention to sustainability. 

Significantly, China is leading the world in embracing non-carbon renewables such as wind, solar, and geothermal biomass. In 2018, China’s renewables consumption was 38% larger than that in the United States and triple that of Germany. While renewables still account for just 4% of China’s total primary energy consumption, they have been growing by 25% annually over the past five years (including 29% growth in 2018). If China remains on this path, then renewables could hit 20% of China’s total energy consumption by 2025 – a major breakthrough on the road to a cleaner, less carbon-intensive economy. 

China’s rapidly changing transportation model is a third key component of its sustainability strategy. China has the world’s largest high-speed rail network, the fastest-growing subway system, and is leading all efforts in the rush to embrace electric vehicles. According to World Bank estimates, China is expected to exceed 30,000 kilometers (18,641 miles) of installed high-speed rail by next year, up from more than 25,000 kilometers by 2017, and to add considerably more in the years ahead. This energy-efficient mode of long-distance connectivity stands in sharp contrast to the carbon-intensive transportation network created the US interstate highway system in the 1950s and 1960s. 

Finally, the urban environment – obviously critical to any sustainability challenge – is especially important in China where rapid urbanization still has about three decades to go, with the urban share of its population likely to rise from nearly 60% at present to 80% by 2050. Yes, as in other countries, roads in China’s major cities are severely congested. But China is doing something about it, boasting seven of the world’s 12 longest subway networks. Moreover, China’s electric vehicles (EV) market dwarfs those elsewhere, with sales of over 500,000 EVs in 2017, versus slightly less than 200,000 in the US and Europe. And China’s EV lead is projected to widen considerably over the next decade. 

China also stands out for its focus on a new eco-city urban model, featuring low-energy construction materials, light mass transportation, and well-planned “green space” urban pockets. The Xiong’an New Area, planned as a “subsidiary center” south of Beijing, is particularly noteworthy in this regard, as is the existing Sino-Singapore Tianjin Eco-city and Hainan’s recently announced plan to shift to all clean-energy vehicles. According to one recent estimate, China currently has plans to construct over 250 eco-cities. As a relative latecomer to urbanization, China has the opportunity to rely on new models of city planning and energy efficiency that were not available to the first movers in the industrial world. 

Is all this enough to make a difference for China and the planet? The good news is that China’s share of global emissions has flattened out, albeit at a high level. China’s share of global carbon dioxide emissions doubled from 14% in 2001 to 28% 2011, but has not increased since. While China’s CO2 emissions did rise by 2.2% in 2018, that was less than in the US (2.6%), Russia (4.2%), and India (7.0%) while falling well short of outright declines of 1.6% and 2% in Europe and Japan, respectively. 

Alas, the good news in China is probably not good enough for a planet that many judge to be already in crisis. It’s one thing to bend the curve and stabilize the emissions share. It’s a different matter altogether to achieve the 20% reduction in the level of emissions as originally stipulated in the 2015 Paris climate agreement. Nonetheless, by shifting away from carbon-intensive manufacturing to low-energy services, and embracing EVs, high-speed rail, and eco-friendly urbanization – and likely to stay the course on all these trends – China is setting a high bar for the rest of the world. 

While the trade war is important, China is winning the far more important battle for sustainability. To its credit, China is focusing on this battle at a point when its per capita output is barely more than one-third the level in the so-called advanced economies. A relatively poor country has made a conscious choice to shift its focus from the quantity to the quality of growth. 

What about the rest of us? 

 

Stephen S. Roach, a faculty member at Yale University and former Chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China

Copyright: Project Syndicate, 2019.
www.project-syndicate.org

 

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