China's Growth Sparks Debate

Five-year plan would boost GDP by 40 percent, even with slower growth rate.
By Michael Lelyveld
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Pollutants billow out of a chimney amid a group of residential buildings in Beijing, March 2, 2011.
Pollutants billow out of a chimney amid a group of residential buildings in Beijing, March 2, 2011.

China's plan to ease economic growth over the next five years will still have a significant impact on energy use and the environment, analysts say.

In delivering his work report to the National People's Congress on March 5, Premier Wen Jiabao set an annual economic growth target of 7 percent for the 12th Five-Year Plan through 2015.

The pace is slower than the 7.5-percent goal for the previous five-year period, signaling the government's shift to a more sustainable economic growth mode.

But calculations based on the new target suggest that the plan will still mean major increases in resource consumption.

At the 7 percent rate, China's GDP would expand by over 40 percent in five years. At the slightly faster pace of the previous plan, GDP growth would total 43.5 percent, making relatively little difference over time.

"China hasn't made a significant revision to its growth expectations. There's no reason for it to," said Michael Levi, senior fellow for energy and the environment at the Council on Foreign Relations in New York.

As a developing country, China will still register rapid growth in its economy and energy use, even if it stresses conservation in keeping with the new plan.

"That's to be expected," said Levi, noting that some increase in energy use is also expected in slower-growing developed countries like the United States. "China is still rapidly emerging," he said.

But a 40-percent expansion may be only a minimum. China's economy actually grew at an average annual rate of 11.2 percent in the 2006-2010 period, when the target was set at 7.5 percent, the official Xinhua news agency said.

Even if GDP is kept to the new target rate, energy use is likely to soar.

Reducing consumption

The government has pledged to reduce energy consumption by 16 percent over the next five years, but only per unit of GDP. That means total energy use could climb by as much as one-third, if China meets its official economic target.

China missed its goal of cutting "energy intensity" by 20 percent over the past five years, achieving a 19.1 percent savings per unit of GDP.

Zhang Ping, director of the National Development and Reform Commission, took the blame for arbitrary power outages imposed by some provinces in an effort to meet the efficiency goal.

"I must apologize for these acts because we, as the responsible department, did not give proper guidance," Zhang said, according to the official English-language China Daily.

He promised the cutoffs would not happen again.

The new five-year plan calls for lowering carbon dioxide emissions by 17 percent per unit of GDP and reducing major pollutants by a total of 8-10 percent.

"These are effective measures in response to climate change," said Zhang.

China's growth will be critical for climate change, now that the country has become the world's top energy consumer and emitter of greenhouse gases.

The lower economic growth goal is welcome, but it will still increase total energy use and emissions by major amounts, said Robert Ebel, senior adviser to the energy and national security program at the Center for Strategic and International Studies in Washington.

"It has consequences no matter where you look, whether it's climate change or consumption of energy," said Ebel.

"China's going to have a real impact on the world."

Coal alternatives

But Deborah Seligsohn of the World Resources Institute (WRI) said the government's plan is moving in the right direction.

The environmental impact of the plan will depend on a series of factors including China's ability to reduce dependence on high-polluting coal for economic growth, she said.

"I think it depends almost entirely on the quality of growth rather than these absolute numbers," said Seligsohn, speaking by phone from Beijing.

China's plan calls for raising the share of non-fossil fuels in the country's energy mix to 11.4 percent from 8.3 percent last year, relying on big increases in solar, wind and nuclear power.

On Saturday, Minister of Environmental Protection Zhang Lijun said China will not back away from its ambitious nuclear plans, despite concerns about reactor safety in Japan following its massive earthquake.

The country also plans to boost cleaner-burning natural gas with consumption expected to rise 20 percent this year, according to the National Energy Agency (NEA).

The issue is not whether but how China will grow, said Seligsohn, who is principal adviser to WRI's China climate, energy and pollution program.

"China is still a pretty poor country," she said. "It has a lot of growth still to do to benefit its people. But in order to benefit its people, it has to be the kind of growth that generates jobs and improves the environment around them."

Officials have also discussed a cap on total energy use for the first time, which could limit growth to 25 percent.

Seligsohn believes the cap could come into play if the economy grows faster than the official target.

"If they grow faster, they're saying that they're going to improve their energy efficiency more," she said.

In recent months, the government has been trying to rein in real estate development and the construction-related industries by slapping taxes and limits on speculative home- buying. The curbs could slow the growth of energy use.

The moves may be a sign that China is finally moving toward the long-awaited shift from investment-led growth toward more sustainable development.

Seligsohn was asked whether she accepts the government's claims that it is serious about changing China's economic model.

"I accept that it's serious, but I also accept that it's very hard and it's going to take them a number of years to do it," she said.





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