China has a track record of making changes rapidly. Within the past decade or two, China has become the world’s biggest market for passenger cars, its biggest e-commerce market – and its biggest source of carbon emissions.
So it should come as no surprise that China has now also assumed a leadership position in green investment.
China is ploughing billions into clean energy, promoting the use of electric vehicles, investing in low-emissions infrastructure for its fast-growing cities, and widening the options for green financing.
For decades, China’s headlong, double-digit economic growth came at the cost of its environment. But China’s more and more educated, articulate and confident citizens increasingly demand that the benefits of economic growth come without the pain of environmental degradation. The fact that many of China’s low-lying urban areas are vulnerable to the effects of rising sea levels adds another dimension to the need to act.
China installed almost three times more wind power capacity than the US last year
The Chinese authorities have declared a “war on pollution,” and over the last few years have been charting a path to a low-carbon economy, pledging under the current Five-Year Plan to incorporate ecological conservation “into every aspect…of economic, political, cultural and social development”.
The plan’s environmental targets include a 15 per cent reduction in energy consumption per unit of GDP; a 23 per cent improvement in water efficiency; a new 5 billion-tonne cap on total energy consumption; and an overall 18 per cent reduction in carbon intensity.
Changes are already underway. China installed almost three times more wind power capacity – 23.3 gigawatts – than the US last year, taking its total wind power capacity to about one-third of the global total. The country’s photovoltaic capacity more than doubled last year, turning China into the world’s biggest producer of solar energy by capacity.
On the low-carbon transport front, meanwhile, China has built more than 20,000 kilometres of high-speed rail lines in the past few years. The authorities’ support for electric vehicles means China is likely to become the world’s largest market for such vehicles within the next few years.
A strong green element also runs through China’s ‘Belt and Road’ initiative, which will see billions of dollars ploughed into improving infrastructure links across more than 60 countries in Asia, Europe and beyond.
Last but not least, China has made significant progress in tackling barriers to private-sector investment in a more sustainable economy, including allowing overseas financial institutions to issue green bonds in China. More than USD33 billion of Chinese green bonds were issued last year, more than one-third of the global total.
Of course, the changes in China’s energy mix and electricity pricing regime, its car fleet or its capital markets cannot happen overnight. As the persistent high air pollution in Beijing, Shanghai and other cities in recent months shows, it will take years to clean up China’s environment.
But China’s policymakers have the motivation and the means to capitalise on China’s current economic transition and deliver substantial progress in the coming years.
A version of this article appeared in Asia International Today (Australia), 7 April 2017.