GDP growth is still king in China
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E-mail China Dialogue, November 4, 2013
China needs to rethink the coal issue and take more forceful steps. Different development targets will incur different environmental costs. Coal consumption has increased by an average of 200 million tonnes a year over the last decade and if that continues we will be using six billion tonnes annually by 2023 – meaning we will struggle to improve air quality, and it may even worsen.
If we opted to grow a little slower and hold coal use steady at four billion tonnes a year it would still be hard to prevent smog – but at least it wouldn't get any worse.
CD: Key regions have released their own policies in response to the plan. How effective do you think those moves will be?
Li: Strong measures are being put in place all over, but they're getting in each other's way, or even coming into conflict. Beijing is to continue replacing coal power with natural gas and is to close three big coal-burning power plants – but those plants were built for the Olympics and have the most up to date technology. So why not leave them and instead use that gas to power small furnaces and factories in Hebei, instead of coal? That would result in greater emissions cuts, and would be better for both. If there aren't fundamental improvements in Hebei then Beijing is going to have smog, even if it replaces all of the 17 million tonnes of coal it uses a year with natural gas.
China always talks about joint action, but really everyone's acting independently.
CD: While the plans were being formulated some provinces indicated a willingness to put cuts in coal use before GDP growth, but also said that the first targets suggested by central government were too tough. Were those targets really higher than the provincial governments could achieve?
Li: China still hasn't really changed the way it grows. Although the president and the premier both talk about making that change, development is still the number one priority. The national GDP growth target is 7.5%, so nobody is going to grow less than that. So overall growth is bound to be over 8%. GDP growth is still king.
But, if we're going to stop smog, then GDP growth in Beijing, Tianjin and Hebei; and in the Yangtze delta, needs to be kept under 5%.
China's most reasonable policy now would be first to do everything possible to increase natural gas supply. That includes more extraction at home and buying in from overseas. And second, expanding renewables. Currently 15% of potential wind power generation is wasted – on one hand we're trying to prevent smog, on the other we're wasting clean energy.
Coal curbs are actually a political opportunity, to stand up for the people's interests; and an economic opportunity, to change the way our economy grows and reduce our reliance on resources.
Thirty years of expansive growth have left us with accumulated problems: a lack of coordination, imbalances, unsustainability. These can't be solved in a single stroke, but we do need to set goals. We cannot be equivocal on cutting coal or improving fuel standards – we must be bold and decisive and leave no blind spots. We must be confident that China has the ability to do better.
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