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Poor Start on Energy Goal
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A good start is crucial if we want to meet the country's target of cutting energy intensity by 20 percent in five years. However, a lack of progress in improving energy efficiency in the first half of this year requires policy-makers to face the issue with a greater sense of urgency.

Yesterday's State Council work conference on energy saving offered a vital opportunity to take stock of how far the national economy has actually shifted from its energy-consuming growth model.

Being part of the national effort to fulfill the 11th Five-Year Plan (2006-10), the central government has declared that energy consumption per unit of gross domestic product (GDP) must be cut by 4 percent this year.

Sadly, while the Chinese economy performed almost superbly with unexpectedly high growth and low inflation in the first half of this year, it appears that the country will have great difficulty in achieving its energy efficiency goal.

With energy consumption outpacing economic growth, the country's energy efficiency has conceivably worsened.

There are surely many lessons that policy-makers should draw from this bad beginning.

For instance, excessive fixed-asset investment growth across the country demonstrated that local officials are still relying far too heavily on extensive growth to secure local economic development.

Besides more rhetoric, it is time for the central government to rethink what policy and economic incentives are required. To ensure local support for energy-saving measures, the central government needs to make full use of its administrative, financial and personnel power.

With less than six months to go this year, the central government must pull out the stops to awaken local officials to the severity of the issue.

By making this year's task a 4-percent cut in energy intensity, exactly one-fifth of the five-year energy goal, policy-makers may have hoped for a smooth start to deliver that grand ambition.

However, the fact that the Chinese economy continues to roar ahead at the expense of energy efficiency implies that shaking off this reliance on excessive growth may be harder than expected.

Theoretically, it is easier to increase energy efficiency through technological progress and industrial restructuring from a lower starting point. And that may partly explain the authorities' previous confidence in achieving a 4-percent cut.

But the reality is that the country is still far from being able to embrace a new growth pattern that is not only environmentally friendly and sustainable but also more efficient in terms of energy use.

(China Daily July 27, 2006)

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