China’s 12th Five-Year Plan Emphasizes Balanced Growth and Environment

By CWR 11 March, 2011

China Water Risk takes a closer look at the headlines.

Water (scarcity and pollution) addressed in the plan; emphasis on environment, energy and climate.
Non-fossil fuel to account for 11.4 percent of primary energy consumption.
Cut water consumption per unit of value-added industrial output by 30%.

An annual parliamentary meeting of China’s 3,000-strong National People’s Congress and the 2,000 members of the Chinese People’s Political Consultative Conference  opened on March 5 with the government releasing a draft of its 12th five-year plan (FYP).  The plan, a framework for government policy and action, is expected to remain largely intact after a vote at the plenary session’s end.

In a significant shift, the new plan emphasizes “quality growth,” moving away from the 11th FYP’s stress on rapid GDP expansion. The new national-level development policies will include economic and political shifts, target growth of around 7 percent, as well as emphasis on seven new strategic industries that are cleaner and greener.

On opening day of the NPC, beyond the draft, several other long reports were also released by Premier Wen Jiabao, the Finance Ministry and the National Development and Reform Commission. These can be found  here.

How much does the latest FYP actually matter beyond political intent?  By all accounts, delivery of the targets is considered a crucial source of political legitimacy for the Chinese leadership, according to China Dialogue, pointing out that strong top-down measures have meant that the Chinese government has managed to achieve most of the environmental targets set under the 11th FYP.

Why the shift from pure growth to a more balanced approach to development in the latest plan? Estimates are that nationwide protests last year, reached 180,000 with rising anger at the perceived high cost of 10 percent plus annual GDP growth, including severe environmental degradation and ensuing health consequences, job shortages and widening income inequality.

With protests escalating in the Middle East, China is keen to lessen discontent at home, recognizing that better healthcare, education, housing, social welfare will be needed over the next years, along with environmental cleanup and an emphasis on less-polluting industries.

Water – both scarcity and pollution – is one of China’s major concerns, and this is addressed within the FYP, which emphasizes the environment, energy and climate. Among the targets of the 118-page plan, which is not yet available on line but was released in summary form by Xinhua:

Non-fossil fuel to account for 11.4 percent of primary energy consumption;

— Water consumption per unit of value-added industrial output to be cut by 30 percent;

— Energy consumption per unit of GDP to be cut by 16 percent;

— Carbon dioxide emission per unit of GDP to be cut by 17 percent;

— Forest coverage rate to rise to 21.66 percent and forest stock to increase by 600 million cubic meters;

The plan assigns specific city targets for motor vehicle emission standards. Contained within there is also an emphasis on reuse and recycling and there are also goals for environmental infrastructure, including wastewater and solid waste treatment.

Although reportedly there aren’t specific targets for major environmental pollutants in the five-year plan, at a March 6 NPC press conference, Director of the National Development and Reform Commission, Zhang Ping, announced reduction targets for Chemical Oxygen Demand (COD) and Sulfur Dioxide (SO2) of 8 percent.

Reduction targets for ammonia nitrogen and nitrogen oxides were set at 10 percent, which could conflict with farming productivity and food security.  Zhang also announced an “index evaluation system” that will allocate targets to provinces and ensure progress toward reduction.

The plan does set an energy intensity reduction target of 16 percent by 2015. At the same time, reductions in CO2 emissions per unit GDP were set at 17 percent by 2015. In Cancun last November, the Chinese government confirmed a 40 to 45 percent reduction in carbon intensity from 2005 levels and the FYP targets seem consistent with this.

China’s new industrial strategy will include the new Magic Seven: Energy saving and environment protection, information technology, bio-technology, high-end manufacturing, new energy, new materials and clean-energy vehicles.

Substantial amounts of public investment and policy support to these areas are expected to push the total value-added output of the new industries to represent 8% of China’s GDP in 2015 and 15% by 2020.

Included in the draft “New Energy Industry Development Plan 2011-2020”, the government expects to invest 5 trillion yuan in the new-energy sector by 2020. Meanwhile, investment in environmental protection is expected to top 3 trillion yuan by 2015, and the government also plans to invest 100 billion yuan in the alternative-energy vehicles industry over the next 10 years.

We look forward to the final documentation and next month expect to review more thoroughly the information available.

Author: CWR

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