The next few months will be a test of China’s resolve to improve the environment.
China needs to sharply slowdown economic growth if it wants to reach its energy efficiency targets by the end of the year, according to a report by Standard Chartered Bank.
China’s latest five-year plan calls for a 20% reduction in the amount of fuel used per dollar of economic output from 2005 levels by the end of 2010. To achieve that, the report says, China would have to use 6% less electricity per month from September to December than its average consumption in the first eight months of the year. That implies the growth rate of industrial output would fall by half in the second half of the year to 7.4%, according to the bank’s calculations.
China was making good progress on energy efficiency until 2009, when the country’s infrastructure-heavy stimulus package – implemented as a response to the financial crisis - led to surges in cement, steel and other energy-intensive industries, the report says.
Beijing was lauded for setting ambitious energy targets when the five-year plan was released in 2006, but pressure to hit those targets has caused turmoil as local governments struggle to reach their quotas. With the end-of-year deadline looming, there’s no time to install efficiency upgrades. Instead, officials are just rationing electricity, with one city in Hebei Province going so far as to squeeze power supplies to hospitals and shut down any traffic light not powered by solar cells....MORE