By: James Pennington
Rapid development over more than three decades has led to a series of environmental challenges, with cities such as Beijing often subjected to pollution levels way above the recommended limit.
Other environmental issues, including the effects of climate change, water pollution, high use of natural resources and the pollution of arable land, also pose challenges.
In previous decades, the environment seemed to take a back seat in Chinese policy-making in favour of the challenges of sustaining economic growth and raising living standards.
However, the impact of air pollution on health, and a global drive to fight climate change, has seen China emerge as an international leader in the environmental space.
As others progressively back away from their leadership position, China has shown a willingness to collaborate with the rest of the world to achieve climate goals.
The World Economic Forum (WEF) is now working with the Chinese government on these issues. At Davos this year, the forum signed a memorandum of understanding with the China Council for International Co-operation on Environment and Development, a body which gives policy recommendations to China’s State Council.
The collaboration will explore how circular and sharing economy models can create a more resource-efficient society in China, also focusing on other areas including oceans, the potential of new technologies for the environment, and climate change. (The “circular economy” is a shift from the linear model of making products then discarding them, to everything being designed to be recycled or re-used.)
At the annual meeting of the WEF in Davos, Chinese President Xi Jinping signalled that China would stick with the multilateral process and others should do so too.
“The Paris Agreement is a hard-won achievement. All signatories should stick to it instead of walking away from it, as this is a responsibility we must assume for future generations.”
As the world’s biggest emitter of greenhouse gases and the world’s second largest economy, China’s leadership sends a strong signal to the global community.
China has been pushing forward action on the ground to back up the president’s words.
It has been shifting away from its reliance on coal, which accounted for 65% of its energy in 2015 – a 3.7% drop from the previous year.
And last year, China decided to stop building 103 coal-powered power plants that were in the construction or planning phase.
Nuer Bekri, the government official in charge of Chinese energy policy, said in Davos: “Last year, we cancelled 7.2 million KW of coal energy, we are also suspending, cancelling and delaying coal generation that approach will create a larger market space for other sources of energy.”
He also noted a willingness to co-operate globally, saying: “We will have to enhance international collaboration in the energy field.”
The government sets the direction, but implementation lies with the private sector. Qiao Baoping, chief executive of Guodian, China’s largest (and the world’s second largest) power generator, said: “Commitments are made by the Chinese government, but they are filled by Chinese businesses such as mines.”
The company now has 16GW of hydro-generation capacity and 25.7GW of wind-power capacity, more than any other company globally. According to UN Environment, China increased investment in renewables (excluding hydro) last year by 17% to $102.9billion, or 36% of total global investment. The country has more than 25% of total global renewable power capacity.
Another important area for China is the use of raw materials. Throughout its decades of fast growth, China has imported vast amounts of raw materials, contributing to a global commodities boom. This has left a lot of room for improvements in resource efficiency: China uses about 2.5kg of materials per dollar of economic growth compared with about half a kilo in countries that are members of the Organisation for Economic Co-operation and Development.
In 2009, China became the first country to introduce a circular economy promotion law, to increase the re-use and recycling of materials. Businesses are also implementing this, as explained by Yu Xubo, chief executive of China National Cereals, Oils and Foodstuffs Corporation – the country’s largest food manufacturing, trading and processing company.
“We stick to a re-use and recycle model. Take hog farming for example, we use the bio-gas for energy and we use the bio-slurry as organic fertilisers”.
Models such as this can increase agricultural productivity in a country with 22% of the world’s population and only 7% of its arable land. The circular economy is also gaining traction in China’s many “circular industrial symbiosis parks”, in which companies use the waste of other manufacturers as raw material inputs into their process. For example, in the Suzhou New District, circuit boards are crafted from copper off-cuts from other heavier industries.
As China’s economy grows, there is a strong policy push to move from an economy focused on investment in infrastructure and exports to one driven by domestic consumption. As China “rebalances” its economy, it will explore new models of consumption that can provide for its consumers without destroying the environment. Technological and business model innovation has given rise to the sharing economy, which has become a strong force. The industry is thought to be worth $220bn domestically and is predicted to grow at 40% a year.
It is thought that the sharing of goods, such as pooling taxi journeys, or sharing products and homes, could pave the way for a less resource-intensive consumption.
A WEF study in collaboration with MIT found that home-sharing could provide extra capacity without building hotels, especially during big events when cities experience a surge in visitors.
Using Airbnb data from the Rio Olympics, it was found that home-sharing created the equivalent of 257 average-sized hotels during the Games. Similarly, China’s largest ride-hailing company, Didi, matches riders going in the same direction. In 2015, it pooled an average of 1.5million rides a day, saving 510million litres of fuel.
These steps will be vital as China continues to grow. New ways of working between governments, businesses and civil society are critical to create the systemic changes needed to safeguard our global commons. The examples above are just the first step of a much bigger global transformation that all stakeholders should embrace.
James Pennington is project specialist: circular economy, WEF