China's top leaders have decided that reining in a red-hot economy on the verge of overheating will be a priority in 2008, a year that they say is crucial to meeting the 2006-2010 targets of saving energy and reducing greenhouse gas emissions.

The targets will help China prevent its economy from overheating and achieve sustained development, said Xie Zhenhua, deputy head of the National Development and Reform Commission (NDRC).

"It is like shooting two hawks with one arrow," said Xie, who is heading China's delegation to this month's global climate change meeting on the Indonesian island of Bali.

The just-concluded Central Economic Work Conference that gathered China's top economic planners together, highlighted the need to save energy and reduce emissions, saying it is a key to "scientific development", a phrase that refers to efficient and sustained growth.

For the first time in history, China's decision makers allowed such a growth pattern to take precedence over the speed of development.

"At present, the core of the problem is not the speed, but the quality and pattern of growth," said Cai Zhizhou, a statistics expert at Beijing University.

Though it was not obligated by the Kyoto Protocol, under which 36 industrial nations must cut emissions by five percent below their 1990 levels during the 2008-2012 period, China has set its own target of reducing energy consumption for every 10,000 yuan (US$1,298) of GDP by 20 percent, with emissions set to drop 10 percent.

Investment boom

Even though consumer spending is playing an increasing role in economic growth, fixed asset investment remains the biggest contributor to growth. China's economy is expected to expand 11.5 percent this year, fuelled mainly by investment which rose 27 percent in the first 10 months.

Due to strong domestic demands and soaring energy prices on the international market, a large portion of the investment is going to such high-energy-consuming and pollutant-discharging industries as construction materials, petrochemicals, chemicals and nonferrous metals.

Investment in these four sectors grew at a blistering 42.9 percent on average in the first ten months - a reason why China finds it difficult to meet its saving-energy and reducing-emissions targets.

"The risk of overheating lingers as investment still faces great upward pressure," said NDRC head Ma Kai. "The situation of saving energy and reducing emissions is still grave."

Last year, energy consumption fell 1.33 percent, only a third of the annual goal of four percent. Both emissions of sulphur dioxide, a cause of acid rain and chemical oxygen demand (COD), a measure of water pollution, were increasing.

Of the 30 administrative regions with figures available, all but Beijing missed the 2006 target of reducing energy consumption. To gear up for the Olympics next year, Beijing achieved a 5.25-percent drop.

A total of 12 regions, mostly those relying heavily on heavy industries and fixed asset investment, cut their energy consumption by less than three percent.

The failure made it even more difficult to meet the five-year targets and China must accelerate its industrial restructuring, said Xie, adding that some regions are still pursuing economic growth as a mandatory objective, at the cost of the environment.

A challenge but a must

While struggling to cool the investment boom that is fuelling its economy, China has to keep the economy growing fast enough to improve 1.3 billion people's livelihoods and boost employment and domestic demand.

Most industrial nations did not deal with the environment until they had achieved some prosperity, while China has to act right now when it is still in the middle of development because the most populous nation on the planet cannot afford to waste or pollute, said Zhou Dadi, an energy expert with NDRC.

"If we don't change the manner in which we are developing, it will in turn hinder us from making more progress in the future," said Zhang Yongjun, an economist with the State Information Center.

China is consuming its natural resources at a pace even faster than its sizzling economic boom. To produce 5.5 percent of the world's GDP last year, China burned through 15 percent of the world's coal consumption and used 30 percent of the world's steel and 54 percent of its cement.

As the booming economy's voracious energy demands kept growing, China became a net importer of oil during the 1990s, and now 47 percent of the country's consumption relies on imports.

After three decades of fast economic growth, China has some of the most polluted cities in the world and the country's major lakes - Taihu, Chaohu and Dianchi, which are water sources for millions, have been contaminated by algae blooms, which eat up oxygen in water which in turn leads to the deaths of water creatures and makes the water undrinkable.

Premier Wen Jiabao said earlier this year that "Without an efficient method of economic growth, China's natural resources and the environment will not be able to sustain its economic development."

Meanwhile, as China has become one of the two biggest carbon dioxide emitters, along with the United States (and according to one Dutch report China is already the world's largest producer of carbon dioxide) it is coming under domestic and international pressure to do more to cope with environmental problems.

Turning point

The central government has spent a total of 23.5 billion yuan in saving energy and reducing emissions this year. It ordered that progress in environmental protection be a key standard by which officials and company heads are judged.

Those who don't meet the targets could be prevented from promotion, while failing provinces and companies would not get approval for high energy consuming projects, it said.

The government even told officials to keep indoor temperatures below 21 centigrade degrees in winter, use energy-saving elevators and purchase Chinese-made fuel-efficient cars with manual transmission.

In July, China scrapped export tax rebates on more than 500 products to curb high-energy-consuming and pollutant-discharging industries and exports of key natural resources.

China is also closing inefficient coal-fired power units and outmoded steel plants, in an effort to save hundreds of millions of tons of coal and water and cut emissions by millions of tons a year. Banks are warned against lending to non-environmentally friendly projects.

All these efforts are starting to yield results, Xie told a press conference last month where he announced that China's energy consumption per unit GDP fell three percent in the first nine months, while both sulphur dioxide emissions and chemical oxygen demand dropped.

Zhang Lijun, deputy director of the State Environmental Protection Administration, said that "this year will be a turning point in China's pollution control."

"A lot of progress has been made this year but more should be done," said Xie.

(Xinhua News Agency December 9, 2007)