By Hu Shaowei
"The cost of growth", the technical term for the imbalance
between tapping resources and environmental protection, necessarily
occurs in the course of all countries' modernization drive.
Some nations have managed to surmount this stumbling block to
embark on the road of sustainable development. Others have fallen
into failure.
China now stands at the crossroads. Shall we get over the
obstacle or be baffled by it?
The experience of other countries indicates that the only
effective formula for surmounting the obstacle is the
transformation of the economic structure. This means that the
growth mode marked by high energy consumption and pollution be
turned into a clean one.
Currently, a new industrial policy of saving energy and reducing
waste discharge is taking shape in the country.
China did not have an industrial policy in the real sense of the
word until 1989. That was the year the State Council promulgated
the Decisions on the Key Points of the Current Industrial
Policy.
With this as the starting point, the country worked out a
package of industrial policies in the 1990s. They involved
optimizing the industrial structure, addressing the defects in
market mechanisms and raising the quality of economic growth.
In the late 1990s, the government adopted policies to enforce
the closing of enterprises in sunset sectors while taking forceful
steps to ensure the development of newly emerging industries such
as machinery, electronics, information, chemicals and
construction.
As a result, these industries have kept expanding, becoming
pillar industries that support the country's rapid economic
development. At the same time, the portion of the service sector
throughout the economy has grown considerably.
All this has helped bring about the China miracle - an annual
growth rate as high as 9.8 percent over the last 28 years.
Problems exist, however. The most prominent one is that energy
saving and environmental protection failed to be taken into
consideration in the formulation of industrial policies.
The country's Outlines of the Country's Industrial Policy in the
1990s, for example, listed machinery, electronics, petrochemical,
auto making and construction as the industries that were expected
to power the Chinese economy. The policy failed to recognize that
these industries are both energy consuming and polluting.
As a result, in the absence of restrictions imposed by
energy-saving and discharge-reduction quotas, the rapid development
of these pillar industries has heightened the imbalances between
economic growth, resources and the environment.
Official statistics show that the energy consumed by producing a
given amount of GDP rose 4.9 percent, 5.5 percent and 0.2 percent
in 2003, 2004 and 2005, respectively. Although energy consumption
dropped 1.2 percent in 2006 thanks to the government's enforcement
of energy-saving policies, the drop still fell short of the
original target of 4 percent. With respect to resource consumption,
the country used 388 million tons of oil and 1.24 billion tons of
cement in 2006. This accounted for 30 percent of the world's total
oil use and 54 percent of its cement that year, to produce a GDP
that was merely 5.5 percent of the world's total.
High resource consumption directly results in worsening
environmental conditions.
In the 1980s and 90s, China's industrial policies were largely
dictated by short-term supply-and-demand relationships. When supply
of certain goods fell short of demand, the industry or sector that
produced them enjoyed development priority.
Upon entering the new century, the industrial policy became
disoriented, with all kinds of goods in full supply. The situation
did not change until the central government put forward the new
strategy of sustainable development in October 2003.
The new strategy calls for a high content of advanced
technology, low resource consumption and much less environmental
pollution. The industrial policy's new focus is energy saving and
waste-discharge reduction.
Although a number of energy- and resource-saving policies had
been mapped out starting in the mid-1980s, they were not effective.
This is because saving energy and protecting the environment were
regarded as elements merely at the service of upgrading economic
growth rather than prerequisites to it.
Now it has become crystal clear that energy saving and
environmental protection must be the preconditions for economic
growth. In fact, land, water and air resources have become so
valuable that they must also be husbanded.
Concern for saving energy and reducing discharge is now on the
fast track since the State Council promulgated the Decisions on
Strengthening Energy-Saving Work last July. On this basis, a string
of industrial policies has been worked out.
In the future, all industrial projects must pass
energy-consumption and environment evaluations before getting the
go-ahead. Existing polluting or high energy-consuming enterprises
must be shut down if they fail to meet energy-saving and
environmental-protection standards after undergoing upgrades.
Note: the author is a senior economist with the State
Information Center
(China Daily May 18, 2007)