Issues in China

China is the biggest producer in the coal-chemical industry. From January to November 2009, China produced 314 million tons of coal, up 8.2 percent year to year.

Wang Jian, secretary general of China Society of Macroeconomics, published an article in Outlook Weekly, saying that 17 industries in China were faced with excessive capacity in 2008, rising from 11 in 2005.

Now China is pushing forward with its low carbon economy by curbing overcapacity and boosting strategic emerging industries.

Li Ningning, a senior official from the National Development and Reform Commission (NDRC), the country's top economic planner, urged tackling the overcapacity problem in industrial sectors such as the coal-chemical industry.

Li said for China, as a country comparatively rich in coal but lacking oil and gas, the mature technology and low-investment threshold in the coal-chemical industry seem conducive to investment.

Yuan Longhua, an official from the Ministry of Industry and Information Technology, pointed out that restructuring the coal-chemical industry involves eliminating outdated production capacity, supporting technological innovations and strengthening policy guidance.

To resolve the problem of overcapacity, Premier Wen Jiabao said the most important thing is to take economic, environmental, legal and administrative measures to eliminate backward capacity and, in particular, restrict the development of energy-consuming and polluting industries with excess capacity.

This year, the Chinese government listed high-tech, emerging industries: new energy, energy-saving, environmental protection, electric vehicles, new materials, information industry, new medicine and pharmacology, as well as biological breeding.

Emerging industries could not only bring about a low-carbon economy, but also help China tide over the financial crisis. According to a Xinhua report, Premier Wen said that the key to conquer the global economic crisis lies in people's wisdom and the power of science and technology.

He viewed the development of new energy, energy-saving, environmental protection and electric vehicles industries as the government's priorities among the emerging industries.

Figures from NDRC showed that by the end of 2008, China's energy-saving and environmental protection industries totaled 1.55 trillion yuan ($227 billion), accounting for 5.17 percent of the country's GDP.

De Villepin praised the effort of the Chinese government since 2007 to engage in the shifting of its development model, but he also said China is using a lot of coal for electricity. "But if you are going use clean coal, then it's going to be a major change for your country."