Premier Wen Jiabao made no mention of energy saving goals for
this year in the government work report delivered to the 12-day
session of the National People's Congress, China's top legislature,
which opened on Monday.
But in the report, Wen said goals for reducing energy
consumption and reducing pollutant emissions will not be altered
and called for steadfast efforts to realize these goals.
The statement was seen as further demonstration of the
government's determination to reduce energy consumption and control
pollution, but achieving the goals will be a challenge for both
central and local governments, observers believe.
According to the government's 11th Five-Year Plan (2006-2010), China's
energy consumption for every 10,000-yuan (US$1,298) of gross
domestic product (GDP) should be reduced by 20 percent by the end
of the period. Meanwhile, the discharge of sulfur dioxide and
chemical oxygen demand (COD) should drop by 10 percent.
However, as the government work report said, last year China
failed to reduce per-unit energy consumption by four percent and
discharge of major pollutants by two percent, targets set at the
beginning of the year.
Zhou Shengxian, head of the State Environmental Protection
Administration (SEPA), said the failure was mainly a result of weak
supervision and insufficient investment by his administration.
Reasons behind the failure, as cited in the government work
report, included slow progress in industrial restructuring and fast
growth in sectors that consumed more energy and discharged more
pollutants. It said, "Some local governments and enterprises did
not strictly abide by laws and rules on environmental protection
and energy saving and did not meet related criteria."
In 2006, the concept of policy execution was written in the
annual government work report for the first time, and a year later,
the work report included "to enhance policy execution" again.
"In the past, policy enforcement relied on political conviction
and the authority and power of the central government. But now,
things have changed. Local governments and enterprises put
interests first," says Wang Xiaoguang, head of the economic
operation and development section of the Research Institute of
Economy under the National Development and Reform Commission
(NDRC).
The central government has long required local governments to
pay more attention to the quality rather than the quantity of GDP.
However, there still exists a "GDP complex" and "competition in GDP
growth" among local governments. Over the past few years, the
government has waged two campaigns of macro economic regulation to
constrain the overheating of some industries, the real estate
sector in particular. But housing prices ran away, which was seen
by analysts as a result of dysfunction between the central and
local governments.
Zhou Dadi, a senior researcher with the NDRC Research Institute
of Energy, says some local governments, including both coastal and
hinterland regions, blindly launched big budget projects to realize
rapid economic growth.
In the first half of 2006, northern China's Inner Mongolia Autonomous Region recorded a
year-on-year economic growth of 18.2 percent, 7.3 percentage points
higher than the national average, and a 43.5-percent growth in
fixed assets investment, 12.3 percentage points higher.
In eastern Shandong Province, 14 out of 17
prefecture-level cities posted an economic growth of more than 17
percent in the six-month period.
The rapid economic growth in Inner Mongolia was a result of both
large investment and high energy consumption.
In 2005, the autonomous region's energy consumption for every
10,000 yuan of GDP averaged 2.48 tons of standard coal, nearly 100
percent higher than the national average of 1.26 tons. The
situation was similar in some other regions.
Media reports said that though local government leaders
frequently spoke of the "concept of scientific development" and
"changing economic growth pattern", they continued to give priority
to quantitative GDP growth.
As far as institutional arrangements were concerned, analysts
noted, the "GDP worship" mainly stemmed from the fact that after
China opened up to the outside world and began to reform, the
interests of local governments have been separated by a certain
degree from those of the central government and the local
governments have become relatively independent stakeholders, making
them more conscious of revenues.
Meanwhile, production factors such as land and labor were yet to
be further commercialized, which made it easier for local
governments to increase income through price leveraging, according
to analysts.
The SEPA has unveiled a blacklist of 82 projects that seriously
violated environmental protection assessment rules. Involving
combined investment of 1.12 trillion yuan (US$145.8 billion), the
big budget projects were protected by local governments as they
were cash cows.
Environmental protection agencies and other departments had
imposed penalties on some projects, but the penalties were not
executed due to local protection.
Wang Xiaoguang says, "Given the current political and economic
regimes yet to be improved and different interests yet to be
unified, such dysfunction between central and local governments
will remain for some time to come."
However, some analysts point out that some local governments
have performed well. They cited southern Guangdong Province.
In late 1990s, Guangdong began to accelerate industrial
restructuring and put energy-efficient services and new and
high-tech sectors high on its development agendas.
In the first half of 2006, the service sector accounted for
approximately 60 percent of the province's total fixed assets
investment.
Meanwhile, Guangdong phased out outmoded production facilities.
In 2005, more than 390 small businesses that failed to meet
industrial standards were shut down. The same year saw Guangdong's
energy consumption for every 10,000 yuan of GDP stand at 0.79 tons
of standard coal, the lowest in China and an equivalent of 65.8
percent of the national average.
In the first half of 2006, the national per-unit energy
consumption went up 0.8 percent on average, but the indicator in
Guangdong went down 2.5 percent. Analysts accredited these
achievements to efficient policy execution by the provincial
government.
Since 2006, the central government has signed accountability
documents on energy saving with local governments and major
enterprises.
Li Zhong, a national legislator and general manager of a
subsidiary of Huaneng Power Group in southern Hainan Province, says
the parent company has assigned specific, annual energy saving
tasks to him. If he fails, the parent company will ignore all of
his other achievements this year.
(Xinhua News Agency March 9, 2007)