China's biggest environmental challenges

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Managing its environmental challenges properly is vital if China is to maintain its growth potential. 

China’s rapid growth and urbanization over the past three decades have created growing environmental challenges. Managing them properly is vital if China is to maintain its growth potential and a good quality of life for its citizens. Rapid urbanization has placed a particular strain on resources in cities, as the incidence of smog and food quality scandals illustrates. 

What are the biggest challenges?

  • Air pollution
    Beijing, Shanghai and other major cities frequently reach high smog levels. Poor air quality affects the health of the population, with fine particulates especially damaging for respiratory health. 
    To tackle air pollution, the authorities plan to spend 1t yuan (US$163b) in 2014-19 to reduce the concentration of fine particulates by 25% in the Beijing area, including limiting the number of cars registered in the city.

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  • Water scarcity and water pollution
    China has around 20% of the world’s population, but just 7% of its fresh water, according to The Economist. A 2012 report produced by the Chinese water authority indicated that around 40% of the rivers in North China are badly polluted.

    China plans to expand its output of shale gas rapidly, but water shortages will constrain this as most of the gas reserves lie in the driest parts of the country. The Ministry of Environmental Protection has set a target for 60% of China’s surface waters to meet the top standards for water quality (Grades I–III) by 2020 (57% reached this target in 2009).
  • Energy intensity and carbon emissions
    Although its energy efficiency has improved faster than any other country over the past two decades, China is still one of the world’s least-efficient energy users. This partly reflects the heavy-industrial mix of China’s economy.

    The key to cutting China’s carbon emissions is to reduce the dependency on coal by shifting its industrial base away from heavy machinery. The Government has determined that coal should account for no more than 65% of energy consumption in 2017 (compared to 70% in 2008-09). 

According to the World Bank, China has the world’s largest capacity for renewable energy generation. It is also the world’s largest solar panel manufacturer.

Adopting green technology

The speed of urban growth in China, high rates of investment, fast renewal of infrastructure and the size of the domestic market provide opportunities to adopt green technologies quickly and adjust to more sustainable ways of living. 

According to the World Bank, China has the world’s largest capacity for renewable energy generation. It is a leader in small hydroelectricity generation and has doubled its wind-driven turbine capacity every year since 2005. China is also the world’s largest solar panel manufacturer. 

Adopting green technology is a key part of China’s urban development plan for 2014-20. 

We assume that China will make moderate progress toward environmental targets over the course of the next 20 years, in line with the 12th Five-Year Development Plan (covering 2010-15) and the proposals set out in the World Bank-NDRC China 2030 report. China’s economy will continue to develop rapidly, and we expect it to take some steps toward a greener growth model, including:

  • Non-fossil fuels to account for around 11% of primary energy consumption
  • Water consumption per unit of value-added industrial output to be cut by 30%
  • Energy consumption per unit of GDP to be cut by 16%
  • Carbon dioxide emission per unit of GDP to be cut by 17%.