China's development path has followed the typical route of western industrialization, but over a much shorter timescale. By 2011 it had become the world's second largest economy, completing an industrialization process that began in 1978 with its 'opening and reform' policy. It consumes the world's largest share of most raw materials and forms of primary energy, and is the largest emitter of greenhouse gases (GHGs). China now faces many challenges, such as energy security, water and atmospheric pollution. One symptom of this situation is the deterioration of air quality in Chinese urban areas in recent years. This represents an unprecedented challenge for China, given the speed and scale of its environmental changes and the limited time available to tackle the issues.
Figure 2 illustrates the relationship between GDP per capita and SO2 and CO2 emissions from 1978 to 2013. This graph shows that China's SO2 emissions peaked in 2006, but CO2 emissions are continuing to increase rapidly, despite China's considerable efforts in the energy and emissions fields. Regarding the latter, GHG mitigation can provide significant co-benefits in terms of local pollutant control, health and energy savings, etc.
China's growth has been accompanied by severe pollution that is proving costly today in terms of human and environmental health, causing a change in the Chinese government's agenda.
In environmental economics there is a hypothesized relationship between development and the environment known as the 'Environmental Kuznets Curve' (EKC). According to this theory, the relationship between economic development and environmental quality follows an inverted U-shape curve, i.e. as economic growth occurs in a country, environmental degradation tends to get worse until average income reaches a certain point, at which the environment begins to recover (Grossman and Krueger, 1995). One of the questions that must be asked is whether the EKC is an inevitability? And if so, how can we bring about the turning point sooner rather than later? Also, when will China reach this turning point?
Identifying the causes
What specifically has led to the exacerbation of China's problems in relation to resources and the environment in recent decades? Essentially, there are two types of driving forces: economic and political factors. The economic driving forces apply equally to China and to developed countries, these factors include rapid industrialization, urbanization and lifestyle change, along with the pursuit of a trade and export-oriented economic development path.
However, many of the political driving forces are unique to China. For example, the low prices of natural resources, heavy subsidies for fossil fuels and lax environmental regulations. These problems have many deep-rooted historical causes, for example: resources are owned by the state as public properties; prices are controlled by government rather than formed in markets; resource prices are kept low to subsidize state-owned enterprises (SOEs); and the promotion of local governors largely depends on delivering growth in GDP (often at the expense of the environment) (Qi et al., 2009). Although many of these issues originated after the 1978 opening and reform policy, the path-dependence effect means that even today they remain relevant in many fields. Only by understanding this background can one gain a better understanding of China's recent reforms in terms of resources and the environment.
Addressing the causes
In energy, environment and climate fields, political institutions lie at the heart of policymaking, implementation and performance. There are three tiers of the political institutions: the central government, the local government, and other stakeholders such as enterprises and societies.
Since the Chinese government is a unitary system with a strong hierarchy (Qi et al., 2009), a number of experts regard China's public policymaking in the fields of energy, the environment and climate to be an example of 'authoritarian environmentalism'. This means that public policies tend to be led by elites within executive agencies, seeking to improve environmental outcomes with only limited public participation (Beeson, 2010). In practice, this 'command-and-control' pattern has many pitfalls (it is typically rigid and cost-inefficient), although it does have benefits in terms of effectively mobilizing the state and social actors to achieve goals set by central government (Gilley, 2012). For example, to achieve the annual energy intensity target, the central government divides the total target into secondary ones for each province and key state-owned enterprises; these provinces and SOEs then subdivide their targets to obtain goals for counties or affiliated enterprises, and so forth.
In the energy, environment and climate fields, different institutional actors are involved. For example, in the National Climate Committee on Climate Change, there are fifteen bureaucratic units including the National Development and Reform Committee (NDRC), the Ministry of Environment Protection (MEP), the National Energy Administration (an affiliate of the NDRC), the Ministry of Finance (MOF), etc. All of these different bureaucracies have their own ideas and objectives. For example, with regard to future carbon policy tools, the NDRC promotes the carbon emissions trading scheme because the NDRC will be in charge of it, while the MOF prefers the carbon tax because its implementation would mean it would bring in more through tax income.
The central government (composed of different bureaucratic departments) plays a decisive role in the policymaking process, while local governments (provincial, municipal, community levels, etc.) are in charge of policy implementation. However, local governments at different levels have their own interests, which may not be the same as those of central government or other higher-level authorities. There are two main reasons for this disparity. The first is that there are conflicts between the interests of local government officials and the environmental targets. For example, the government's promotion scheme has previously prioritized GDP as the most important criterion, which means that local officials tended to increase GDP in any way possible. However, on top of this there are now environmental and energy targets within the promotion scheme, and failure to achieve these new goals damages an official's promotion prospects. Officials must therefore consider these environmental goals while still focusing on GDP (because the central government has not dropped the GDP criterion). The second reason is the institutional setting. At the central level the MEP is in charge of environmental issues, while at the provincial and county levels, the local environment agencies are subordinate to the provincial and county governments. Local environment agencies play a marginal role and usually have to adhere to the orders of local officials who often call for a relaxation of environmental regulations and for environmental agencies not to stand in the way of GDP growth. This situation is changing as the central government (MEP) is currently seeking more power for itself and more independence for local environment agencies. In 2014, in order to work towards clean air in Beijing, the MEP sent supervision teams to adjacent provinces, and the local environment agencies played a leading role in policymaking, coordination and implementation to tackle pollution.
China's transformation to ecological civilization in the 21st century
The Chinese government has made great efforts to address the issues of energy, pollution and GHGs, and some significant achievements have been made under the broad concept of 'ecological civilization' (Box 1). During the period of China's Eleventh Five-year Guidelines (2006-2010), the country's energy intensity (energy consumption per unit of GDP) decreased by 19.1% (Figure 2) and the main pollutants (SO2 and Chemical Oxygen Demand) decreased by over 10%. The Twelfth Five-year Guideline (2011-2015) targets include a 16% reduction in energy intensity; a decrease of between 8% and 10% of the main pollutants (including ammonia, nitrogen and NOx); an increase from 8.3% to 11.4% in the portion of primary energy consumption derived from non-fossil fuels; and a decrease in CO2 intensity (a newly established target) of 17%.
In 2014 the State Council released the Energy Development Strategy Action Plan (2014-2020), which announced new goals and plans to curb coal consumption, increase natural gas supply and the use of non-fossil fuels. These targets are only a part of the 'energy revolution' that has been initiated by President Xi.
China's new Standing Committee, lead by President Xi Jinping and Premier Li Keqiang, is now focusing a great deal of attention on the ecological civilization concept, with greater emphasis being placed on well designed institutions. For example, of the eleven top national security issues raised by President Xi in 2014, ecological and resource security matters are among them. Furthermore, in 2013 the third plenary session of the 18th National Congress of the Communist Party of China plans to enhance both the role of government and the market in the fields of natural resources and the environment, for example, it will build a national balance sheet of natural resource assets, establish ecological and environmental carrying capacities and set corresponding development limits for different regions, implement ecological compensation mechanisms, gradually increase the prices of natural resources and the taxes on pollution, levy consumption tax for energy and pollution-intensive products, and replace the current pollution fee with an environment tax, etc. The market policy tools, such as the emission trading scheme is underway and will play an increasingly important role in the future.
In the new government promotion scheme, the energy performance (energy-intensity, and also the renewable energy ratio and coal-consumption quantity control) and pollutant targets (SO2, COD, NOX, CO2, and probably PM2.5) will be critical criteria to rein the performance of local officials. China's strategy is to initiate an 'energy revolution', to reform its environment policies and to set ambitious targets for CO2 emissions. In this way, China hopes to speed up its transformation to an ecological civilization and to reach the downward side of the EKC as quickly as it climbed up it.
Ecological civilizationThe concept of the ecological civilization was used by the former president Hu in 2005. It is now part of various policies and discussions that are ongoing in China. Ecological civilization is a new form of social civilization with a universal ethic and value; it is based on industrial civilization but with higher ambitions. Firstly, it emphasizes the equality and harmony of humans and nature, shifting away from the traditional anthropocentric view. Secondly, it calls for new production models and lifestyles, promoting a move away from traditional sources of energy and pollution-intensive modes of production towards efficient, low-carbon and recycling industries. The concept encourages the transition from extravagant, unsustainable lifestyles towards greener and healthier ways of life. The ultimate goal of the ecological civilization is to follow a path towards comprehensive human development and sustainable development in terms of society, the economy and the environment.
The deterioration of air quality in Chinese cities
Growth and pollution in China (1978 - 2013)