A Businesslike Approach
Enterprises balance saving the environment with making profit
hen the UN Climate Change Conference—cop25—opened in Madrid, Spain, on December 2, countries and non-state actors alike were once again called on to address the world’s environmental problems with concrete measures.
In China, many companies have long been engaged in saving energy, recycling and making the best of waste.
Energyefficient buildings
The sci-tech museum at the Hangzhou Energy and Environment Industrial Park, developed by the China Energy Conservation and Environmental Protection Group (CECEP), in Zhejiang Province, east China, is a prime example of passive-house construction. A passive house, a specially designed building that can retain heat from the sun, lights, the human body and electronic appliances to maintain constant temperature, humidity and oxygen, is an advocated solution to saving energy. The museum, which opened in 2009, saves one fourth energy per square meter with its unique shading system, ventilation, and electricity and water reuse.
However, while passive houses save energy compared to normal buildings, the cost per square meter is 1,000 yuan ($142) higher.
While the high cost is a deterrent in implementing them widely, the government is subsidizing developers to introduce energy-efficient construction.
Also, since a passive house is highly energy saving, the cost of maintenance is lower, Liu Ming, an executive with the China Construction Eighth Engineering Division, said.
In 2014, 11 passive house projects were launched in Shandong Province in east China with the provincial government providing as much as 60 million yuan ($8.5 million) in subsidies.
“Passive houses are emerging in China as developers become optimistic. As more domestically developed building materials enter the market, the price of passive houses will go down,” Liu said.
Ahead of COP25, China published the Report on China’s Policies and Actions for Addressing Climate Change 2019, detailing its work in addressing climate challenges in 2018, including policies and measures. It was the 11th consecutive report since 2009.
Waste to resources
Domestic waste is another growing environmental issue as China’s urbanization deepens. More than 150 million tons of household waste is produced in cities per year and the volume is increasing by 8 to 10 percent year on year. The value of wasted resources is nearly 25-30 billion yuan ($3.5-4.2 billion).
Linyi is the most populous city in Shandong. Its downtown area alone produces about 3,100 tons of domestic waste a day, along with sewage, livestock carcass
es and sludge.
In 2006, the CECEP undertook the work of dealing with the city’s domestic waste. The Linyi Ecology Recycle Industrial Park was established to deal with all kinds of waste. It burns the combustible waste to generate power. Solid waste that can be recycled is reused as well as by-products generated by chemical or physical reactions.
From the garbage, the park provides steam to 141 factories nearby and supplies heating and electricity to the city.
“It’s a decent way to address waste, which is also a symbol of civilization,” CECEP General Manager Yu Honghui told Beijing Review in a recent interview.
Leading enterprises like state-owned CECEP have cutting-edge technologies, operational expertise and a long-term vision to plan and invest. So they can create public benefits and meet economic interests, which makes environmental protection more sustainable.
“State-owned enterprises undertake political, economic, social and environmental responsibilities. It’s our mission to be actively involved in energy conservation and environmental protection,” Yu said. “When you are witnessing waste turning into valuable resources, you know you are doing good. Both the company and the country will win respect and gain more opportunities.”
China’s market- oriented lending interest rate reform has shown its effectiveness, as the new loan prime rate (LPR)—A recently reformed benchmark that shows real borrowing cost— edged down, on its way to strengthening credit support for the real economy.
The one- year LPR came in at 4.15 percent on November 20, down from 4.2 percent a month earlier. The rate for abovefive-year LPR stood at 4.8 percent, down from 4.85 percent for the prior month, according to the National Interbank Funding Center.
This is the fourth release of the reformed LPR since the interest rate mechanism was revamped in August.
Both the one-year and above-five-year LPRS fell 5 basis points from the previous release, in line with the central bank’s move on November 5 to cut the rate of oneyear medium-term lending facility (MLF), a monetary policy tool which reflects the central bank’s lending price to commercial banks, by 5 basis points, said Wen Bin, chief researcher with China Minsheng Bank.
“This indicates the central bank’s policy interest rate changes will have a more direct and effective impact on LPR changes,” Wen said.
The reformed LPR mechanism reflects the reported loan rates from 18 representative banks’ best clients. After reform, the quote became more market-based as the quoting banks added a few basis points to the interest rates of open market operations, which mainly refer to the MLF rates, according to the central bank.
After the MLF operation, the central bank cut the seven-day reverse repo rate, a key interbank interest rate, by 5 basis points on November 18, to 2.5 percent from 2.55 percent, the first such cut in four years.
In addition, the two key open market policy interest rates fell in November, supplemented by appropriate liquidity injection, effectively guiding the market interest rates and LPRS down, and will further drive down the loan interest rates for enterprises in the future, said Wang Qing, a chief macroeconomy analyst with Golden Credit Rating International.
China has made breakthroughs in interest rate liberalization this year. The reformed LPR formation mechanism will help lower the real lending rates since it will be more market-based, thus making it difficult for banks to set an implicit interest rate floor for loans, and the breaking of the implicit floor, in turn, will prompt lending rates to drop, the central bank explained in a statement.
The interest rate of newly-issued enterprise loans in September dropped by 0.36 percentage point from a high in 2018, reflecting the policy effect of lowering the real interest rate of loans by means of market-oriented reform, according to the central bank.
The LPR, introduced in October 2013, was meant to better reflect market demand for funds compared to the benchmark rate. In the revamp, the LPR is set on around the 20th of each month, instead of on a daily basis.
In addition to the previous one-year maturity, the reformed LPR also covers the maturity longer than five years, which serves as a pricing reference for bank’s long-term loans such as housing mortgages, according to the central bank.
On November 20, the above-five-year LPR shrank for the first time since the reform was implemented. Since the interest rates on new commercial personal home loans are linked to the above-five-year LPR, the reduction of the above-five-year LPR by 5 basis points will also help reduce the mortgage cost for new home buyers, Wen said.
The drop of above-five-year LPR is not the same as the loosening of mortgage policy, but mainly aims to reduce the financing costs of medium- and long-term loans for enterprises, said Chen Ji, an analyst with the Bank of Communications.
On November 19, Governor of the People’s Bank of China Yi Gang held a meeting with executives of financial institutions. A statement issued after the meeting said financial institutions should enhance counter- cyclical adjustments and beef up credit support for the real economy.
The reformed loan prime rate formation mechanism will help lower the real lending rates since it will be more marketbased, thus making it difficult for banks to set an implicit interest rate floor for loans, and the breaking of the implicit floor, in turn, will prompt lending rates to drop