IMF: Better growth helps offset emissions
China’s pursuit of “high-quality, sustainable” growth would substantially reduce its carbon emissions, the International Monetary Fund’s chief said on Thursday, as China’s central bank confirmed that a national emissions trading system will start by the end of June.
“China’s continuing reforms toward high-quality, sustainable and balanced growth can also contribute to lowering carbon emissions,” IMF Managing Director Kristalina Georgieva said at a virtual High-Level Seminar on Green Finance and Climate Policy, co-sponsored by the global lender and the People’s Bank of China, the central bank.
Georgieva, whose institution has been championing green recovery amid the COVID-19 pandemic, has been calling for global efforts to turn the crisis into an opportunity by building greener and more climate-resilient economies.
In China’s case, it will shift from investment-heavy to consumptionled growth and support the expansion of the service and high-tech sectors, as envisioned in the country’s 14th Five-Year-Plan (2021-25). The shifting will reduce energy demand and the carbon intensity of growth, making it easier to achieve the nation’s climate goals.
“These efforts would result in a big cut to emissions — which would be amplified by synchronization across markets,” she said.
That is why the IMF is advocating carbon price floors for the world’s largest emitters, to ensure more substantial climate change mitigation, the IMF chief said.
She said that while there is no one-size-fits-all solution for national policies, there is a growing consensus that carbon pricing is the most efficient and cost-effective approach to curbing emissions.
China’s existing coal tax could eventually be scaled up to curb CO2 emissions, she said.
China has announced the goal of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060.
To attain the goal, public awareness of emission reduction has to be raised, and the carbon market has to play a greater role in price discovery, said Yi Gang, governor of the People’s Bank of China.
Price discovery, or a price discovery mechanism, refers to the process of determining the price of an asset in the marketplace through the interaction of buyers and sellers.
Even before the National Bureau of Statistics said on Friday that the country’s GDP grew 18.3 percent year-on-year in the first quarter, optimism about the economy was very high not only because two days ago the bureau announced that foreign trade increased a remarkable 29.2 percent in the first three months but also due to the low base of the first quarter in 2020.
The economy grew 0.6 percent compared with the fourth quarter of last year and 10.3 percent compared with the first quarter of 2019, suggesting the world’s second-largest economy is on the road to a steady recovery from the impact of the COVID-19 pandemic and is regaining its robust growth momentum.
According to the Ministry of Commerce, 10,263 foreignfunded enterprises were set up in China in the first quarter, an increase of 47.8 percent yearon-year, and up 6.7 percent compared with the first quarter of 2019, with the actual utilization of foreign capital hitting 302.47 billion yuan ($46.34 billion), up 39.9 percent year-on-year and 24.8 percent from the first quarter of 2019, while the actual utilization of foreign funds in the service sector rose 51.5 percent year-on-year.
The figures speak volumes of the effectiveness of China’s opening-up policies and the attraction of the Chinese market. It is the central leadership’s pro-innovation, proemployment and pro-growth policies that have put the country in a position where it can take full advantage of its solid industrial foundation, huge market and multilevel engagement with the global markets, and synergize internal and external circulations.
The steady increase of investment in fixed assets, high-tech industries and the service sector reflects domestic and foreign investors’ confidence in the Chinese economy, and more importantly, ensures that enough liquidity flows into the cash-starved real economy.
Thanks to the improvement in the business environment, private enterprises, and innovation-driven and new economy industries are acting as not only growth engines, with expanding margins, but also stabilizers of the economy and society.
Residents’ per capita disposable income increased 13.7 percent year-on-year in the first quarter, while in the first two months, the service sector enterprises with annual turnover of more than 20 million yuan made up their deficits and also earned profits.
Prudent monetary, financial and macro-economic policies have kept inflation, both domestic and imported, in check, which in turn has helped maintain consumer goods prices at a rational level, setting the stage for the expansion and upgrading of consumption.
Yet despite all the favorable factors, uncertainties remain because with the pandemic still raging in many parts of the world, the external economic and trade environment remains complicated.
Also some service sector enterprises and micro and small businesses still face difficulties in getting financing and loans.
As such, to bolster the economic recovery, which till now is impressive and comforting, the country needs to take further measures to boost the real economy, expedite economic restructuring and industrial upgrading, and maintain stable and sustainable macro-policies.