Golden op­por­tu­nity for China to em­brace green growth

The Pak Banker - - OPINION - Man­ish Bapna

WILL China make con­crete progress to­ward its vi­sion of a more in­clu­sive and sus­tain­able so­ci­ety in 2016, re­bal­anc­ing its econ­omy to bet­ter ad­dress the re­lated chal­lenges of erad­i­cat­ing poverty, re­duc­ing in­equal­ity and pro­tect­ing the en­vi­ron­ment? A clear course has been set by three in­ter­na­tional agree­ments reached in 2015?the first in Ad­dis Ababa on fi­nance for sus­tain­able de­vel­op­ment, the se­cond in New York on a set of global goals to erad­i­cate ex­treme poverty, and the third in Paris on cli­mate change. Th­ese agree­ments have set forth a bold, new vi­sion for how the world can tackle th­ese chal­lenges. As Pres­i­dent Xi Jin­ping has said, af­ter un­prece­dented eco­nomic ex­pan­sion since 1990, China now needs to em­brace a new eco­nomic model that fo­cuses more on the qual­ity rather than the quan­tity of growth. Will the 13th Five-Year Plan (2016-20) be able to de­liver this?

On com­bat­ing cli­mate change, China has al­ready made its plans known with its de­clared goal of peak­ing car­bon diox­ide emis­sions by 2030. It also aims to in­crease its share of non-fos­sil sources in its pri­mary en­ergy con­sump­tion to 20 per­cent while re­duc­ing car­bon in­ten­sity by 60 to 65 per­cent from 2005 lev­els. China could sig­nal its com­mit­ment to cli­mate ac­tion by set­ting more strin­gent caps on coal con­sump­tion and pro­duc­tion, ex­pand­ing its pro­gram of low car­bon provinces and cities and turn­ing its car­bon-trad­ing pi­lot pro­gram into a na­tional emis­sions trad­ing sys­tem, as ex­pected by 2017.

Re­cent news re­ports sug­gest China has set a tar­get of re­duc­ing its car­bon in­ten­sity by 18 per­cent from 2015 lev­els by 2020, be­yond its 2009 goal, this tar­get could help China reach its goal of peak­ing car­bon emis­sions by 2030 or ear­lier.

On fi­nance, China needs to make its fi­nan­cial sys­tem more en­vi­ron­men­tally sus­tain­able if it is to em­bark on a new model of high-qual­ity eco­nomic growth. So will China's govern­ment send clear sig­nals to shift in­vest­ment to re­source-ef­fi­cient growth and pol­lu­tion con­trol, mov­ing from "busi­ness as usual" to green fi­nance?

A new re­port from the China Coun­cil for In­ter­na­tional Co­op­er­a­tion on En­vi­ron­ment and De­vel­op­ment rec­om­mends that China launch a na­tional green de­vel­op­ment fund, de­velop long-term sources of fi­nance by pro­mot­ing green bonds and sup­port the de­vel­op­ment of a green fi­nance risk guar­an­tee mech­a­nism, in­clud­ing en­vi­ron­men­tal li­a­bil­ity in­sur­ance. When it hosts the G20 sum­mit in Hangzhou, Zhe­jiang prov­ince, in Septem­ber, China can pro­vide real lead­er­ship to en­cour­age cen­tral banks and fi­nance min­istries to en­able the global fi­nan­cial sys­tem to more eas­ily sup­port green in­vest­ment.

The third area to watch is sus­tain­able de­vel­op­ment.

With agree­ment on the United Na­tions' new Sus­tain­able De­vel­op­ment Goals, China can play a key role in demon­strat­ing a growth path that erad­i­cates ex­treme poverty while pro­tect­ing the planet. How China re­sponds could pro­vide im­por­tant lessons for other fast­de­vel­op­ing coun­tries. China has seen a re­mark­able ten­fold in­crease in real GDP since 1990. Rates of ex­treme poverty have dropped from 84 per­cent in 1980 to just 10 per­cent to­day, ac­cord­ing to World Bank fig­ures. Can China lift that last 10 per­cent of its pop­u­la­tion out of ex­treme poverty and sus­tain im­proved liveli­hoods over the long run?

Emerg­ing de­tails of the 13th Five-Year Plan of­fer some clues. Many pro­posed pro­grams bear di­rectly or in­di­rectly on poverty re­duc­tion, en­vi­ron­men­tal ste­ward­ship or both. They in­clude ru­ral land re­form, cleaner in­dus­trial de­vel­op­ment, pro­mo­tion of new en­ergy ve­hi­cles, pro­tec­tion of forests, ef­fi­cient wa­ter man­age­ment, and an im­proved so­cial in­sur­ance sys­tem aimed at lift­ing peo­ple out of poverty.

As the world piv­ots from com­mit­ments in 2015 to ac­tion in 2016, the op­por­tu­ni­ties and chal­lenges are vast. China's lead­ers have made their vi­sion clear. Pres­i­dent Xi said at the 2015 cli­mate change con­fer­ence: "The Paris con­fer­ence is not the fin­ish­ing line but a new start­ing point."

China has the chance to em­brace a sus­tain­able eco­nomic growth model that will ben­e­fit its peo­ple as well as be­come an ex­am­ple for oth­ers to fol­low. Let us hope the 13th Five-Year Plan turns this vi­sion into tan­gi­ble progress.

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