The environment is a frequent topic of Chinese leaders these days. This year on March 5th, Premier Li Keqiang advanced the “war on pollution” he declared in 2014 by declaring a new “battle” to “make the skies blue again”. Luckily for the delegates of the “Two Sessions”(两会, lianghui) – the National Peoples’ Commission (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) – they enjoyed bright sunshine and blue skies during the two-week of conferences.
Environmental protection again placed as a top priority of the Two Sessions
In this year’s annual government work report, environmental protection is again placed as a top priority of the central government along with issues like employment, financial security and people’s livelihood. “Deepen institutional reform to build a sound ecological environment” is highlighted as one of the top priorities of 2017. Moreover, Premier Li Keqiang urged to “save the bottom line of environmental protection”.
China to deliver “Qualified answers” in 13FYP
Premier Li Keqiang spoke to delivering “qualified results”, inferring satisfactory results, to the people, and according to his Work Report this will include ecological environment information, as well as other aspects of life.
|“Accelerating the improvement of the ecological environment, especially the air quality, is the urgent desire of the people, and the inherent requirement of sustainable development. (The government) must implement policy scientifically, tackling both the symptoms and root of the problem with iron fist, and strive to present our people with qualified answers.”
— Premier Li Keqiang, Annual Government Work Report Speech , March 5 2017
If 2016 is an example for qualified answers on the ecological environment we can expect answers on energy intensity per unit of GDP emissions reductions, key pollutant emission reductions, etc. In fact, 2016 was quite a “green” year; the energy intensity per unit of GDP dropped 5%, sulfur dioxide and nitrogen oxide emissions dropped 5.6% & 4% respectively, the annual average concentration of PM2.5 in 74 key cities dropped 9.1%, coal consumption percentage dropped 2%, and the renewable energy percentage increased 1.7%.
As for 2017 (the second year of the 13th Five Year Plan), further targets have been set:
- To further reduce steel production capacity by around 50 million tonnes and coal by 150 million tonnes. Also, to phase out, stop or freeze the construction of coal power generation capacity of more 50 million kilowatts;
- To reduce pollutant discharge of chemical oxygen demand (COD) and ammonia by 2%, and to control and prevent water pollution in key river basins;
- To complete the compensation mechanism of key ecological functional zones, establish a monitoring and early warning system on resources and the environment, as well as improve pilot projects of the national natural resource capital management system;
- To cultivate and strengthen the energy-saving and the environmental protection industry for the achievement of a win-win situation on environmental improvement and economic development;
- To implement strict environmental enforcement and supervision accountability; and
- To promote the comprehensive reform of agricultural water price, improve the “guarantee rate” of rural drinking water supply and quality, and control & prevent rural pollution of non-point sources.
Winning the battle of “blue skies”
Premier Li’s promise to make the skies blue again was the major environmental note at the Two Sessions. In order to achieve this China needs to continue to adjust domestic coal use, which as the targets above show it is doing.
Premier Li: the energy sector is essential to winning the battle of safeguarding blue skies
However, China also needs to adjust its renewable energy development. According to a Greenpeace report, China wasted enough wind energy in 2014-2016 to power Beijing for a year and came with an environmental & health bill of more than RMB8.4 billion.
Indeed, Premier Li said the energy sector is essential to the winning the battle of safeguarding blue skies. The political will is real and strong.
While “making our skies blue again” is the focus of much attention, water and soil are no less important
If you look at Premier Li’s remarks during this year’s Two Meetings, by far he spoke most on air pollution/prevention compared to water and soil. In his Work Report the words on water and soil combined accounted for just around a third of those on air pollution.
This focus on air pollution isn’t that surprising as after all, the Chinese people see it, breathe it and smell it. Moreover, there has been growing information about the health consequences of polluted air. However, while water and soil pollution may not be as visible as air pollution their severity and the associated health consequences are no less important. Moreover, our economies run on water and we all depend on soil for food production.
More general & soft targets were set for water & soil
The real focus this year is on key regional water basin poln control & agri non-point source poln control…
Unlike the ambitious target of winning the battle in safeguarding blue skies, this year the government set more general and soft targets on water and soil pollution control and prevention. Besides two pollutant discharge reduction targets, the real focus this year is on key regional water basin pollution control and agricultural non-point source pollution control. “Drinking water safety” is no longer a priority but rural drinking water continued to receive high political attention. According to the 13FYP on Water Conservation Reform and Development, the target is to increase tap water access rate in rural area to 80% by 2020. Yet, no specific target was set on the ratio of water quality meeting national drinking water standard, not in the 13FYP or Li Keqiang’s annual work report.
The Yangtze River Economic Belt highlighted as a key project…
…Up to RMB22 bn of investment in the belt failed to pass environ approval in 2016
Ecological environment restoration of the Yangtze River Economic Belt was highlighted as one of the key projects of “building a sustainable green wall”. In a press conference during the Two Sessions, Minister Chen Jining from the Ministry of Environmental Protection (MEP) said an ecological redline had been draw to protect key ecological functional zones in the belt. After Xi Jinping’s guidance on “placing ecological environment as a priority”, new projects in the belt will have to face much stringent environmental entry threshold. According to Chen, in 2016 alone, up to RMB 22 billion of investment in the belt failed to pass environmental approval. Already the MEP is setting up a market access negative list of which environmental criteria are key – as we said in 2016, China is no longer tolerant for any “monkey business”.
On the soil front, China will launch a new detailed survey on soil pollution this year. Much has changed since the last national soil quality survey in 2006. Will the new results show that more than 16.1% of soil polluted? How will China secure its red line on arable land with 19.4% agricultural land being contaminated from heavy metal and POPs? Hopefully the new survey will provide some honest answers on whether China is on the right track in tackling soil pollution. For more on China’s action on soil, see our Soil Ten article.
China to implement stronger control on raw materials in transition to manufacturing power
‘Made in China 2025 Action Plan‘ was one another of the most popular topics during the two-week conferences, according to the Renmin Public Opinion Monitoring and Research Institution. China’s transition into a world manufacturing power (as guided by the Action Plan) and its push to a circular economy is creating a new development path for China, one that does not prioritise growth over pollution.
‘Made in China 2025′ was another popular topic…
…but questions remain about the supply of the critical raw materials crucial for the Plan
China’s transition to a manufacturing power is heavily reliant on raw materials, including strategic and critical minerals such as rare earths, tungsten and graphite. This could become an issue as we showed in our Rare Earth Report, where China may struggle to feed its domestic need for these materials by as soon as 2020. Rare earths and other critical raw materials are crucial to many of the higher-value manufacturing industries that ‘Made In China 20025’ pushes. In other words, the transition can’t be achieved without a sustainable supply of rare earths and other critical minerals. See which other critical materials are dug-up in China here.
The Chinese government is aware of the situation and has implemented a series of policies and regulations since the 13FYP to secure its domestic supply. In a recent national storage bid in January 2017, the State Reserve Bureau purchased over 2,000 tonnes of rare earth oxides from the major Chinese rare earth groups. This plus the newly established ‘Resource Exploitation Red Line’, ‘The National Strategic Mineral Resources Category,’ ‘National Planned Mining Area’, ‘Key Mining Areas of Important Value to National Economics’ and a new wave of crackdowns on the black market and illegal mining, signal China’s increasing control over the situation. The global market would do well to take note.
We are happy to see that environmental issues are key topics of the central government and hope that by the time the 13FYP targets are being assessed in 2018, China is winning the battle on blue skies and smoothly transitioning to world manufacturing power.
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