pollution.jpgChina is still struggling to meet its own energy conservation targets although efficiency is slowly improving in the world's second largest economy.

Driven by worries about energy security amid booming oil imports, and the rising economic and social cost of pollution, Beijing is trying to reverse years of promoting economic growth at any cost and push for greener development.

In 2006, China launched a five-year campaign to cut energy use per unit of economic output 20% by 2010 amid worries about pollution and rising dependence on imported oil. According to Xinhua, energy consumption per unit of economic output fell just under 2.8% in the first half of the year compared to the year-earlier period.

In the largest companies, those with annual sales exceeded 5m yuan, consumption fell steepest by almost 3.9%. The government hopes that industry consolidation will go a long way to help meet its target by eliminating the often outdated, energy-hungry facilities of smaller producers.

Chinese industries use 20 to 100% more energy per unit of output than their counterparts in the west and Japan, according to the World Bank. China's government says the gap is even bigger, putting energy use at 3.4 times the world average.

In many of China's heavy industries, which are such a potent symbol of the country's rapid economic development but also a frequent blight on the landscape, energy consumption per unit of industrial output has fallen dramatically. In the coal industry, it dropped 7.8% year-on-year, 6.5% in the steel industry, 7.8% among producers of construction materials, 5% in the chemicals industry and 2.6% percent among power companies.

The energy consumption per unit of industrial output, however, rose 1.3% in the oil and petrochemical industry and 1.6% among non-ferrous metal producers.

China's profligate energy use has led to criticism abroad as its demand for oil pushes up world prices and state-owned companies sign production deals with international pariahs such as Sudan. By some calculations, China has overtaken the US to become the world's biggest producer of greenhouse gases — see this EngagingChina story.

To the west, China's laissez-faire approach to issues such as energy efficiency and pollution causes much concern, but Chinese government has traditionally argued that such issues have to seen in the context of the country's economic development. .As China's GDP rises, consumers and industries will become more conscious of green issues but it is unrealistic to expect more aggressive measures from China's government while millions of Chinese still live in poverty, the argument goes.

This is the so-called “pollute first, improve later” philosophy and it is based on an economic theory called the environmental Kuznets curve. This maintains that there is no need to pay special attention to environmental issues, because the “green” stage of the U-shaped Kuznets curve will be reached through rapid economic growth. The faster China grows — GDP is currently growing at an astonishing 11% — the sooner Nirvana will be reached.

However, Lin Boqiang, director of the centre for energy economics research at Xiamen University, argues that China is, in effect, an exception to this rule and world cannot wait for the automatic improvement of the environment when China's economy develops. Market reforms are urgently needed to prevent further deterioration of the environment and boost energy efficiency, he argues.

Whilst the economists argue about the shape of curves, western businesses could at least set a better example in China. Stung by the continuous criticism of its polluting industries, China fought back last year and accused that the west of “environmental colonialism” after discovering that 33 joint ventures of multinational corporations were on a list of China's worst polluters.

The list included Chinese affiliates of Panasonic, PepsiCo, and Nestle among others. See this Radio Free Asia story for more.

Ecoworld has a good article on China's soaring energy demand and its environmental and political consequences. See also this English-language article in German news magazine Spiegel.

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