Susan Mays, Ph.D., contact smays999@yahoo.com

Globex Faculty Fellow, Peking University; Faculty, The University of Texas at Austin

China’s Economy:Growth and Global Connections

Urbanization, Environment (air, water), and Energy

北京大学 , 工学院PKU, College of EngineeringGlobex

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China’s great transformation affects energy and environment in China…and all around the world

Three major transformations

Industrialization

Urbanization

Motorization

Three socio-economic targets

2000, well off society

2020, all round well off society

2050, developed country level

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"Turning Your Eyes to China”

“Since China has 1.3 billion people, any small individual shortage, multiplied by 1.3

billion, becomes a big, big problem. And any considerable amount of financial and material resources, divided by 1.3 billion,

becomes a very low per capita level.”

Speech by Premier Wen Jiabao at Harvard December 10, 2003

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Urbanization

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With mass migration, China’s total urban population likely crossed the 50 percent mark in 2010-2011

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China’s cities: mega cities and population “clusters”• 5 megacities of over 10 million

• versus 3 in India, 2 in the US, Japan, and Brazil

• 14 cities of over 5 million• SH, BJ, TJ, SZ, DG, CD, HK, NJ, WH, SY, HZ, CQ, and TP• 21% of world’s 5 million person cities

• 41 cities of over 2 million, 20% of the world total

_______________________________________________________

3 of the world's top 6 “City Clusters” (a.k.a. megalopolises)The Pearl River Delta, 120 million:• GZ, SZ, DG, HK, FS, ZH, MCThe Yangtze River Delta, 88 million:• NJ, HZ, NB, SZThe Bohai Rim, 66 million:• BJ, TJ, SY, DL, and other cities

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Example: Pearl River Delta cluster cities (HK, SZ, GZ, DG, MC, ZH, and others) have ~120mm (?) people

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New emphasis on big cities: Shanghai, Hong Kong, and Beijing as China’s “global” cities

Modern service economies Global reputations (connections between international strategy and

urban environment, e.g., “Better City, Better Life” in SH) Notable transport infrastructure: airports and trains rank high globally Symbolic structures (BJ Olympics 2008 and SH World Expo 2010) Cultural and entertainment sites

BJ and SH developments speed past HK’s “West Kowloon Cultural District”

__________________________________

Economic and population growth attracts FDI and infrastructure investment

Educated labor force seeks affluent, exciting lifestyle Density of central business districts pushes populations to satelite

(suburban) residential pods

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China’s management of urbanization could be a global model

2025: over 850 million in cities 2025: half the world’s 100 largest cities 2050: over 1 billion in cities (¾ Chinese will live in a city)________________________

How to manage the infrastructure and environment? How to ensure that urban areas “livable”?

Do the high-rise developments constitute social communities? Major cities are under unified authority…does this help enviro policy?________________________

See Economist’s “Asian Green City Index” (HK ~2; BJ/SH ~3-4) See Mercer study of “Top 50 Asian Cities”: no Chinese cities…yet,

Singapore and Tokyo are in

China’s cities will be – are? – a testing ground for new urban strategies and policies; China has more funding than other

developing nations for experiments

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Environment: air

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Air quality in China’s cities

BJ and other cities are notorious for poor air quality

Primary drivers are coal and oil combustion 20+ times WHO recommended levels of PM (“fine particles,”

2.5micron diameter or less, penetrate lungs and enter blood, 25 micrograms per cubic meter considered safe, but 600+?)

Shut down airports, snarl traffic, close schools Cause illness and premature death Affluent leaving China? Expats getting “health” compensation packages to live in China

New York Times, “Clearing the Air in China,” October 2013.

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Air quality in China’s cities

RMB2 trillon (~US$330m) for various anti-pollution efforts announced 2014

Major investments to limit CO2 emissions, which cause climate change Yet, carbon dioxide emissions rising about 8% per year

Forceful regulation to reduce sulfur dioxide emissions from power plants Quickly effective between 2006-2010… Yet, atmosphere is complex physical and chemical system… Pollution was not controlled by sulfur dioxide reductions

New York Times, “Clearing the Air in China,” October 2013.

More concern that China’s air affects global air quality

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New directions in energy use to mitigate pollution

New energy sources developed World’s largest wind power capacity World’s largest hydro-power capacity Nuclear capacity growing rapidly Increasing imports and production of natural gas (cleanest fossil

fuel) Also, mandated scrubbers to abate sulfur dioxide; replaced old

power plants

National targets in 5YPs and technology mandates (as in developed economies)

Prices on emissions via the market Cap-and-trade or simple carbon tax have been in testing and

discussion Present status of above?

New York Times, “Clearing the Air in China,” October 2013.

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Oil 20%

Natural Gas 3%

Coal 70%

Nuclear Energy 1%

Hydro electric 6%

Charts collected by Gang He, Stanford Univ,, for China Scope 2010 at MIT.

In the 2000s, air quality was negatively affected by China’s predominant use of coal for energy

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70% of Energy from Coal, 2009Source: China National Bureau of Statistics

Coal-fired81%

Hydro16%

Nuclear2%

WindOthers

81% of Electricity from Coal, 2009Source: China Electricity Council

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Air pollution also causes acid rain

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Source: China Environment Strategic Plan, 2009; collected Gang He, Stanford Univ.

PH value

No data

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An analysis by McKinsey of China’s energy policy targets

15Source: McKinsey, “China’s green opportunities”; Gang He, Stanford Univ.

Policy and implementation will affect use

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Environment: water

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China has low available water per person1

Total supply is 5th in the world, but per capita supply is low

China has ~2100m3/person in “annual water flow” (India is lowest at 1150 m3/person)

World average is 6800 m3/person, so China is ~1/3 world average• Comparison: US has 9450 m3/person

Water stress as population and incomes rise (non-linear)• Water availability per person dropped by 25% from 1980 to 2005

17Source: Zmarak Shalizi, “Water and Urbanization,” from China Urbanizes.

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Continued: China has low available water per person1

Water availability….

• North availability is 1/6 the south• North has 50+ percent of population but <15% of water resources• Cities compete with agr for water• Urban beautification campaigns to attract investment and high-

skills use much water• Agr, food processing, paper and textiles are water-intense for

production

Water shortages cost over US$1 billion a year for China’s economy

400 of 600 of China’s cities experience water shortages

18Source: Zmarak Shalizi, “Water and Urbanization,” from China Urbanizes.

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Water supply and water pollution are related problems1

“Water Mining”: surface water, groundwater (north), aquifiers, using desalinated water near coasts

• In rural areas, mining groundwater leads to aridity and low or no crop production

• In urban areas, mining ground water changes the land foundation resulting in infrastructure weaknesses

China would like to produce 95% of grain requirements, but output expected to decrease by 5-10% due to water scarcity and sub-optimal crop yields due to air pollution

Surface and ground water pollution affecting public health and environment; difficult to recycle polluted water

19Source: Zmarak Shalizi, “Water and Urbanization,” from China Urbanizes.

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Water supply and water pollution are related problems1

Even 10-15 years ago, 38% of China’s rivers were polluted

• 70 percent of 5 of 7 major river systems are “grade iv” or worse, not useful for any purpose

• 75 percent of water in urban rivers is unsuitable for drinking or fishing

• Half of water pollution comes from rural use (agr, livestock, rural industries, etc.)

• Half of water pollution comes from industrial and municipal use• Only half of urban waste water is treated

Government monitoring and enforcement limited

• Selective application of laws, low fines, weak local enforcement, officials have been judged on econ growth

20Source: Zmarak Shalizi, “Water and Urbanization,” from China Urbanizes.

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How will China’s water needs change?1

Key variables of water use are:

• Urban and rural population composition• Per capita water demand by ruralites and urbanites• Production composition (agr, mfg, services)

The urbanization growth is key threat

The 27% growth in 1980-2005 caused:

• Water diversion from downstream rural sites• Mining aquifiers at a faster rate than replenishment

^ unsustainable

21Source: Zmarak Shalizi, “Water and Urbanization,” from China Urbanizes.

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Water use increases faster than population; with industry, urbanization, & high incomes, use increases

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Environment: water use by sector

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How will China’s water needs change?1

China has initiated a wide range of programs for water infrastructure

Less success in controlling demand thru pricing and conservation

Less success in coordination of water management across jurisdictions

Encourage population in more water rich south (?)

Consider public versus private use allocation

Consider quotas to price-based sourcing

Improve institutions for water management

Increase urban water recycling

24Source: Zmarak Shalizi, “Water and Urbanization,” from China Urbanizes.

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Energy

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China’s energy use

Fastest growing energy market in the world

Energy intensity (high) and per capita consumption (Urban=3 x Rural)

Not yet seen use decline by move to services

Intensity is high: coal is less efficient; ample supplies; transfer north to south

Transport, urban residents, industry drive demand

Directions and policy:

• Improve efficiency: autos and fuel stds, residential, commercial

• Improve pricing: oil (set on internat. levels) and electricity (kept low) should reflect market

• Increase renewable energy sources

• Use modular, distributed system

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China’s growth of energy use has been underestimated, shown here in millions of tons of oil-equivalents

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IEA 2002, 2006, 2012.

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China’s energy sources, in international comparison

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China’s overall approach to environmental challenges

Technology innovation

Interdisciplinary programs

Good governance, policy experiments, using proven methods

Corporate social responsibility and public participation

Education: leadership and greenness of next generation

International cooperation

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China topped new added wind capacity in 2009

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1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

5000

10000

15000

20000

25000

30000

25100Total installed wind capacity

Source: Gang He, Richard Morse. Data from China Renewable Energy Industries Association, Global Wind Energy Council

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China has been leading global photovoltaic manufacture

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Source: Paula Mints, Navigant Consulting, Inc. Roadmap 2050: a practical guide to a prosperous, low-carbon Europe.

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Some conclusions…

• China’s economic transformation and the opportunities….come with challenges

• Population matters: 1.36 billion population is the starting point of China’s economy-energy-environment problem

• China’s environmental challenges are unprecedented: if China’s can address these problems, learning lab for the world

• “Black cat, white cat…..green cat”?

• China must lead a clean energy revolution, with the world’s cooperation

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Solid waste: take E-waste as a case

• Every day, the world dumps thousands of tons of e-waste on China, where it ends up polluting communities and harming the public health

• At least half of e-waste collected for “recycling” in North America gets exported, according to environmental groups, and about 80% of that goes to China

• The United States, where up to 250 million electronics or almost 2.2 millions tons became obsolete in 2005, leads the trans-boundary, hazardous traffic.

--By Michael Zhao

33Source: http://michaelzhao.net/eDump/

Susan Mays, Ph.D., contact smays999@yahoo.com

Globex Faculty Fellow, Peking University; Faculty, The University of Texas at Austin

China’s Economy:Growth and Global Connections

Urbanization, Environment (air, water), and Energy

北京大学 , 工学院PKU, College of EngineeringGlobex

35

Water: increasing eutrophication

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expansion in middle and

large lakes

135

600

5000

8700

1970s late 1980s early 2000

mainly small lakes in cities Some are

middle/large lakes

small lakes in

cities

booming in middle and

large lakes

(Sq

. km.)

Area o

f lake eu

trop

hicatio

n

占 5%

accounting for 5%

占 35%

accounting for 35%

increasing trend of eutrophication

Source: China Environment Strategic Plan 2009.