China's changing economy: implications for its carbon dioxide emissions

Abstract

As China's government finalises the country's 13th Five Year Plan for economic development (2016)(2017)(2018)(2019)(2020), this article takes stock of recent changes in China's economy and energy system since the turn of the century, and looks ahead to the likely trajectory of Policy Relevance StatementThe article suggests a number of important areas of Chinese policy focus to mitigate risks and challenges that might otherwise prolong the peak date for CO2 emissions. Our analysis and conclusions also have more general implications for Chinese and international climate policy.They suggest that China's international commitment to peak emissions 'around 2030' should be seen as a highly conservative upper limit from a government that prefers to under-promise and over-deliver. They also reinforce the virtue of a 'dynamic' approach to international climate cooperation, as envisaged under the Paris Agreement, whereby countries' targets and policies are regularly updated in light of new information. The importance of macroeconomic analysis for emissions projections climate policy development is also highlighted.

China's New Sources of Economic Growth: Vol. 1. Reform, Resources and Climate Change

“…As the share of industry in an economy declines relative to the household, commercial and transport sectors, the energy requirement of economic activity tends to fall (Grubb et al 2015;Schafer 2005). This appears to be what is now happening in China, and this in turn is putting downward pressure on the energy intensity of GDP (Green and Stern 2016). Changes in output from the steel and cement industries, which are especially energy intensive, over the past two years illustrate the scale and speed of the decline in energy-intensive economic activity in China.…”

“…In addition to affecting the rate of growth, this structural transition will continue to reduce the energy requirements of China's economic activity in the manner discussed above (Green and Stern 2016). While relative growth in the household, transport and commercial sectors will increase the energy demand from these sectors, such increases are for the foreseeable future likely to be strongly outweighed by the decline in energy demand associated with the shift away from industry, which we expect to continue (Grubb et al 2015).…”

“…Thus, China's investment rate is likely to fall significantly, one way or another, over the next decade ; there will be a rise in the consumption share, especially of services. Because it is likely, as reflected in the experience of other countries, to be more difficult to obtain very high growth rates from consumption expansion and productivity improvements, compared with the past strong driver of investment in capital stock, this structural transition will entail slower GDP growth for China (though it would significantly improve living standards) (Green and Stern 2016).…”

A new normal? The changing future of nuclear energy in China

“…After more than a decade of rapid growth in China's energy-intensive heavy industry sector between 2000 and 2013, China's economy has now begun transitioning towards less energy-intensive sectors such as services and advanced technology (Green and Stern 2016). This shift is intentional: the country's leadership has been trying deliberately to steer China away from an overwhelming focus on exports towards exploiting domestic demand for products, partly in the expectation that this shift will reduce the environmental impacts of large-scale industrial manufacture.…”

“…Electricity demand has flattened in China as the country's economy has started to undergo structural changes, from being an economy primarily focused on export-led industrial production to one oriented towards the service sector and domestic consumption. This shift has led to what many have termed the 'new normal' (Green and Stern 2016;Hu 2015;Levi, Economy, and Rediker 2016), with a corresponding decrease in energy and electricity demand. The average amount of electricity produced by different kinds of power plants has also declined.…”