Industrial Transformation, Urbanization and Sustainability in China Jiahua Pan Research Centre for Sustainable Development The Chinese Academy of Social Sciences CASS-Nottingham Workshop on Environmental Management June, 2005 Nottingham University

1.1 developmental challenges Industrialization as a measure of development  Industrialization process  urbanization  infrastructure ： physical infrastructure and institutional infrastructure  Industrial process ： labor intensive (energy intensity low)== 》 capital intensive (energy intensity high) == 》 knowledge intensive (energy intensity low)  Industrial stages  De-industrializing countries (decoupling energy)  Industrialized ( stable and high level of energy consumption )  newly industrialized (slow growth of energy consumption)  rapidly industrializing ( rapidly increasing consumption of energy )  Early industrializing ( moderate increase of energy consumption)  Pre-industrial economies

 stages of development - developing countries: De- industrializing, industrialized, newly industrialized, industrializing  Urbanization: shift from rural urban  82.1% in 1978 down to 69% in 2002, to 50% in 2020; Absolute numbers: 790.1m in 1978 to 890m in 2002 to 750m in 2020  Rural labor force: 400 million; 100 million rural laborers in urban sector; 150 million redundant rural laborers  Construction of physical and institutional infrastructure  Transition of the economy from labour to capital to knowledge intensive industrial structure 1.2 developmental challenges Industrialization: a process with different energy and emissions implications – the case in China

1.3 Developmental challenges: stage of China’s industrialization?  Going heavier? Latest trend in the past few years  Energy demand elasticity: in the industrialised world, elasticity for energy demand is around 1, in China before 2000, the figure is between And the projected number between 2000 and 2020 is The actual number between 2001 and 2004 is between  For 2004 in China, total electricity production amounted 2,120 billion kWh: industrial sectors 75.3%, service sector 11.1%, residential sector 10.8% and agriculture 2.8%.  Debate: development vs conservation  The trend: energy >12% increase; GDP > 8%; investment: iron & steel 173%  development: urbanization, employment, income generation  conservation: energy, land, water, pollution  Government decision: 7% GDP for 2004; actual 9.5%; (14% added up from provincial numbers); restriction in iron & steel, aluminum, cement

1.4 developmental challenges Carbon Stocks vs carbon flows  Stocks: all the build-up infrastructure, buildings and durables stock carbons  physical infrastructure  buildings  durable consumption goods (cars, fridge)  Flows: daily/regular need for carbon  depreciation  maintenance  household/service

 Construction of physical and institutional infrastructure 1.5 developmental challenges: stocks vs flows

1.7 energy demand: primary energy projection made in 2003 and reality in 2004 Scenario a: with limited intervention Scenario b: policy intervention for efficiency Scenario c: policy intervention for renewable energy Actual

SOx NOx CO Emissions of major pollutants (million tons) in China, 2010 and 2020 Source: SO2 and Nox, Chen (2003); table 4; CO2: Zhou (2003), p. 143; CO2 for 2000: IEA, environmental, ecological and resource challenges

2.3 resource endowments Dirty coal dominated energy structure Increase in electricity consumption: over 15% annually. The first half of 2004 generated billion kWh in China. 83.2% is from coal and 2.1% from nuclear energy, with 14.7% from hydropower.

2.4 resource endowments: land Two thirds of land area are Gobi dessert, arid, and high altitude mountain ranges Urban expansion Infrastructure: road, airports Arable land: 7% of the world average, 0.1ha/c Deforestation Biodiversity: losses

2.5 natural disasters Extreme climatic events: drought, flooding, heat waves… Land slides Earthquakes Mine explosion

3.2 social & economic challenges –Population: Large population base, still increasing: 1.3 billion, 0.75% Aging: over 60 year old: 10%

3.3 social & economic challenges –Income distribution Urban-rural: urban/rural income ratio: from 2.5 in 1980 to 3.5 in 2004 East-west divide: drivers of the Chinese economy: Zhujiang Delta, Yangtze Delta, Bohai Region Rich-poor: Gini coefficient: 0.46 –governance Tendency to be wasteful and luxurious: waste of limited resources: large cars, large houses Social inefficiency: corruption, policy failures

3.4 Technological: theoretical vs realistic Source: Nakicenovics et al, IPCC, Total Energy Demand for SRES scenario range: EJ/yr Nuclear total: EJ >> average EJ/yr over next 100 years

4.1 Way out?  Development of non-conventional fossil fuel energy  Commercially viable ： large hydro 、 nuclear power  New and renewable energy: solar, wind, and bio-energy – commercially yet to be competitive  Clean coal?  Technological leap forward  Energy efficiency: 20% more energy intensive than OECD  Energy intensive industries: moving out of China?  To developed nations? They are De-industrialising 。  To other developing countries? Not feasible (1) political and economic risk (institutional uncertainties); (2) they themselves need energy intensive products for physical infrastructure  China needs them: industrialization, urbanization. The practice in industrialization in OECD countries proves a stage that cannot jump over.

 Legally binding regulations, planning and standards  Buildings in China: life time too short, waste of energy for bricks, steel, cement, chemicals. In OECD countries, over 100 years  Infrastructure: lack of planning, poor quality  Political intervention in planning: should be avoided  Energy saving: waste / luxurious consumption  mass transport instead of private cars  Smaller cars /houses 4.2 Way out?