276
Y. Wang
catching up with developed countries. This is conducive to forming complete industry
chains by exploiting industrial and technological strengths in different fields.
The fourth advantage is the broad space for technological transformation of traditional industries. Traditional industries still make up a large part of the economy,
with huge space for efficiency improvement. For instance, clean use of traditional
energy sources has a broad prospect, and China ranks the first in the world by the
share of energy technology R&D spending in GDP and has made great strides in
improving the efficiency of coal-fired power plants.
Lastly, China is leading the world in new energy development. China has an
abundance of wind energy, solar energy, shale gas, and biogas resources. Since 2005,
the capacity of wind turbines has doubled almost every year and is still growing at
a high rate. China is also the largest manufacturer of solar PV panels and has the
largest solar PV power generation capacity in the world, making it possible for China
to reduce its dependence on fossil fuels and improve its energy mix.
2. Challenges
The first challenge comes from the centralized discharges of pollutants brought by the
industrialization. Compared with industrialized countries, China’s industrialization
process is marked by “squeezed growth,” meaning that a broad range of industrial
products have seen an explosive growth and the scale production reached unprecedented levels in a short period of time. As China is becoming a “world factory,”
massive volumes of pollutants, greenhouse gases, and waste are generated, putting
enormous pressure on the environment and resulting in hefty treatment costs. In recent
years, China has advanced the supply-side structural reform and stepped up efforts
to phase out high-energy-consuming and high-polluting backward capacity and cut
excess capacity. However, that will inevitably bring impact on employment, leading
to a substantial increase in public expenditures for social security, reliefs, compensations, and placement costs for the unemployed. Additionally, financial institutions
have to pay bad debt expenses.
Second, there are challenges in the adjustment of the energy mix and improvement
of energy efficiency. Given China’s resource endowments, the dominance of coal
in the energy mix is unlikely to change in a short period of time. The imbalanced
distribution of energy producers and consumers poses a barrier to the development of
clean energy in terms of accommodation and transmission channels and cultivation
of domestic markets. Therefore, hydropower, wind, and solar curtailment occurs
more often than not. Meanwhile, China still lags behind in terms of energy resource
use efficiency. According to OECD estimates, in 2016, China’s energy output rate
was equivalent to 84% of that of the U.S., 57% of that of Germany, and 59% of
that of the Japan. In China, one ton of CARBON DIOXIDE can bring in economic
benefits of USD2, 150, roughly half of the USD4, 240 of OECD countries. In the past
twenty-plus years, green total factor productivity (also known as environmentallyadjusted total factor productivity, which refers to economic growth not explained
by human capital, productive capital, and natural capital inputs) has contributed less
than 30% to China’s economic growth, while the rate has reached 60% in OECD
Y. Wang
catching up with developed countries. This is conducive to forming complete industry
chains by exploiting industrial and technological strengths in different fields.
The fourth advantage is the broad space for technological transformation of traditional industries. Traditional industries still make up a large part of the economy,
with huge space for efficiency improvement. For instance, clean use of traditional
energy sources has a broad prospect, and China ranks the first in the world by the
share of energy technology R&D spending in GDP and has made great strides in
improving the efficiency of coal-fired power plants.
Lastly, China is leading the world in new energy development. China has an
abundance of wind energy, solar energy, shale gas, and biogas resources. Since 2005,
the capacity of wind turbines has doubled almost every year and is still growing at
a high rate. China is also the largest manufacturer of solar PV panels and has the
largest solar PV power generation capacity in the world, making it possible for China
to reduce its dependence on fossil fuels and improve its energy mix.
2. Challenges
The first challenge comes from the centralized discharges of pollutants brought by the
industrialization. Compared with industrialized countries, China’s industrialization
process is marked by “squeezed growth,” meaning that a broad range of industrial
products have seen an explosive growth and the scale production reached unprecedented levels in a short period of time. As China is becoming a “world factory,”
massive volumes of pollutants, greenhouse gases, and waste are generated, putting
enormous pressure on the environment and resulting in hefty treatment costs. In recent
years, China has advanced the supply-side structural reform and stepped up efforts
to phase out high-energy-consuming and high-polluting backward capacity and cut
excess capacity. However, that will inevitably bring impact on employment, leading
to a substantial increase in public expenditures for social security, reliefs, compensations, and placement costs for the unemployed. Additionally, financial institutions
have to pay bad debt expenses.
Second, there are challenges in the adjustment of the energy mix and improvement
of energy efficiency. Given China’s resource endowments, the dominance of coal
in the energy mix is unlikely to change in a short period of time. The imbalanced
distribution of energy producers and consumers poses a barrier to the development of
clean energy in terms of accommodation and transmission channels and cultivation
of domestic markets. Therefore, hydropower, wind, and solar curtailment occurs
more often than not. Meanwhile, China still lags behind in terms of energy resource
use efficiency. According to OECD estimates, in 2016, China’s energy output rate
was equivalent to 84% of that of the U.S., 57% of that of Germany, and 59% of
that of the Japan. In China, one ton of CARBON DIOXIDE can bring in economic
benefits of USD2, 150, roughly half of the USD4, 240 of OECD countries. In the past
twenty-plus years, green total factor productivity (also known as environmentallyadjusted total factor productivity, which refers to economic growth not explained
by human capital, productive capital, and natural capital inputs) has contributed less
than 30% to China’s economic growth, while the rate has reached 60% in OECD