Green Transformation in China: Progress and Outlook
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countries. This implies that the dependence of China’s economic growth on human
capital, productive capital, and natural capital inputs is significantly higher than that
of OECD countries.
Third, it is an arduous task to adjust the economic structure and upgrade industrial
value chains. Over forty years of reform and opening-up, China’s economic structure
has seen great changes. Specifically, the share of the service sector rose from 24.6%
in 1978 to 52.2% in 2018, which, however, is still lower than that in other emerging
market economies such as Brazil, Russia, India, Indonesia, and South Africa. In
contrast, the share of the industrial sector has long remained above 40%. Despite
the downward trend since 2011, it was still as high as 40.7% in 2018, much higher
than that in other emerging market economies. Following Germany, Japan, and the
U.S., China became the world’s largest manufacturer in 2010. According to data
from the National Bureau of Statistics of China, in 2017, China produced about half
of the world’s crude steel (832 million tons), coal (3.52 billion tons), and cement
(2.34 billion tons) and nearly a quarter of the world’s automobiles (29.02 million).
In 2018, the added value of China’s manufacturing accounted for over a quarter of
the global total. In recent years, China has accelerated the upgrade of the manufacturing value chain, with its exports from low-end products to middle and high-end
products. However, there are still major gaps between China and industrialized countries in basic manufacturing capabilities, such as R&D of core technologies, process
innovation, and digital management. In other words, industrial transformation and
upgrading will remain a long haul.
Fourth, China is under great pressure to tackle environmental issues. Although
the discharges of some pollutants have showed a downward trend in recent years,
the amount of discharges has remained enormous, placing huge pressure on the
environment. According to statistics, if China’s urbanization rate rises by 1%,
domestic sewage will increase by 1.15 billion tons, household waste by 12 million
tons, construction land by 1000 square kilometres, domestic water consumption by
1.2 billion tons, and energy consumption by 80 million tons of stand coal equivalent.
Overall, China’s air quality has improved, but the situation remains severe. Since
2013, the annual average concentration of PM 2.5 in Chinese cities has been on the
decline, but seasonal fluctuations are notable. The water quality has improved on
the whole. While the water quality of main river basins has turned for the better,
eutrophication is a major problem affecting the water quality of lakes, and groundwater pollution is also a great concern. By and large, the soil quality is not optimistic, as reflected in serious soil pollution in some regions and acute soil problems
in abandoned industrial areas and mining lands.
3 Outlook for China’s Green Transformation
For years to come, China will push forward its industrialization and urbanization
endeavors and remain at a turning point of the Environmental Kuznets Curve. Pollutant emissions, carbon dioxide emissions, and energy and resource consumption will
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countries. This implies that the dependence of China’s economic growth on human
capital, productive capital, and natural capital inputs is significantly higher than that
of OECD countries.
Third, it is an arduous task to adjust the economic structure and upgrade industrial
value chains. Over forty years of reform and opening-up, China’s economic structure
has seen great changes. Specifically, the share of the service sector rose from 24.6%
in 1978 to 52.2% in 2018, which, however, is still lower than that in other emerging
market economies such as Brazil, Russia, India, Indonesia, and South Africa. In
contrast, the share of the industrial sector has long remained above 40%. Despite
the downward trend since 2011, it was still as high as 40.7% in 2018, much higher
than that in other emerging market economies. Following Germany, Japan, and the
U.S., China became the world’s largest manufacturer in 2010. According to data
from the National Bureau of Statistics of China, in 2017, China produced about half
of the world’s crude steel (832 million tons), coal (3.52 billion tons), and cement
(2.34 billion tons) and nearly a quarter of the world’s automobiles (29.02 million).
In 2018, the added value of China’s manufacturing accounted for over a quarter of
the global total. In recent years, China has accelerated the upgrade of the manufacturing value chain, with its exports from low-end products to middle and high-end
products. However, there are still major gaps between China and industrialized countries in basic manufacturing capabilities, such as R&D of core technologies, process
innovation, and digital management. In other words, industrial transformation and
upgrading will remain a long haul.
Fourth, China is under great pressure to tackle environmental issues. Although
the discharges of some pollutants have showed a downward trend in recent years,
the amount of discharges has remained enormous, placing huge pressure on the
environment. According to statistics, if China’s urbanization rate rises by 1%,
domestic sewage will increase by 1.15 billion tons, household waste by 12 million
tons, construction land by 1000 square kilometres, domestic water consumption by
1.2 billion tons, and energy consumption by 80 million tons of stand coal equivalent.
Overall, China’s air quality has improved, but the situation remains severe. Since
2013, the annual average concentration of PM 2.5 in Chinese cities has been on the
decline, but seasonal fluctuations are notable. The water quality has improved on
the whole. While the water quality of main river basins has turned for the better,
eutrophication is a major problem affecting the water quality of lakes, and groundwater pollution is also a great concern. By and large, the soil quality is not optimistic, as reflected in serious soil pollution in some regions and acute soil problems
in abandoned industrial areas and mining lands.
3 Outlook for China’s Green Transformation
For years to come, China will push forward its industrialization and urbanization
endeavors and remain at a turning point of the Environmental Kuznets Curve. Pollutant emissions, carbon dioxide emissions, and energy and resource consumption will