Quality Development Driven by Green Development

March 15, 2012
  • BSR spark

    BSR Staff

In the recent China 2030 World Bank report, China looks to shift from relying heavily on fossil fuels and dated management methods to embracing green technologies and innovative solutions in an effort to improve the quality of future growth.  The report indicates that for the next 18 years, China will aim to develop into a more “modern, harmonious, and creative high-tech society.” Fittingly, this phrase also is used in China’s current five-year plan, and perfectly captures the commitment of the country’s government to improve the balance and quality of its growth.

Still, to become the society it desires to become, China first must:

  • Create clear and supporting policy reforms that facilitate green development.
  • Educate government, private enterprises, and citizens the benefits of going green.
  • Foster collaboration across all industry and society sectors.
  • Expand emerging green technologies to scale, while decreasing traditional energy-wasting technologies.

In the past, China has produced idealistic visions and goals for its economic and social development, but has tended to fall short on implementation. One reason for this: The central government must do better to provide support for local governments, which are on the forefront of making these visions into reality. Promoting this collaboration will improve future policy reforms and methods of implementation, resulting in more effective policy reform down the road. In terms of changing the nation’s mentality to go green, China’s young domestic market potentially could embrace this new approach, but likely would need a combination of well-implemented policies, continued funding, and market incentives to make sustainability stick.

China currently sits in a unique position for growth. The nation now ranks as the world leader in renewable energy investment—at US$3.1 trillion, it is the second largest economy (behind the United States)—and the largest exporter across the globe. China also boasts top-class manufacturing clusters of excellence around its ports, as well as the world’s largest population, middle class, and labor force. These prerequisites offer a nice foundation for China to start going green. The World Bank proposes the following as opportunities for green development to drive growth:

  • Overhaul traditional sectors to become more energy efficient, competitive, and productive.
  • Scale up emerging green industries, such as solar, wind, hydro, green vehicles, and more.
  • Expand the service sector for new eco-oriented or green services—a step that would result in job-creation, financial savings, and reduced environmental degradation.

Adoption and enforcement are two of the biggest challenges to this kind of quality development. For starters, when compared to other high-income countries, factories, vehicles, and methods of management in China are lagging behind efficiency levels in other high-income countries. According to a McKinsey report, simply installing LED lighting in old buildings in China would provide cost savings of about US$25 billion. This example of shifting from low quality to high quality in terms of energy efficiency is a quick return on investment that is not only beneficial economically, but also will reduce the reliance on traditional sources of energy, which negatively impact the environment and personal health.

Based exclusively on China’s previously demonstrated ability to bring manufacturing industries to scale rapidly, reduce unit prices, and enable manufacturers to scrounge up margins out of low-value goods, it seems possible that green development—in the form of solar panels and wind turbines—could succeed over the next 18 years. To achieve this goal, however, China will need to manage new reforms effectively, ensure that local level government officials are implementing reforms actively, and engage private enterprise owners, NGOs, and  local community leaders so that all key stakeholders are involved with decisions going forward.

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