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Part II

Host: As we all know, China is on the fast track to urbanization. At present, China's urbanization ratio has hit 40 percent. In the next five years, the figure is expected to reach 60-70 percent. In this context, the country raised the Low Carbon City concept. What kind of problems will we come across in terms of urban management? I am glad to have Dr Wu Zhenghong to talk about his research on this issue.

Wu: Thanks. I'd like to share some of my personal views on it. As the host mentioned, China's urbanization ratio has witnessed a dramatic increase after the reform and opening-up. The ratio was 17 percent in the first years of the opening-up, but now, it's 46.6 percent. We are facing another 30 years of strategic opportunities, and according to the government's goal, the urbanization rate is expected to hit 60-70 percent by the end of the next 30 years. Developed economies, such as Europe and the United States, finished their industrialization in the 1960s and 1970s. Which means their urbanization ratio reached 60-70 percent. So, we have to be aware that China is in a critical period of low carbon economy development. Because China's urban population is about 600 million, according to the current 46.6-percent urbanization rate. In the next three decades, the urban population will be 800 million to 1 billion. Which means the population in the cities will experience a gigantic surge. Cities are the cluster spots of both production and living methods, and it's also the cluster center of human beings. It's the major emission source of greenhouse gases. So, cities are the important platform for low carbon management and low carbon economy. That's the background information I want to give you.

Now, I am going to share my personal views on what kind of problems we should foresee when facing this important strategic opportunity.

First, there's an ancient proverb, which goes, "Actions speak louder than words." So low carbon economy should not stay in media reports or scholarly and government discussions. It should enter ordinary people's families. China also has ancient poetry to describe it: "Swallows skimmed by painted eaves in bygone days, are now dipping among the humble homes' doorways." The low carbon economy should also enter Chinese people's lives and works. Third, I think that the changing process of economic development mode should be bonded tightly with low carbon economy. Academically, transportation, constructions, energy and housing all play an important role in a city. How to put the green elements in all these sectors, such as low carbon buildings, low carbon energy and low carbon transportation, is a topic that we should pay a great deal of attention to in the next three decades.

Another point I want to make is that enterprises, or industries, are the pillar of society's economic life, they will play a major role in this process. More than 99 percent of China's enterprises are small- and medium-sized companies. We should consider carefully how to let the small- and medium-sized companies participate in the low carbon project.

In addition, on the way to low carbon development, we should value both technology and systems. It is well known that science and technology are the primary productive forces. Science and technology are also the primary productive forces when building the low carbon economy.

The other aspect is system construction. We think that a relatively complete commitment and stimulating mechanism should be built. The government, enterprises and ordinary families should all be put into a systematical consideration. Technology and system are inspired by innovation, we should also pay close attention to technology innovations and system innovations. And it also highly corresponds to the government's concept of building an innovative society.

Five, I want to say that the construction of low carbon economy is a step-by-step process, it follows regular patterns. So, we should understand which stage we are in. The fundamental reality of the country is that China remains at the primary stage of its development. The energy structure or the method of living and production needs a gradual transition. We should properly handle this problem. The experts and scholars are obligated to find out the patterns of building the low carbon economy. The public's opinions are also needed.

The last point is a fundamental question. We often heard that the popularization of computers should start with children, Chinese football's future should focus on the training of kids. The building of low carbon economy should also start with educating the next generation. We should spend more energy on education and living style to lead the children in living a low carbon life. Thanks.

Host: We all know that the development of low carbon economy is going to need funds. As the leading role in terms of city management, how should the local government raise money? By bond financing, stock right financing or other means? I'd like to invite the economic expert, Dr Tian, to give us an introduction on how to raise money in order to develop a low carbon economy, and how to harvest profits by investing in the low carbon economy.

Tian: Okay, thanks. We know that from the first wave of human civilization, namely agricultural civilization, to industrialization, and then to the third wave, informationization, and to low-carbonization. The main subject is the cities. And the core element of a low carbon city is a low carbon industry. Just like what the host has said, questions on how to arrange capital to push the development of the low carbon industries should be valued. The government has listed seven major strategic industries, such as energy saving, new energy and new energy cars. These industries should be developed rapidly. Besides the government's investment, I think the use of private capital should also be given prominence. In terms of finance, I suggest that the government set up a financing platform, and it can find a positive way to guide the private capital investing in low carbon industries. In the meantime, some policy support would also be needed. And the capital retreat channels should be established, such as private equity. The next thing is the central government's policy support. I've met a company that operates window and door manufacturers. The energy consumption of the architectural industry takes about 30 percent. I think the country should support this kind of enterprise in different fields such as project establishment, finance nursery and fiscal subsidy. Because the capital is usually a bottleneck for these kinds of companies. Financing difficulties are practical for private enterprises, both because of historical reasons and loan terms. Using private capital to develop a low carbon industry is practical. Thanks very much.

Host: When answering netizens' questions a few days ago, Chinese Premier Wen Jiabao said that China will release a mandatory target for carbon emission reduction. It will be a challenge for provinces to transfer their economic development patterns throughout the 12th-Five-Year Plan (2011-2015). The local governments' response methods are worth studying. I remember an example from Henan province, the local government limited power supply and reduced the heat supply in winter in order to cut emission. This incident aroused a big problem. The theoretical basis should be argued on this angle. Let's welcome Dr Li Jingbing to introduce his research on this question. In which direction should we see the emission target, the process or the sources?

Li: I cannot see any paradoxes between building low carbon city and energy saving and emission reduction. Because during the country's transition period, technology innovation will replace the previous extensive mode of development. In the short run, it will slow down the growth rate of the economy. However, it is a new force to spur technology innovation and the high-efficient use of energy. And it can boost the economic development in a fresh angle. Personally, I think there are three aspects that we should focus on.

First, living system, Dr Wu said that the concept of low carbon economy should be educated through kids, I can't agree more on his idea. The products in the living system will be consumed by the public. The producers should make sure that their products are low-carbon in the entire life cycle. The supply chain throughout production should be low-carbon. The core enterprises should conduct carbon exams to up-stream companies and down-stream enterprises. The third one is technology innovation. It can be divided into three stages. First, the products' carbon emission should be lower than the self-purification ability, so that no more fresh damage could be done to the environment. Second, the emission should equal the environment's self-purification ability, so that the environment could develop substantively following the current situation. Third, the final emission should help the environment to purify itself, so that we could get a better environment. The people, the society, as well as nature could develop substantively. The low carbon city program is developing rapidly, it is a new development direction, which is good for human beings, the planet, and the country. We are on the way to building a low carbon society. And I also want to point out that we are looking for a true low carbon society based on the entire life cycle. And the low carbon should be people-oriented, it should be easy to obtain, available for both city and rural areas, and beneficial to all ages. The cost of low carbon products should be lower than the old products, which have been substituted. So that it won't be a new burden for the public. The idea of low carbon city should be seen as a system of theories. The plans for low carbon city should be drawn based on a series of macroscopical concepts and a scientific thought of development. We should draw a more long-term and more scientific blueprint for a low carbon city strategy. And the prospects for China and the entire human race will be brighter.

PKU economists: The idea of 'Smart New City' (I)PKU economists: Sound motivating mechanism needed (III)