China shines in green project spend

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By Fu Jing (China Daily)
Updated: 2009-04-17 07:59

China has shown a strong and sustained commitment to environmental protection, with more than one-third of investments under the 4-trillion-yuan stimulus package unveiled last year by the government going towards green projects, a leading international research institution has found.

The Washington-based World Resources Institute has found that 38 percent of the country's stimulus package resources are "directly or indirectly" linked to green industries and environmental protection. The institute's findings, revealed at a roundtable organized by the China Council for International Cooperation on Environment and Development, have shown that China is one of the few countries in the world with such a strong commitment towards environmental protection.

However, officials and researchers alike expressed concern over whether local governments would be able to effectively turn these plans into reality.

Li Ganjie, vice-minister of environmental protection, said the central government had increased investment by 230 billion from January to March and about one-tenth of that money has been pumped into environmental protection, energy efficiency and emission control.

"I personally believe the central government will continue the rapid investment momentum in environmental protection from now on," Li said.

"However, I am concerned about whether the provincial and local governments can strictly implement environmental standards first (when implementing the stimulus plans and fighting the financial crisis)," he said.

Researchers at the local level too were not optimistic.

"Even some good practices and accountability systems have not been implemented even though local governments are urged to step up growth and create more jobs," said Liao Ming, senior research fellow at the China Society of Economic Reform.

The central government aims to keep the economy growing at 8 percent this year. Most of the provincial governments have targeted higher-than-8-percent growth.

Liao said the country is witnessing two negative trends. One is that the provincial and local governments have ignored the "veto system", an accountability system that links higher officials' performance in energy saving and emission control to their career promotion.

In 2007, the central government regulated that these officials should be punished if they fail to cut energy consumption (in per unit of GDP) by 4 percent annually during 2006-10.

"And, the other trend is that the local governments are rushing to launch investment projects without careful environmental impact assessments," said Liao. "This is too risky as some of these investments require huge capital."

Daniel Dudek, chief economist of the US-based Environmental Defense Fund urged decision-makers to bear in mind the lessons of the financial crisis. "It's a failure, indicating that we have failed to live within our means," Dudek said. "When implementing stimulus plans, we should look at the environmental budget that we have."

While doing a review of investments, Dudek said there were many policies and tools to check and balance investment activity but the key was to tell these investors what they must produce and where they should go.

Dudek suggested that the Chinese government should strictly implement environmental impact assessments before the investment projects are kicked off, instead of assessing the impact several years after the projects have been implemented.