The forthcoming 12th Five Year plan will target modestly slower growth than China has recently experienced. Premier Wen Jiabao announced a 6%-7% growth target this past weekend. Of no great surprise is an emphasis on expanding domestic consumption in exchange for lower export-driven growth. Premier Wen indicated that growth must be adjusted in order to mitigate adverse environmental consequences of unrestrained expansion.
While the Middle East grapples with regime change, I believe the Chinese nerves are on edge. Thus, I believe many aspects of the 12th Five year Plan will be intended to ameliorate palpable citizenry concerns over corruption, environmental predation and inflation, not to mention ways to get more money into household hands. I believe it was Herbert Hoover who coined the phrase, “… a chicken in every pot and a car in every garage.” So long as the people are content, “social disharmony” risks are thought to be manageable.
On the “green” front, I was less excited to see a similar softening of carbon intensity objectives. Prospectively, China will aim to reduce GDP carbon intensity by ~16.5% from 2011-2015. As many had feared the original goal in the current five year plan was for a 20% cumulative carbon intensity reduction. Alas, the results are in and from 2006-2010, the carbon intensity was reduced by 19.1%. Sure – that is less than 20%, but it is a darned close and thus should not be dismissed as a “miss.” What does, however, concern me is how manipulated the statistics might have been in C2H10 by unsustainable factory shutdowns. The stats for 2011 will prove to be quiet interesting.
The interesting dynamic in these new carbon intensity metrics will hinge on economic output. Traditionally the provinces have also exceeded macroeconomic output targets (it is how one gets ahead as a cadre). The current FYP aimed for a 7.5% GDP growth rate and it has been materially exceeded. Thus, by trimming the carbon intensity reduction targets, there is concern voiced by NGO’s and policy folks that the provinces will be able to expand a bit more easily with looser “carbon constraints.” If macro growth continues at current levels, then China energy consumption is estimated by the Chinese Academy of Engineering to have the potential to overshoot 2015 targets by ~20%.
Lastly, the air here in Beijing has been dreadful in the period just after the Lunar New Year/ Spring Festival week. With air quality metrics well into the “Hazardous” territory and often “off scale high,” I share below two photos to give you an idea. I am certain you can guess “before” and “after!”
Both photos were taken around 1100hrs. The pollution was so thick you could feel it on your face. On both days weather data and satellite imagery indicated neither cloud cover nor fog.