It is disappointing to see a reduction of nearly 40% to "energy conservation and environment" in China's stimulus package (from RMB350 billion (US$50 billion) to RMB210 billion (US$30 billion)). As we have noted before, there is still the opportunity to increase the environmental aspects of the stimulus if "infrastructure" and "technology" spending (which has seen a more than two-fold increase) are directed at energy-saving, low-polluting projects and technologies. The following is a table comparing the Chinese stimulus package announced in November 2008 compared to the revised package just announced.

Source: Wall Street Journal

Source: Caijing Magazine

The massive amounts of stimulus spending in China and the U.S. are an opportunity to transform the economies in both countries, to increase jobs while decreasing pollution and energy use. Prior to the reductions in the Chinese stimulus, the amounts of proposed spending devoted to energy and the environment in the U.S. and China compared favorably:

• China: US$50 billion for energy conservation and environment (now reduced to about US$30 billion)
• United States: US$47.7 billion for clean energy and energy efficient transportation in the U.S. stimulus (plus about US$20 billion in clean energy tax incentives).

NRDC estimates that the U.S. clean energy stimulus will create some 1.5 million jobs (see this NRDC report for a detailed description of the "green" elements of the U.S. stimulus package). The potential for "green" jobs in China should be even larger. If the Chinese stimulus goes mostly to old-line heavy industry and non-environmental uses, a tremendous opportunity for China will be lost. These spending decisions today could come back to haunt China in the years to come if the U.S. and other countries are able to leap ahead and gain a competitive advantage in the clean energy industries.

It's not too late for the various aspects of the Chinese stimulus to be aimed to a larger extent at environmental and energy-saving projects, but right now the trend has been in the opposite direction.

The Ministry of Environmental Protection responded to some of these concerns in a press conference last week, noting that since the announcement of China's economic stimulus "the Environment Ministry has approved 970 billion-yuan worth of projects, but has also turned down schemes worth 104 billion yuan...These included projects which may threaten drinking water sources, would consume too much energy, damage nature reserves or were in sectors in which the government was trying to control overcapacity."

Links:

Gady Epstein, "Cars or Bicycles," Forbes, March 13, 2009

See our bilingual (English and Chinese) blog dedicated to discussion of China's environmental law, policy and the power of the people at http://www.greenlaw.org.cn.