03/15/2011 06:46 pm ET | Updated May 25, 2011

In China, Concern for the Environment Means a Plan for Less Growth

Days before the opening of the meeting of China's top decision-making government bodies last week in Beijing - the annual convening of the National People's Congress and the Chinese People's Political Consultative Congress - Prime Minister Wen Jiabao called for a cap on China's growth rate at 7%, a significant slow-down from the 8%-10% clip of the last decade, and a reduction from the 7.5% target set in the last Five Year Plan.

A policy to cap the rate of growth is potentially game changing - for China, where challenges to growth have been unthinkable up to this point.

The call comes amidst a wave of aggressive legislative offensives in China against the unsustainable consumption of natural resources. Other commitments include plans to reduce reliance on coal and to generate 15% of China's total energy consumption from renewable sources such as solar, wind and hydropower by 2020. China's plan includes measures to reduce the energy it takes to produce one unit of economic output by at least 16% by 2015. To achieve this, leaders have called for a pilot cap and trade market, as well as comprehensive carbon taxes, aggressive government investment and a new policy to provide incentives for innovation and expanded production in seven strategic industries, including energy-saving and environmental protection, new sources of energy and "new energy cars."

These policies will be adopted into law under the 12th Five Year Plan, the document that will set the blueprint for the next five years of China's development and which is scheduled for approval at the close of last week's meetings.

Many are wondering how the change in growth rate will affect the health of China's environment. To be sure, a 7% annual growth rate is still relatively high. And capping growth likely will not strip China of its unfortunate current ranking as the world's largest emitter of greenhouse gases. But it does change the actual carbon reduction implied by China's nation-wide goal of reducing the energy that goes into producing one unit of economic output by 40%-45% from 2005 levels by 2020. Since the target is linked to growth, a slower growth rate will mean China is effectively committing itself to greater emissions reductions. And it is proven that slowing growth is an effective way to curb climate change. For example, the greatest single contribution to the reduction of climate changing gases in the atmosphere in recent decades has been the recent economic recession.

This is how Wen articulates it: "We must not any longer sacrifice the environment for the sake of rapid growth and reckless roll-outs, as that would result in unsustainable growth featuring industrial overcapacity and intensive resource consumption." Local government officials, he continued, will be judged on their performance based on "whether the public are happy or not" and not by "how many high-rise building projects he has been involved in."

Another key voice on China's development strategy echoed the sentiment, Zhou Shengxian, the Minister of Environmental Protection said, "The depletion, deterioration and exhaustion of resources and the worsening ecological environment have become bottlenecks and grave impediments to the nation's economic and social development."

China's Vice Minister of the National Development Reform Commission, Xie Zhenhua, who led the Chinese delegation in climate talks in Cancun last December also made statements demonstrating that clean energy and energy efficiency will be key priority areas in the 12th Five Year Plan. The plan "will place climate change and green, low-carbon development at an even more important strategic position, raising countries' shared confidence in facing climate change," he said (link is in Chinese).

While the targets look good on paper, concerns remain that they won't be implemented. Last October, when rumors regarding the contents of the 12th Five Year Plan first circulated, Michael Levi from the Council on Foreign Relations wrote that the government's official statistics on its environmental performance frequently change and are "arbitrary" and "pretty meaningless." Levi argues that in order to accurately measure China's cuts, sophisticated tools for measuring, reporting and verification - or in the UN parlance "international consultation and analysis" - of emissions need to be established.

According to a New York Times report, Wen Jiabao has promised to oversee the implementation of the energy-efficiency targets with an "iron hand." Many news reports covered the widespread blackouts of last summer that were imposed by the provincial government under pressure to demonstrate compliance with targets. However, later it become clear that many factories were simply running rogue generators to continue operations resulting in a diesel shortage and likely producing even more emissions than if there had been no blackouts.

However, Alex Wang from the Natural Resources Defense Council points out that even without full compliance these policies set an important precedent. "While national climate legislation in the U.S. has languished, China has over the last five years been putting in place the framework for a massive, national effort to reduce energy intensity," he recently wrote on his blog.

In the wake of China's ambitious policies, the question becomes not only will Beijing put climate change concerns at the heart of development strategies (that is now clear) but will the implementation of these policies be satisfactory and does China have the political honesty and sophisticated instruments and experts needed to measure and report the reductions accurately.