04/13/2009 05:12 am ET Updated May 25, 2011

Will China Put the "Eco-" Back Into "Economy"?

In slowdown and stimulus, can China breathe easier?
In this economic downturn, few green linings could be as exciting as a cleaner China.

It was the recession that Chinese leaders partially credited for helping the country reach its Five Year Plan pollution goals for the first time in 2008. Meanwhile, energy consumption has been on the decline (though it rose for the first time in three months in February), along with the demand for Chinese goods.

But to put people back to work and maintain its golden number of 8 percent growth, China will pour $586 billion into the economy. In the process, it may also pour a lot of concrete, a lot of coal into its engines, and a lot of smoke back into the air.

Much of the reason for China's dirtier stimulus is clear: the country is still developing, and still depends largely on dirty industry and manufacturing for growth. It's aiming to be more like developed countries, which rely more heavily on cleaner service sectors, like banking or retail. But on the way there, it's still dirty. And China's leaders don't seem to be showing much interest in making that path -- and its end result, for that matter -- much cleaner right now.

A message released during the ongoing annual session of the National People's Congress (NPC), said, according to Xinhua, that "saving energy and protecting environment is a big government agenda, though keeping a 'steady and relatively fast' economic growth is a paramount task amid the global economic crisis."

That sounds like a pretty blunt dashing of the hopes of environmental groups like the old Beijing NGO Friends of Nature, which sent a letter to the NPC this week urging a clean stimulus.

"In order to guarantee good, fast economic development, a few high-pollution, high-energy-consumption, high-risk projects should not be snuck into" the government's investment goals, said the letter. "Use the 4 trillion yuan investment to pioneer a green, low-carbon economy. Don't sacrifice the long-term objectives of conserving energy and reducing emissions for the sake of protecting high energy-consuming industries that have no future."

"Future" isn't exactly something the Party is thinking about. Forbes" Gady Epstein doesn't parse words in describing the government's relationship with sustainable growth: "Despite a dramatically increased awareness in Beijing of the need to protect the environment, the Communist Party's brand of scorched-earth capitalism still prioritizes economic growth over all else."

As a result, mandatory environmental reviews of many large projects will now be completed twice as quickly while some approvals will be managed by very low and understaffed levels of government.

And even if an industrial project meets environmental regulations, incorporating or turning on clean technology is not going to be a priority for factory or power plant owners if it means added costs. And though the Ministry of Environmental Protection continues to work on improving local oversight of industrial compliance, progress is slow going. The mountains are still high and the emperor is still far away.

Green Projects
Still, the government isn't about to let its green gains slip away in the face of a recession. Many leaders recognize the opportunity China has to clean up its development in a way that the US and Europe did not have the chance or foresight to do. It's partly a matter of playing a role in the global environment befitting a rising superpower. As an op-ed in China Daily urged this week, "developing a low-carbon economic is a must as China continues to industrialize, not only for the nation's energy security, but also as part of an urgent international responsibility to address global climate change." Hillary Clinton could have written that.

The government also knows that in the long term, cleaning up environmental problems is costly, and in the short term, environmental problems lead to social unrest -- the feared stick that ultimately spurs the Communist Party's every move.

To wit: the 4 trillion yuan stimulus package includes a 210 billion yuan (US$30 billion) investment in environmental protection and energy conservation.

But this sum is a reduction of nearly 40% from the original sum allocated to environmental protection and efficiency in an early draft of the package of RMB350 billion (US$50 billion).

And as the ever astute Charlie McElwee observes, 210 billion yuan, or 24 billion Euros, is 50 percent of the green investment recommended by a new McKinsey report "China's Green Revolution." The study concludes that "from now until 2030, up to 150 billion to 200 billion euros on average would be needed in additional investment each year to effectively deploy the green technologies needed to achieve the substantial improvements." In the early years, 2011-2015, only 35 billion Euros would be needed. "Nobody said this was going to be cheap," says McElwee.

Continued at TreeHugger