The National People’s Congress (NPC) approved the 12th Five-Year Plan (FYP) on March 14, 2011. The NPC is China’s law-making body. Each Five-Year Plan in essence becomes the blueprint for direct government action and further law- and rule-making.
Adjustments can be made during the course of the Plan but it is generally handled as a matter of emphasis rather than revision.
Over the next two months, policy experts and economists from within China and around the world will be studying the 105-page document to decipher its intent.
Five-Year Plans tend to emphasize continuity of thought and effort and are carefully worded so even small alterations can signal significant changes. As said before, business follows government in China.
Every province, city and district in China will be studying the plan to figure out how they will be proceeding. The document is in essence China’s economic bible and is therefore something you should be familiar with if you are doing, or intend to do, business in China. Having become the world’s second-largest economy after the United States, and given the situation in Japan; watching and understanding China has become a necessity whether you are in or outside of China.
This article is just to give you a taste; other articles will follow on different aspects which might be of interest.
The key components identified so far include:
GDP
China’s gross domestic product will grow by 7 percent annually on average. This is a sharp 2-percent drop vs. current growth and seems to be a response to concerns about inflation and income disparity.
Energy consumption
China aims to cut energy consumption per unit of GDP by 16 percent from 2010 levels by 2015, and by 3.5 percent by the end of 2011. The cumulative reductions achieved during the 11th Five-Year Plan period were 2.74 percent (2006), 7.64 percent (2007), 12.44 percent (2008), 15.68 percent (2009) and 19.06 percent (2010), based on 2005 levels. China aims to cap energy use at 4 billon tons of coal equivalents by 2015, as a mandatory ceiling. 3.2 billion tons of coal equivalents were consumed in 2010.
Non-fossil fuels
Non-fossil fuel will account for 11.4 percent of primary energy consumption.
Carbon emissions
Carbon dioxide emission per unit of GDP will be cut by 17 percent from 2010 levels by 2015 and by 3.5 percent in 2011.
New NOx targets
China will target a 10-percent to 15-percent decrease in NOx emissions from coal-fired power plants, by 2015 from 2010 levels, beginning with a 1.5-percent decrease in 2011.
SO2 reductions
Reduce sulfur dioxide (SO2) by 8 percent by 2015 from 2010 levels, and 1.5 percent by 2011.
Nuclear power
From 2011 to 2015, China plans to launch nuclear energy projects with a combined generation capacity of 40 GW. In addition to boosting the construction of nuclear power plants in the coastal areas, new plants will be planned in central regions. Given the situation in Japan it is likely that this will be delayed but not abandoned as it would seriously impact China’s overall energy goals.
Hydropower
China plans to build hydropower stations along major rivers such as the Jinsha River, Yalong River and Dadu River with an installed capacity of 120 GW.
Wind power
At least 70 GW of wind power capacity will be created in the next five years.
Solar power
At least 5GW of solar power capacity will be created in the next five years.
New-energy vehicles
Miao Yu, head of the Ministry of Information and Industry Technology (MIIT), told reporters on March 4 that the Energy-Saving and New-Energy Vehicle Plan has been submitted to the State Council and is likely to be made public in the first half of this year. According to one industry expert who participated in drafting the plan, the final version is unlikely to differ significantly from the draft issued late last year, and that the biggest change will likely be a revision of the 2015 target for 500,000 new energy vehicles on the road upward to 1 million.
Electric power pricing reform
Improve pricing mechanisms for all kinds of electricity.
Smart grid
Intensify smart grid construction.
Oil pricing reform
China aims to improve price-setting mechanisms for refined petroleum products and natural gas.
SEIs
Seven strategic emerging industries (SEIs) – energy conservation and environmental protection, new energy, biotechnology, next-generation IT industry, high-end equipment manufacturing, new materials and new energy vehicles – will account for 8 percent of GDP by 2015, and 15 percent of GDP by 2020.
R&D
Expenditure on research and development will account for 2.2 percent of GDP by 2015 and 1.85 percent of GDP in 2011.
Urbanization
China’s urbanization rate will grow from 47.5 percent to 51.5 percent by 2015, and 48.3 percent in 2011.
Clean water
China targets 15 percent reduction for five heavy metals including lead, mercury, chromium, cadmium and arsenic, in key polluted areas, from 2007 levels, which was 900 tons in total.
Industrial water consumption
Water consumption per unit of value-added industrial output to be cut by 30 percent from 2010 levels by 2015 and 7 percent in 2011.
COD
Reduce Chemical Oxygen Demand (COD) by 8 percent in 2015 and 1.5 percent in 2011.
Renewable energy in buildings
Ministry of Housing and Urban-Rural Development (MOHURD) issues notice on increasing renewable energy use in buildings. By 2020, MOHURD aims for renewable energy to account for over 15 percent of building energy consumption. During the 12th FYP period, MOHURD is calling for efforts to increase concentrated development and the use of other types of renewable energy applications and strategies in buildings. The goal is to have over 2.5 billion square meters of new floor space that use renewable energy or highly efficient energy saving systems by 2015, resulting in a savings of 30 million tons of coal.
(Information supplied by Genentech, Chinese Embassy and Xinhua News.)
