China’s 13th Five-Year Plan: Expanding Attention on the Green Economy

By Nicole White & Grace Hearty —

Water quality is tested at the Shahu Water Supply Plant in Gao’an City, Jiangxi Province, China. Source: Asian Development Bank's flickr photostream, used under a creative commons license.

Water quality is tested at the Shahu Water Supply Plant in Gao’an City, Jiangxi Province, China. China’s 13th Five-Year Plan has 16 mandatory environmental targets, including requirements to improve its surface water supply. Source: Asian Development Bank’s flickr photostream, used under a creative commons license.

If China’s Five-Year Plans (5YP) act as “large blinking neon arrows” pointing out the Chinese Communist Party’s (CCP) top priorities, then China appears to be more serious than in the past about moving towards a more sustainable growth model. After decades of prioritizing economic growth at all costs, the consistent increase in environmental targets, from 3 in the 10th 5YP to 16 in the recently-released 13th 5YP, reflects the CCP’s heightened commitment to tackling environmental issues. The most notable new targets in the 13th 5YP are related to surface water, soil, and air quality, as well as a cap on coal consumption. Out of 33 targets in the current plan, all five targets related to economic growth are classified as “predictive,” whereas all 16 environmental targets are deemed “mandatory.”

With this latest iteration of the plan, the CCP seems to have finally internalized the calamitous state of China’s water resources. China’s water stress is old news in the environmental world, but agricultural run-off, industrial waste, and water contamination have now become problems that China cannot avoid aggressively tackling. The 13th 5YP mandates that over 70 percent of China’s surface water supply must be equal or better than Grade III water, the level at which water is deemed fit for human consumption. The plan similarly decrees that no more than five percent of the country’s surface water supply can be Grade V, or industrial grade, water. China has already set up water quality monitoring stations, and plans to increase the number of monitoring stations throughout this five-year period from 972 to 2,767.

It is important to note that these targets focus on surface water only. Groundwater pollution is a major issue in China and will require significant reforms over the long term. In the 13th 5YP, officials address the groundwater problem through acknowledging the scope of soil pollution and calling for a second pollution census, the first of which was completed in 2010. These water and soil targets are significant because they suggest a more holistic approach to environmental reform, given the focus on pollution that is less visible than city smog.

In addition to increasingly ambitious targets for reduction of specific air pollutants, the 13th 5YP is the first plan to mandate good-to-moderate air quality in cities and above the prefecture level. If this standard is not met for 80 percent of the year, cities must reduce concentration of the dangerous air pollutant PM2.5 by 18 percent by 2020, representing the first specific PM2.5 target included in a 5YP. Ambitious national targets dovetail with local government plans, which also now cite specific smog targets.

Given the complex composition of chemicals and pollutants used to calculate PM2.5, reducing PM2.5 quickly will be difficult for many cities in China. The Ministry of Environmental Protection has articulated that truly cleaning the air will be a 15-year task. Another new addition to the 13th 5YP is a 10 percent reduction target for volatile organic compounds (VOC), major contributors to PM2.5. Though VOCs are emitted from fossil fuels and the plan prescribes fuel and emissions standards, they are also emitted from paints, solvents, and industrial processes, which are much harder to regulate.

The 13th 5YP also calls for a reduction of untreated coal, a decrease in demand for coal, and an increase in natural gas and renewables such as hydropower, and nuclear energy. China has set plans for a significant increase in non-fossil fuel usage compared to previous 5YPs. One of the most notable components of the plan is its call for a total energy consumption cap of 5 billion tons of coal equivalent by 2020, measured by adding all energy sources together. Analysts are confident China can meet its new target to reduce 2015 levels of carbon and energy intensity by 18 percent, which would put China on track to surpass its initial target of a 40-45 percent reduction by 2020 and meet its Paris Agreement carbon-intensity commitment of 60-65 reduction by 2030.

Efforts to encourage market-based governance of the environment and pollution, such as a cap-and-trade program, are in their infancy in China and have yet to show signs of becoming genuine constraints on corporate behavior. One way in which the 13th 5YP supports this program is by tasking the government with management and oversight of the seven pilots before rolling out the national program in 2017. This initiative is not unique to this year’s plan; in fact, an emissions trading system was introduced in the 12th 5YP, but pilot programs have not been terribly successful. Even if the 13th 5YP carbon targets are reached China’s overall carbon emissions are still scheduled to rise for the next 14 years. In this area, one determining factor will be the extent to which strong top-down government regulation and enforcement can be coupled with more vigorous market-oriented mechanisms, a question-mark that applies to a wide range of CCP policy initiatives.

China’s increased investment and heightened focus on green technologies will be crucial to continuing the country’s positive momentum in the energy sector. In tandem with investment comes implementation of the current targets, which will be paramount over the next five years. The key will be follow through on regional limits for energy and water consumption and industrial development, which are proposed by local governments and approved by the State Council. Promotions of local officials will now partly hinge on resource-consumption record keeping, environmental degradation, and “ecological competitiveness.”

There is reason to believe that the incentive structure for local officials with vested interests in the highest polluting industries is shifting. Minister of Environmental Protection Chen Jining announced in March of 2016 that there would be a pilot program in 17 provinces (to be rolled out nationally before 2018) for law enforcement monitoring below the provincial levels to stave off local protectionism and increase accountability for environmental protection.

In June 2016, China’s top prosecutor ruled against an environmental government agency in Shandong for failing to adequately punish a sewage company for insufficient safeguards in a watershed public interest lawsuit. This decision is one concrete indication that China’s new Environmental Protection Law, effective since January 2015, will be taken seriously and hints at a broader shift in how the Chinese government is tackling pollution. The law bolsters enforcement mechanisms, formalizes a performance assessment of local officials based on environmental protection in addition to economic growth, imposes fines that accumulate each day pollution violations continue, and permits nongovernmental actors to pursue legal action against polluters.

Political will and resource expenditure turned the sky “APEC Blue” during the 2008 Beijing Olympics, the 2014 APEC Summit, and China’s 2015 military parade commemorating victory in World War II. The question is how quickly China can achieve improved environmental performance not only on important occasions but every day of the year. President Xi Jinping has made climate change a standout facet in his foreign policy. With the 13th 5YP, Xi is setting in motion the opportunity to make much-needed domestic environmental improvements a hallmark of his policy agenda.

Ms. Nicole White is program manager with the Freeman Chair in China Studies at CSIS. Ms. Grace Hearty is associate director of the Simon Chair in Political Economy at CSIS. Follow her on twitter @gehearty.

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