Although the above mentioned achievements are substantial, challenges still exist in many areas. Air and water pollution is severe and the effi - ciency in energy consumption is low. Although the consumption of electricity grew much faster than GDP, there were widespread electricity shortages across the country during peak time in 2011, suggesting that China’s economic structure was still highly energy ineffi cient, posing a big threat to sustainable growth. 22
Th e Chinese economy has relied heavily on manufacturing for over three decades. 23 In 2011, the manufacturing and construction indus- tries were responsible for 46.8 % of GDP, compared with less than 25 % in many developed countries. In contrast, the service industry was responsible for 43.1 % of China’s GDP, compared with over 70 % for most developed economies. Even compared with other BRICS (Brazil, Russia, India, China, and South Africa) economies, China is far more
20 12th Five-Year Plan for Energy Saving and Emission Reduction, the State Council of China. 21 Calculated by the author based on data from China Environment Yearbook, 2007–2011. 22 Yao, Luo and Rooker, “Energy Effi ciency Economic Growth,” 99–121.
dependent on the industrial sector. Heavy industry is more capital and energy intensive, though labour extensive, compared to light industry. However, the share of output from light industry in total industrial out- put declined from 49 % in 1978 to 29.1 % by 2010. Although the industrial sector contributed 40 % of GDP in 2010, it consumed over 71 % of total energy and 95 % of the total coal consumption. In addi- tion, the growth of the six most energy consuming industrial sectors has been faster than that of the others. 24 China has claimed to have adjusted and upgraded its industrial infrastructure for more than a decade; how- ever, its industry is still greatly reliant on the production and exporta- tion of low-tech manufacturing products using cheap labour and energy without the adequate capacity to innovate or the ability to produce high value products. Such over-dependency on low-tech and labour intensive production cannot be maintained forever because of labour shortages, an ageing population, and the rising prices of key commodities, such as iron ore, oil, soybeans, and copper.
Th ere have been several gaps in the formulation of environmental standards. Firstly, existing standards are lagging behind other countries in the world. For example, fi ne particles (PM 2.5 ) are not new for many
countries: as early as 2005 the WHO had introduced guidelines on rec- ommended limits for the concentration of PM 2.5 and other air pollutants,
applicable across all WHO regions. Subsequently, most Western coun- tries set their targets accordingly, but China has only recently added them to the updated national air quality standards (GB3095-2012) which will be enforced from January 2016.
Secondly, many environmental standards are outdated and have not been revised for over ten years. 25 For example, it has taken 16 years to revise the existing air quality standard (GB3095-1996). Other stan- dards, such as the Pollution Discharge Standards of Boats and Ships (GB3552- 1983) have not been revised for 30 years, and the Soil Quality Standards (GB15618-1995) for almost 20 years. Th erefore, such stan- dards do not take into account new pollutants and hazardous substances.
24 Th e six high energy-consuming industries include: manufacturing of raw chemical materials and
chemical products; manufacturing of non-metallic mineral products; smelting and pressing of fer- rous metals; smelting and pressing of non-ferrous metals; oil, coking, and nuclear fuel processing; and the production and supply of electricity and heat.
Th irdly, the existing standards focus more on the concentration of the pollutants, rather than total pollution emissions. Th e concentration of pollutants can be aff ected by many factors, such as temperature, rainfall, and measuring equipment at the observation site. It is also possible to reduce the concentration whilst not reducing total emissions. For exam- ple, the concentration of air pollutants in the city can be reduced by heightening the chimneys of factories or relocating polluting factories out of the city.
Weaknesses in the implementation of environmental regulations also exist. Many places, particularly at the grass-roots administrative lev- els and in less developed regions, do not possess adequate quantitative management of energy consumption and pollution emissions, which is compounded by insuffi cient monitoring and supervision capacity. For example, only one-third of cities and counties in Xinjiang have estab- lished energy saving supervision bureaus. Few cities have professional energy statisticians and the majority of enterprises do not have a specifi ed energy statistician. Some industrial fi rms do not even have the energy measuring equipment required by law. 26 Th erefore, it is diffi cult for these regions to monitor and control the energy consumption of large energy users, as well as the emissions of large polluters.
Although many organizations and enterprises are aware that environ- mental impact assessments have to be carried out before establishing a new project, a substantial number of small and medium scale organiza- tions fail to do so. A greater number of them have no idea about energy saving assessments, which is also required by law and has to be carried out by qualifi ed organizations. A fi eldwork study conducted by me in Shandong Province in summer 2013 found that some fi rms were not aware of the related environmental and energy regulations; therefore, they did not follow the proper assessment procedure. Some were even deceived by unqualifi ed organizations and purchased an expensive but worthless energy saving assessment report. Th is generated additional costs to the fi rm which had to redo the assessment, and they also ran the risk of penalties from the energy supervision authority. I also found
26 General Offi ce of Xinjiang Uygur Autonomous Region (2013) “Energy Conservation, Emission
that a large proportion of the fi rms were still using ineffi cient models of electric motors listed on the ‘Catalogue of Outdated Electromechanical Equipment (Products) with High Energy Consumption to be Phased Out (Batch 2)’, which was enforced in 2012 by the Ministry of Industry and Information Technology of China.
In summary, China is lagging behind developed countries and even some developing countries in terms of environmental quality, energy intensity, as well as the enforcement of energy/environmental regulations. In addition to the above inadequate industrial infrastructure and weak- nesses in the formulation of implementation of environmental policy, China also faces other challenges in alleviating environmental problems, such as lack of expertise and technology, bureaucracy, and corruption.