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Joanna Lewis, an EWC visiting fellow and Georgetown University professor who researches China’s energy use and climate change policies, noted that China also made news recently when the International Energy Agency proclaimed it as the world’s largest energy user.
“It is now likely the largest national energy user in the world,” said Lewis, who is an advisor to the Energy Foundation’s China Sustainable Energy Program in Beijing. She said China has disputed the ranking, contending the U.S. still surpasses its energy use.
“But either way,” she said, “the recent trends in China’s energy use are of major concern because it means China has begun to backtrack on some of the progress to reduce the environmental impacts of its energy use.”
Lewis said China has a number of programs to reduce carbon emissions, including replacing inefficient energy plants, adding renewable energy capacity and setting target dates for lower emissions.
Energy use rose faster than planned during the first half of this year, she said, due in part to China’s economic stimulus program, which increased demand for production of steel and cement. Lewis said the government’s goal of a 20 percent reduction in energy intensity from 2005 levels by the end of this year was jeopardized by a 0.9 percent energy-intensity rise during the first six months of 2010. Energy intensity, which measures the energy efficiency of a nation's economy, is calculated as units of energy used per unit of gross domestic product.
Kang Wu, an EWC senior research fellow and specialist in energy economics, said China’s energy efficiency is still below that of other major economies. He said Japan consumes one-fifth the amount of energy, but has an economy that’s roughly the same size as China’s.
“There’s still a lot of room for China to improve,” Wu said, noting the country’s long-term target of reducing the intensity of carbon emissions in 2020 by 40 to 45 percent from 2005 levels.
Energy is also a national security issue for China, because it gets most of its oil from outside its borders, Wu said. China – which is both the world’s largest coal producer and user – last year imported coal for the first time, he said, and this year it will probably import about 15 percent of the natural gas it uses.
China realizes the security implications and has diversified sources of its oil imports, Wu said. Its oil companies have equity stakes in 2 million barrels a day of production around the world, he said, while it has embarked on building massive strategic petroleum reserves.
“Right now I think energy security trumps climate change,” Wu said.
The environment may also take a back seat to growth objectives, said Christopher McNally, an EWC research fellow and political economist studying China’s capitalist transition.
He said China’s top-down, state-led development has given many incentives to local officials to maximize economic growth at the expense of the environment.
Nonetheless, what McNally calls “Sino-Capitalism” performed better than the U.S. system in the aftermath of the 2008 financial crisis, when the Chinese government successfully undertook a massive stimulus program that included guiding banks to increase lending.
That resulted in a boom that the government is now trying to temper, McNally said. He noted China has a kind of “stop-go” economy in which the government attempts to manage and smoothen boom and bust cycles.
“Right now the Chinese government is in a stop phase,” he said, explaining that one of the consequences of rapid recovery had been a dramatic climb in housing prices.
“Property is extremely expensive in China in terms of average incomes,” McNally said, adding that the central government is now pressuring local administrations to act on public housing targets that would give poorer residents an opportunity to climb the housing ladder.
But beyond the immediate economic concerns, China must look for long-term ways to improve its social welfare and medical systems, and transition from an export-led economy to one that is more focused on domestic consumption, he said.
China has also had a high profile this year in the area of security. Denny Roy, an EWC senior fellow who focuses on Asia Pacific security issues, said the recent developments in the South China and Yellow seas serve to illustrate how China is trying to guard what it sees as strategic assets and how the country’s role in the region is changing.
Roy said Chinese government and media have started using the term “core interest” with respect to the South China Sea, with some commentators saying China has indisputable sovereignty over much of the strategically and economically important body of water.
Last month, the U.S. responded by saying China doesn’t own the South China Sea and can’t restrict the movements of the U.S. Navy there. Moreover, Roy said, it asserted that claims over the sea should be discussed in multi-party talks, something the Chinese don’t favor.
The Chinese reacted by saying the U.S. response was in effect an attack on China, he said.
A South Korean announcement that a U.S. aircraft carrier would participate in exercises in the Yellow Sea also was met with a strong reaction from the Chinese, who don’t believe such a powerful ship should be operating so close to China’s shores, he said.
Roy said the reaction differs from the past and highlights China’s changing vision of both its own and the United States’ security role in the region.
“They feel like they can tolerate a certain level of American involvement in the region for the time being,” Roy said. “But that level of tolerance may well be decreased year by year in the future.”
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