CHINA HAS a track record of making changes rapidly. Within just the past decade or two, the world’s most populous country has become its biggest market for passenger cars, its biggest e-commerce market, its biggest exporter and its biggest source of carbon emissions. So it should come as no surprise that China has now also assumed a leadership position in the green-investment arena.
China’s “green” motivations are easy enough to understand. For decades, China’s headlong, double-digit economic growth came at the cost of its environment – with air, water and soil pollution to match.
The fact that many of China’s low-lying urban areas, much like those in Thailand, are vulnerable to the effects of rising sea levels and intensifying weather conditions adds another dimension to the need to act.
At the same time, China is more and more educated, articulate and confident citizens are increasingly demanding that the benefits of economic growth come without the pain of environmental degradation.
To their credit, the Chinese authorities have recognised the need for action.
They have declared a “war on pollution,” and over the last few years have been ploughing billions into clean energy, investing in low-emissions infrastructure, and widening the options for green financing. China has become the main driver of growth in the global market for green bonds. More than US$33 billion worth of Chinese green bonds were issued last year. That is well over one-third of the global total and it is up from just $1 billion in 2015.
Efforts to decarbonise and green China’s economy now permeate the fabric of its economic efforts; they also dovetail with Beijing’s goal of taking the economy up the value chain, boosting home-grown high-tech industries and the high-end jobs that come with them, and paving the way for more sustainable, balanced and ecologically-aware economic expansion.
The changes are already underway. Last year, for example, China installed almost three times more wind power capacity or 23.3 gigawatts than the United States, taking its total wind power capacity to about one-third of the global total.
Similarly, the country’s photovoltaic capacity more than doubled in 2016, turning China into the world's biggest producer of solar energy by capacity.
And in January this year, just as the United States looked poised to take a very different approach on climate change, China said it would plough RMB 2.5 trillion (about US$ 360 billion) into renewable energy by 2020.
On the automotive front, meanwhile, official support for electric vehicles means China is likely to become the world’s largest market for such vehicles within the next few years. This has particular resonance for Thailand, where the car industry has long been a major pillar of the economy. Like their counterparts in China, policymakers here want to make the economy more high-tech and innovation-driven. In line with this ambition, the Thai government is aiming to transform the country into a global centre for electric-vehicle production, with the Board of Investment recently approving an investment-promotion package for EVs.
Of course, the changes in China’s energy mix and electricity pricing regime, its car fleet or its capital markets cannot happen overnight: it will take years to clean up China’s or indeed Thailand’s environment and truly “green” its economy.
But China’s policymakers are committed to the fight. They have not just the motivation, but also the means, and the opportunity to capitalise on China’s economic transition to deliver substantial green progress in the coming years.
That is good news : not just for China, but also for the rest of the world.
KELVIN TAN is chief executive officer, HSBC Thailand