Manufacturing lies at the core of China’s efforts to develop a greener and more competitive economy. Between 2003 and 2011, the green growth efficiency of China’s manufacturing industry notably improved. To support green industry transformation, localities such as Beijing and Shanghai announced major initiatives,23 and the Green Manufacturing Association of China (GMAC) was launched in 2017.
Last year, a group led by the Chinese solar product manufacturer LONGi initiated the “RE100 China Pathfinder Pledge” to get more Chinese companies to commit to the global RE100 initiative for businesses that pledge to go 100 percent renewable on energy. Previously, only two Chinese companies had signed up for it by 2018.
Despite some progress, major green goals for China’s manufacturing industry have not been met, such as the 2020 targets to reduce industrial energy intensity by 18 percent and CO2 intensity by 22 percent compared to 2015.24 A 2017 study on the green growth performance of 30 industries still identified seven “light brown” (e.g. transport equipment manufacturing), five “dark brown” (e.g. metal products) and nine “black” pollution-intensive industries (e.g. pharmaceuticals).25 The greening progress of China’s economy is still highly fragmented.
3.1. China uses a variety of tools to stimulate industrial greening
The Chinese leadership uses different tools to promote a green transformation of industry. Most notably, these include local clustering, incentives for more private sector participation and green funding, state procurement and standardization.
The government banks on a cluster approach in promoting showcase areas of expertise, e.g., in the form of “Circular Economy Pilot Cities” (such as Tianjin) and “Green Industry Demonstration Bases” – a new initiative aimed at creating market-oriented green innovation systems and green champions in qualified industrial parks. How successful these bases will be is yet to be seen. China’s eco-industrial parks (EIPs), however, have already shown promising results according to a study by German development experts.26 They stepped-up the reuse of both water and solid waste by more than 90 percent each between 2011 and 2015, yet still managed to remain competitive. However, EIPs account for only ten percent of China’s industrial parks, and challenges remain with regard to upscaling and insufficient private sector participation.
With a view to getting more private companies on board, Beijing in May released recommendations to improve market conditions for private companies that engage in energy conservation and environmental protection, e.g., via tax relief.27 Public-private partnerships (PPPs) have also gained prominence. In 2019, almost 60 percent of China’s PPPs dealt with pollution prevention and green low-carbon technologies.28 More than 500 environmental non-governmental organizations (NGOs) and foundations are also contributing to greater sustainability in Chinese industry, e.g., by raising awareness of green product consumption.
It is estimated that China’s green transition requires an additional 40.3 trillion CNY.29 Encouraged by the state, green financing has become a big deal in China. Almost 200 green bonds worth 282 billion CNY were issued domestically in 2019.30 China thus ranked second only to the United States in this regard, followed by France and Germany. However, much more capital is required for a full-fledged greening of China’s economy.
To accelerate and improve China’s sustainable industry transformation, the government also engages in priority procurement of green products and services. By the end of 2018, more than 90 percent of products acquired by the bureaucracy were considered energy-efficient and environment-friendly.31
Finally, a standards system for green manufacturing that covers all aspects – from resource input to emissions reporting and eco-design evaluation – is envisioned for industry-wide use by 2025. Things are progressing fast. The framework for green factories was largely completed in 2019, and hundreds more standards are in the making. However, company inspections reveal that green standards are not always adhered to. In 2017, 70 percent of almost 14,000 inspected companies in northern China failed to meet air pollution standards.32 And as the government acknowledged itself in a report in 2019: “Laws, regulations and standards for green manufacturing are underdeveloped” and “resource utilization in the manufacturing sector is still far below world-class efficiency levels”.33
3.2. Work remains to be done on green products
In addition to a national plan, about 80 provinces and cities drew up their own schemes for green manufacturing. Taken together, this should create a nation-wide manufacturing system that adheres to green standards and focuses on clean production and resource utilization at all stages of a product’s lifecycle and supply chain. Both the upgrading of traditional industries, such as steel, and the creation of internationally competitive, outright green industries such as new energy vehicles (NEVs) are key aspects of greening China’s manufacturing industry.