China’s climate goals: Necessary measures threaten economic and social stability in the country

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China aims to reduce its emissions to “net zero” within just 30 years. The country is facing massive economic and social challenges.

  • China wants to reduce greenhouse gas emissions from 2030 and operate in a climate-neutral manner by 2060.
  • Can China’s climate change succeed in just 30 years without endangering growth and prosperity?
  • This article lies IPPEN.MEDIA in the course of a cooperation with the China.Table Professional Briefing before – had first published him China.Table on November 4, 2021.

Beijing / Berlin – China’s climate goals are ambitious. Within the next eight years or more, the country wants to reach the highest level of national CO2 emissions. By 2060, emissions should then drop to “net zero” * – then only greenhouse gases that are offset elsewhere may be emitted.

The climate goals require action “at an unprecedented speed and scope,” as climate expert and journalist Liu Hongqiao says. “The path to net zero will not be easy”. There is a threat of economic, social and political tensions. Can China succeed in restructuring an economy that causes a good 28 percent of global CO2 emissions annually at the necessary speed?

In terms of economic policy, China * faces two major challenges: energy security and securing growth and jobs.

1. Challenge: Energy security depends on fossil fuels

China’s electricity mix currently still consists of a good 65 percent coal-fired electricity. It is clear to everyone involved: It will be difficult to reduce dependency on an energy source that is normally readily available. To do this, the power supply must largely be converted to renewable energies within the very short period of time. In its recently adopted climate plans, the government itself emphasizes: “Construction before destruction”. Before the phase-out from coal is accelerated, sufficient renewable energies, electricity storage and transmission capacities should first be built up. Those responsible will not take any risks here. The current energy crisis * makes it clear to political leaders what is at stake if the switch to renewable energies threatens energy security.

In the past ten years, China has seen strong growth in the expansion of renewable energies. Wind energy capacity has increased tenfold. In the case of solar energy, the increase was even steeper. However, the overall demand for electricity also rose sharply. Renewable energies have not yet been able to push back the share of coal-fired electricity very far. And China is facing major challenges in building the necessary power lines and storage systems. In recent years, the construction of some new plants in the windy and sunny western provinces of Gansu, Xinjiang * and Tibet has even been stopped because there is a lack of the necessary transmission capacities and storage systems. In some provinces, a good seven percent of the electricity produced from renewable sources is lost. In Tibet it is almost 25 percent.

Challenge 2: Growth depends on fossil fuels

The restructuring of the economy will not be easy either. At the moment, China’s economy * is still very heavy on industry. 38 percent of economic output comes from the industrial and construction sectors. For economies like India, Japan and the USA, the value is between 20 and 25 percent. In addition: Sectors with high energy consumption and high CO2 emissions dominate: the steel, cement and aluminum industries, the construction sector and (petro) chemistry. And it is precisely in these sectors that reducing greenhouse gas emissions is the most difficult.

The positive news: Overall, China has been quite successful in decoupling economic growth from CO2 emissions since 2010. “China has almost doubled its economic output per capita since 2010, while CO2 emissions have remained reasonably stable,” says Liu. And yet: the further emissions are supposed to fall, the more difficult it will be to maintain the old growth model. In the past, growth through the CO2-intensive construction sector has helped the political elite even in crises. In the recent economic crisis as a result of the corona pandemic, Beijing fell back on old patterns: billions of dollars were pumped into the CO2-intensive construction sector.

However, China’s political leadership is willing to shut down CO2-intensive industries, says Alexander Brown, an analyst at the China Research Institute Merics. This has social consequences: Employment in coal mining and metal production has been falling since 2015.

The climate transformation * therefore also harbors great social tensions. The legitimacy of the Chinese Communist Party rests on the fact that it creates jobs and citizens can participate in the growing prosperity. There is a “risk of social instability and economic stagnation,” writes Sam Geall, energy and environmental expert at the Chatham House think tank. That is one reason why the government is not adopting more ambitious climate targets in the short term.

China’s climate change: where are the new jobs coming from?

The carbon-intensive industries employ tens of millions of people. Depending on the source, 54 to over 60 million people work in the construction sector alone. Coal mining employs between 2.6 and five million Chinese, depending on the source. For comparison: According to scientific forecasts, the solar industry in China will have created around 2.3 million new jobs in production, assembly and maintenance by 2035. The new solar jobs do not even begin to make up for the lost coal jobs.

In addition to the loss of jobs in the energy sector, there are millions of workers in the steel, aluminum and chemical industries as well as in the service industries dependent on these sectors who could also lose their jobs. And many of these jobs are located in the poorer regions of the country, says Merics analyst Brown. In Shanxi, coal mining accounts for almost six percent of employment. “Energy-intensive industries are critical to boosting employment and economic performance outside of China’s more developed eastern region,” Brown told China.Table. The trend is particularly affecting the hinterland. The government actually wanted to curb the migration from western China to the rich coastal regions.

In addition, many of the workers in the carbon-intensive sectors are poorly trained. According to development economist Scott Rozelle from Stanford University, China is already suffering from a massive shortage of skilled workers. According to Rozelle, the vast majority of the workforce does not have the basic skills to become specialists in the service sector and technicians in a chip factory or to take on office work. The result: 200 to 300 million people could be structurally “not employable” in the future, according to Rozelle. In 2008 he was honored with the Friendship Prize of the People’s Republic of China, the highest award for foreign experts.

The International Labor Organization (ILO) also states in a study that the number of new jobs in the field of renewable energies is limited. The restructuring of the energy industry will “increasingly lead to employment problems,” writes the ILO. Older and poorly trained workers in particular have little chance in the sector.
The faster China converts its economy towards more climate protection, the more poorly educated people are in danger of falling by the wayside – and the greater the social tensions.

China: Climate protection activists in the Communist Party still have a hard time

In addition to all of these challenges, there is the fact that China is not a monolithic political bloc either. Climate policy is largely defined by the central government. But in the provinces and cities there are powerful actors with interests that stand in the way of climate policy. Local officials and provincial princes traditionally rise up in the CPC * when they can demonstrate high economic growth, which in the past was often at the expense of the environment and the climate.

The preservation of jobs in fossil fuels and the tax revenue from these are also an important political goal for some provincial governors. Beijing is making efforts to give environmental aspects a greater role in the promotion of officials. But how quickly such considerations will prevail remains to be seen. Whether China’s political elite will succeed in reconciling climate protection with the necessary growth, energy security and social stability will be a central question for the coming decades. At the moment, the environmental and climate protection lobbies within the political elite are still fighting a “difficult battle when it comes to increasing ambitions for climate protection in one’s own country”, analyzes Sam Geall.

From Nico Beckert

Nico Beckert has been editor for the since January 2021 Table.Media Professional Briefings. His main topics are German-Chinese relations, economics and finance, the New Silk Road and Chinese climate policy. Beckert previously wrote for the Daily mirror and the Friday.

This article appeared in the newsletter on November 4, 2021 China.Table Professional Briefing – As part of a cooperation, it is now also available to readers of the IPPEN.MEDIA portals. * is an offer from IPPEN.MEDIA.

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