China’s Conundrum: Pursuing Sustainable Development in a Post-Coronavirus Landscape

The coronavirus crisis is the latest test for China as it deliberates over how to develop its domestic demand while promoting a green transformation, writes Jiangwen Guo.

Expert comment Updated 27 January 2021 Published 17 June 2020 2 minute READ
Chinese shoppers outside a shopping centre in Beijing as China emerges from the COVID-19 pandemic. Photo: Getty Images

Chinese shoppers outside a shopping centre in Beijing as China emerges from the COVID-19 pandemic. Photo: Getty Images

China accounts for almost 20 per cent of the global economy and its actions have enormous impact both domestically and abroad. In a Politburo meeting in March, the country pledged to widen its fiscal deficit and sell its sovereign debt, which can be taken as a signal that the country is preparing a large-scale stimulus package to counter the economic fallout from the current coronavirus crisis.

Recent discussions have focused on a ‘new infrastructure’ plan to scale up domestic growth and job creation. Seven areas in the plan involve 5G, ultra-high-voltage power facilities, inter-city transport, electrical vehicle charging stations, big data centres, artificial intelligence and industrial internet.

In parallel, the National Energy Administration has recently approved ‘old infrastructure’ projects, particularly of new coal power plants, under the pretext that China’s current power system is under significant pressure despite renewables taking an increasing share of the country’s domestic power mix.

The balance of old versus new infrastructure as part of economic recovery efforts is to be decided along with the national public budget, estimated to be around RMB 20 trillion (US $2.8 trillion), at the National People’s Congress.

It has also drawn global attention because of the fact that the direction China’s economic recovery takes will have a significant impact on the rest of the world including meeting the goals of the Paris Agreement.

However, it has been encouraging to see, so far, that the Chinese government has explicitly supported to recover ‘better’, as outlined at the Petersburg Ministerial Dialogue in April, which includes supporting six climate actions proposed by the UN.

Many believe the Chinese government’s 14th five-year plan (FYP) will set the tone for the overall reform of China’s system which is likely to be consistent with its strategy for energy production and consumption, last set in 2016, which includes the deployment of efficient coal power plants.

This strategy is expected to meet the power demands for both power security and energy reform plans in the short term (14th FYP) and in the mid- to long-term (2030-50).

Furthermore, China’s 14th FYP includes an overarching plan for economic and social development by the world’s largest greenhouse gas emitter, setting out national goals for 2021-25, and being potentially one of the world’s most important documents for global efforts to tackle climate change.

This plan is expected to be approved in early 2021 followed by more detailed sectoral targets over the next year. However, the narrative of the new five-year plan will have to be adjusted due to the COVID-19 pandemic which has presented huge challenges to China’s development. The ‘new infrastructure’ concept, therefore, will play an equally important role along with indispensable traditional infrastructure investment.

China’s goal to safeguard its energy security, promote cleaner and more efficient use of coal and develop renewable energy was also reiterated in a government work report in May which was delivered by Premier Li Keqiang on behalf of the State Council at the Opening Session of National People’s Congress.

But, given this contradictory context facing Chinese society between unbalanced and inadequate development, as well as its people’s ever-growing need for a better life, a clear signal could be interpreted from the government’s work plan that China should focus on improving its people’s wellbeing, boosting consumption and expanding investment in a mutually reinforcing way. New infrastructure, after all, is a fresh engine for high-quality development.

On the other hand, traditional infrastructure projects such as water, transportation and energy won’t be replaced in the short term due to the fact that they are essential to stabilize the overall development of the social economy and are a driving force for other industries.

Premier Li Keqiang has emphasized that one of the priorities of the Chinese government going forwards will be on a new urbanization initiative to facilitate structural adjustment and enhance sustainable growth. This is an important indication from China that it is willing to demonstrate an active role in a post-pandemic green world.

So, despite this juxtaposing context that the country, and indeed the world, finds itself in as well as contrasting needs for development, China is seeking to design and deploy a strategy of expanding its domestic demand while promoting a green transformation.