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Tuesday, December 19, 2006

Eye on China: Efficiency Overtakes Speed as Primary Goal of Economic Development


Efficiency has replaced speed as the official priority in China's economic development, which has registered double-digit growth at the cost of high energy consumption and a deteriorating environment.

Chinese President Hu Jintao [pictured at left] has said in recent meetings that the country would realize "efficient and rapid" economic development. His remarks replaced the decade-long goal to achieve "rapid and efficient" development.

"China should take substantive measures to shift its focus from pursuing speed to improving the quality and efficiency of economic growth," said Hu.

Zhong Wei, an economic professor with Beijing Normal University, said the wording change sent a strong signal that the government would list efficiency as the primary criterion to evaluate economic performance of next year.

A high-level meeting presided over by Hu last week decided that the government would convene the annual Central Work Conference on Economy in the near future to discuss the new primary goal.

The economy has been expanding rapidly since 1990, with an annual growth rate of 9.7 percent on average, making China the world's fourth largest economic entity last year.

But the country has paid a price for blind pursuit of GDP. The high energy consumption, accompanied by high pollution, has posed a threat to its sustainable development and prompted criticism from around the world.

Zhong said efficient economic growth had many implications, such as raising the proportion of the tertiary sector in the economy, reducing the output of high energy-consuming industries and developing and applying high technologies.

The government has set a goal to reduce energy consumption per capita GDP by 20 percent in 2010 over that in 2005, which translates to around a four-percent decrease annually from 2006 to 2010.

But Zhong said published data indicated the difficulty of attaining the goal. The economy surged by 10.9 percent in the first half, the fastest growth rate in a decade. Meanwhile, energy consumption rose, rather than fell as expected.

Zhong speculated that the grave situation in energy efficiency had pushed the government to make the changes and list efficiency at the top of the economic agenda.

In other news, China will join the steering committee of the United States' FutureGen project. China thus becomes the third country to join the United States in the FutureGen International Partnership. South Korea joined the FutureGen initiative in June 2006.

The US and China also signed an Energy Efficiency and Renewable Energy Protocol renewing cooperation in advancing clean technology including solar, wind, and biomass. The agreements were made as an outcome of the US-China Strategic Economic Dialogue (SED) in Beijing.

"We welcome China and their expertise to the FutureGen project," said U.S. Energy Secretary Samuel Bodman. "China and the US share a common energy resource in coal, so it is imperative that we work together to find ways to use coal effectively, efficiently, and without contributing emissions."

The $1 billion FutureGen prototype plant, targeted to begin operation in 2012, is a nominal 275 MW facility that will remove and sequester carbon dioxide while producing electricity and hydrogen from coal, making it the environmentally cleanest fossil-fuel fired power plant in the world.

Separately, China’s State Nuclear Power Technology Company (SNPTC) selected the Westinghouse Advanced Passive 1000 (AP1000) as the technology basis for four new nuclear power plants. Westinghouse is now a group company of Toshiba.

The AP1000 has been identified as the technology of choice for 12 new projected plants in the United States as well. The NRC approved the final design certification for the AP1000 reactor in January 2006.

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