China currently emits more CO₂ into the world’s atmosphere than any other country (but not more per capita). It faces international pressure to control these emissions because they are a primary cause of climate change, but China claims it should not be held responsible for CO₂ “export emissions” that can be attributed to the production of items for export to the United States and other nations.

It is an accepted fact that China’s exports are responsible for large amounts of greenhouse gas emissions; in 2005, carbon dioxide emissions from China were estimated at 1700 Mt (million metric tons, compared to around 30,000 Mt emitted by humans due to fossil fuels each year), or 6 percent of global emissions from fossil fuels, which is unusually high, as US exports are about 500 Mt. Reacting to international demands to reduce greenhouse gases, China has claimed that limits on carbon dioxide emissions would hamper both economic development and its efforts to relieve poverty. It has also emphasized that per capita emissions ranked only seventy-third in 2004, but this ranking is higher than some developed countries, and it is growing rapidly. China also argues that its historical, cumulative contribution to carbon emissions is low, and while this is true on a per capita basis (China ranked ninety-second in cumulative emissions from 1900 to 2004), it is fourth in cumulative emissions since 1990. A final argument against mandated emissions limits is related to the role of exports (that is, products made in China for sale elsewhere): China claims that it should not be held responsible for emissions that can be attributed to the production of items for export to the United States and other nations.

Gauging the contribution of exports to China’s carbon dioxide emissions is not easy, but they have clearly risen dramatically over the past decade. A 1997 study by the ecologists Ahmad and Wyckoff found that 15 percent of China’s emissions were “embodied” in products to be exported to other countries (that is, they were the byproduct of the manufacturing of toys, electronics, shoes, and other exports, while only 3 percent of China’s domestic emissions were imported. By 2001, further studies found that the figures had increased to 24 percent and 7 percent respectively, showing that a larger volume of goods was being traded. But the export amount is still much higher than that of imports, as one would expect from the current balance of trade between China and, for example, the United States.

Export Growth

In 1987, 12 percent (230 Mt) of China’s domestic carbon dioxide emissions were created during the production of exports; by 2005, this figure steadily had risen to 33 percent (1700 Mt). These numbers closely mirror the rise of exports as a percentage of China’s gross domestic product (GDP), which suggests that export products are no more or no less carbon-intensive than products for domestic consumption.

Of China’s 1700 Mt of export emissions in 2005 (which was comparable to the 1850 Mt total emissions of Germany, France, and the United Kingdom), 22 percent came from exports of electronic goods, 13 percent from metal products, 11 percent from textiles, and 10 percent from chemical products. The recent surge in export emissions can be attributed to value-added products, which is evident when compared to previous years. In 1995, for example, the breakdown was very different: 19 percent textiles, 13 percent electronics, 12 percent machinery, 10 percent chemicals, and 7 percent metal products. Emissions embodied in primary product exports—such as minerals, raw timber, raw chemicals, and basic metals—decreased from 20 to 24 percent during the years from 1987 to 1992 to only 13 percent during the years from 2002 to 2005, showing how the Chinese economy has evolved into producing higher value-added items, such as electronics, which are more valuable as a product than their parts combined.

International attention to China’s role in causing—and mitigating—climate change shows how important trade is in the environmental profile of many countries. In general, small countries have larger shares of domestic emissions from the production of exports (for example, most European countries have a 20 to 50 percent share) while relatively self-sufficient countries have lower shares (such as the United States with 8 percent, Japan with 15 percent, India at 13 percent, and South Korea, 28 percent). China does not fit into this categorization because it is a large country with a large share of exports contributing greenhouse gases; its exports therefore play a more important role in its environmental profile.

Environmental Implications

Experts question whether the rapid growth of exports in China (or any other country) comes at the loss of production in developed countries, a phenomenon termed “carbon leakage” or the “pollution haven hypothesis.” The Intergovernmental Panel on Climate Change (IPCC), the international group that represents the consensus on climate change science, has not rated carbon leakage as very important, because its definition of leakage only considers marginal emission changes in nonindustrialized countries that have been caused by climate policy in industrialized countries. It remains unlikely, however, that this is the case in China, where the increase of emissions is most likely a byproduct of China’s other advantages for production—in particular, lower environmental standards and lower labor costs.

A large proportion of goods responsible for China’s export emissions go to the developed world: approximately 27 percent to the United States, 19 percent to the twenty-seven European Union countries, and 14 percent to the other remaining Annex B countries, mainly Japan, Australia, and New Zealand. (Annex B countries are those industrialized nations that have agreed to emissions caps according to the Kyoto Protocol, a binding intergovernmental agreement signed in 1992.) While approximately 40 percent of China’s export emissions go to other developing nations, flows to these countries may displace their own domestic production or production from another trading partner that might have produced goods with less energy intensity than China. (Energy intensity is defined as the energy required per unit of economic output, or energy demand per unit of GDP.) This may be significant because production is more polluting in China than in many other countries due to inefficient systems and a coal-dominated electricity supply. The apparent low cost of Chinese production comes with other consequences: damage to the Chinese environment and increased energy emissions that contribute to the international risk from global warming. Some energy experts point out that if the Chinese could decrease the cost of the production of environmentally friendly items such as energy-efficient lighting or wind turbines, the effect of emissions would be outweighed by the beneficial impacts of their use.

Potential Solutions

A possible approach to solving the problem of a huge amount of export emissions would be to use monetary or tax policies to discourage large-volume export commodities such as electronics, machinery, metal products, and textiles. But these higher value-added products contribute to China’s economic growth more than primary products like natural resources, so in a time of economic challenge, this could lead to a loss in competitiveness and higher costs to consuming countries through inflation. Over the long term, it is in the interest of both the West and China to lower the energy and carbon intensity of its production practices, and to cooperate on low-carbon research and development.

While China benefits from export growth in terms of its GDP and balance of trade, consumers in developed countries also benefit. For this reason, there are efforts to hold consumers in developed countries at least partially accountable for emissions occurring because of the demand for low-priced goods. If consumers were to take some responsibility for China’s export emissions, it is conceivable that China would be more willing to play an active role in post-Kyoto climate commitments. And if China does not want to be held wholly responsible for its export emissions (as it claims), then it must at least be held responsible for what it imports. This could become important in the future, as China shifts to more of a consumption-driven economy.

Although one-third of China’s carbon dioxide emissions result from the production of exports, the remaining two-thirds need to be addressed as well. Inefficient, coal-dominated electricity production is the major cause of China’s carbon dioxide emissions, accounting for 44 percent in 2005. Urgent improvements are needed in this sector. Increasing efficiency in manufacturing as well as domestic and commercial building and in transportation is essential. Other solutions are expanding renewable energy generation and investing in new technologies such as carbon capture and sequestration (CCS), which seeks to develop ways to capture, purify, and store carbon dioxide instead of releasing it and contributing to climate change. Allowing parties to the Kyoto Protocol to shoulder some of the incremental cost of CCS as part of their commitment to decrease greenhouse gas emissions would be a first step, as this would allow importers of China’s carbon-intensive, emissions-producing goods to invest in lowering the carbon intensity of what they buy.

Christopher WEBER

Further Reading

Ahmad, N., & Wyckoff, A. A. (2003). Carbon dioxide emissions embodied in international trade of goods. OECD Science, Technology and Industry Working Papers. Paris: Organisation for Economic Co-operation and Development. Retrieved February 13, 209, from http://masetto.sourceoecd.org/vl=3507516/cl=16/nw=1/rpsv/cgi-bin/wppdf?file=5lgsjhvj7ld6.pdf

International Energy Agency. (2007). World Energy Outlook 2007. Paris: Author.

Intergovernmental Panel on Climate Change. (1996). Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories (Vols 1–3). Author. Retrieved February 20, 2009, from, http://www.ipcc-nggip.iges.or.jp/public/gl/invs1.html

Peters, G. P. & Hertwich, E. G. (2008). CO2 embodied in international trade with implications for global climate policy. Environmental Science and Technology, 42, 1401–1407.

Peters, G. P., Weber, C. L., Guan, D., & Hubacek, K. (2007). China’s growing CO2 emissions—a race between increasing consumption and efficiency gains. Environmental Science and Technology, 41, 5939–5944.

Streets, D., Yu, C., Bergin, M., Wang, X., & Carmichael, G. (2006). Modeling study of air pollution due to the manufacture of export goods in China’s Pearl River Delta. Environmental Science and Technology, 40, 2099–2107.

Weber, C., & Matthews, H. S. (2007). Embodied environmental emissions in US international trade 1997–2004. Environmental Science and Technology, 41, 4875–4881.

World Resources Institute. (2007). Climate Analysis Indicators Tool (CAIT) Version 5.0. Washington, DC: Author.

With almost 10 million square kilometers of territory China has a wide range of climate, largely determined by two weather systems that divide the country east to west. Vegetation adapts to the climate and is one of the richest in the world..

China covers an area of 9.6 million square kilometers and has an immense diversity in climate and vegetation. More than 1.2 million square kilometers are made up of sand and rock-strewn deserts, whereas another 2.1 million square kilometers have continuous permafrost, with glaciers covering nearly 60,000 square kilometers. Only an estimated 1.7 million square kilometers are arable land.

China may be divided into two halves roughly along the 102? longitude meridian because, generally speaking, two weather systems exist. The comparatively low areas to the east of this meridian are dominated by a temperate, dry or subtropical, humid monsoon climate, whereas the highlands to the west have a significantly drier continental climate. Apart from factors such as latitude and elevation, deviations in temperatures and precipitation within and between regions are influenced by topographical features. Mountain ranges, plateaus, river valleys, and proximity to the ocean all have an impact on local weather conditions.

East of the 102? longitude meridian, the division between the temperate north and the subtropical south approximately follows the Qinling Mountains in southern Shaanxi Province and the Huai River, which traverses southern Henan and central Anhui and Jiangsu provinces. North of this line the January mean temperatures decrease from zero to below ?20? C in the northeastern province of Heilongjiang, whereas Hainan Island in the far south enjoys a tropical climate, with annual average temperatures between 22? C and 26? C. The July mean temperature for the same area, with an elevation below 1,000 meters above sea level, shows little difference from north to south. Annual precipitation decreases from more than 2,000 millimeters in the southeastern coastal provinces to 500–750 millimeters in the northeast. The rainy season follows the southeastern summer monsoon, which lasts from April to September in the southeast, whereas it is considerably shorter in the northeast, lasting only through July and August.

Tropical China includes the Leizhou Peninsula of southern Guangdong Province, Hainan Island, parts of Taiwan, and the five thousand islands and islets of the South China Sea, which covers an area of 2.3 million square kilometers south of the Chinese continent. The largest concentrations of islands are the largely uninhabited and disputed Paracel and Spratly islands. The South China Sea has a monsoon climate, with northern winds in winter and southern winds with high precipitation in summer. Annual temperatures average between 22? C and 26? C. Hainan has an annual precipitation of 1,600 millimeters, which increases with the elevation. Except for February and March the islands of the South China Sea and Hainan are repeatedly hit by typhoons that may last for several days. Situated between the East China Sea and the South China Sea, Taiwan is on the border of the subtropical and tropical zones. The eastern plains have an annual average temperature of 22? C, which decreases with the elevation in the mountainous areas in the western part of the island. The July mean temperature of the plains is 28? C, whereas peaks above 3,000 meters may be covered in snow during winter. Annual precipitation varies greatly around the island, from 2,000 millimeters in the south to 6,000 millimeters in the northeast, where the city of Jilong records 214 rainy days a year. In the south rain is more frequent during the summer months, when it is often accompanied by devastating typhoons.

Subtropical Monsoon Climate

The roughly 25 percent of China situated to the east of the Tibetan Plateau and south of the Qinling range and the Huai River has a subtropical monsoon climate with long, hot summers and short, mild winters. The area may be divided into three regions: the Yunnan-Guizhou Plateau and the Sichuan Basin in the west, the river plains along the Yangzi (Chang) and Zhujiang (Pearl) rivers, and the mountainous territories of Zhejiang, Fujian, and southern Jiangxi in the east.

The Yunnan-Guizhou Plateau rises from 1,200 meters above sea level in western Guizhou to about 2,000 meters in northern Yunnan. It is a rugged limestone terrain where the subtropical monsoon climate, combined with the high altitude, means pleasantly warm summers, with July average temperatures between 18? C and 28? C in the low-lying parts in the north and 19? C and 22? C in the higher south. Winters are mild, with January mean temperatures between 3? C and 10? C. As a consequence of the great variation in altitude, especially in Yunnan, local climatic conditions may vary considerably. Annual average precipitation in the Guizhou area is 1,200 millimeters, unevenly distributed over valleys and mountain slopes, and hailstorms and droughts are common. Whereas up to 50 percent of the rainfall in Guizhou occurs during the summer months, in Yunnan the rainy season from May to October accounts for 85 percent of the annual average of 1,000 millimeters, and spring droughts are common. The regions bordering on Laos and Myanmar (Burma) have the most rain, with up to 2,000 millimeters annually.

The Sichuan Basin, which occupies the eastern part of Sichuan Province, has an elevation up to 700 meters above sea level and is surrounded by high mountains. The subtropical climate gives mild winters, with January mean temperatures around 6? C, and hot summers, with average July temperatures of 27? C. The average annual precipitation varies from 600 millimeters to 1,200 millimeters and as high as 1,500 millimeters in the Qingyi River valley in the far west of the basin. The rainy season is in late summer and autumn. The plateau of the western half of Sichuan rises to 4,500 meters above sea level, with peaks such as Mount Gongga reaching to 7,556 meters, more than 6,000 meters above the valley of the nearby Dadu River. Here the climate varies greatly between mountains, with cold and dry weather throughout the year and subtropical valleys with warm winters and cool summers.

The plain along the Yangzi River, which includes the southern parts of Hubei, Anhui, and Jiangsu and the northern parts of Hunan and Jiangxi provinces, has a subtropical climate and four seasons with short springs and autumns. Average January temperatures are between 3? C and 9? C, and July temperatures are between 27? C and 30? C. Extreme lows below ?18? C have been recorded in Wuhan, which is otherwise known as one of the “four furnaces” (together with Chongqing, Changsha, and Nanjing) because of an average July temperature of more than 37? C. Half of the annual precipitation of 700–2,000 millimeters falls between April and June, often followed by droughts well into September. The subtropical plain drained by the Zhujiang River and its tributaries, which flows through the Guangxi Zhuang Autonomous Region and Guangdong Province, have annual mean temperatures up to 22? C. Large parts of Guangdong and Guangxi are above 1,000 meters above sea level and therefore cooler. The river plain has a July average temperature of 27–29? C, whereas January mean temperatures range between 6? C and 15? C. Annual precipitation varies from 1,250 millimeters to more than 2,500 millimeters, with 80 percent falling between April and September.

Well-Defined Seasons

The hilly terrain of the eastern coastal provinces of Zhejiang and Fujian and southern Jiangxi farther inland has four well-defined seasons and a typical humid subtropical monsoon climate, with average temperatures reaching between 27? C and 30? C in July and between 6? C and 9? C in January. Several mountain ranges, of which the highest is the Wuyi on the border between Jiangxi and Fujian, run parallel with the coastline and are traversed by rivers, resulting in many ravines and a highly serrated landscape. Local variations in weather conditions depend on elevation and location on leeward and windward slopes of the ranges. Extreme low temperatures in the mountains go down to ?9? C, whereas the coastal valleys record summer temperatures well above 40? C. The annual precipitation varies greatly, from 900 to 1,500 millimeters on the coastal areas of Fujian to 2,200 millimeters in the mountains, with 40–50 percent falling in spring and early summer, followed by frequent typhoons and torrential rain from July to September.

The area north of the Qinling range and the Huai River is in the temperate zone; the low plains and the coastal areas in the east have a monsoon climate with hot, wet summers and cold, dry winters, and to the west the loess (an unstratified, loamy deposit) plateau has a predominantly continental climate. The Gulf of Bohai and the Yellow Sea (Huang Hi) have January mean temperatures that vary from ?4? C to 3? C from north to south, and the July mean temperatures are between 26? C and 29? C. In the dry, cold winters Bohai and the inner Yellow Sea freeze over, and ports may be ice-locked for up to eighty days. The annual average precipitation increases from 570 millimeters in the Bohai area up to 1,200 millimeters in the southern parts of the Yellow Sea. In the north up to 75 percent of the annual precipitation falls in July and August, compared to 40–60 percent in the south. The northeastern plain, which incorporates Liaoning and Jilin provinces, has average January temperatures ranging from ?5? C near Bohai to ?20? C in the north, whereas average July temperatures are between 20? C and 26? C. Temperatures may reach as high as 38? C in summer. Annual rainfall in the northeastern plain averages 1,000 millimeters, with up to 80 percent falling between May and September. Farther north in Heilongjiang Province and in the mountains, where the continental climate interferes with the monsoon, winter temperatures are significantly lower, with record lows below ?50? C, and annual temperatures may differ by up to 40? C. Annual precipitation varies between 600 millimeters in the lowlands and 1,000 millimeters on windward slopes of the mountains and is largely concentrated in the summer months.

The Huang (Yellow) River plain covers the greater parts of Hebei, Henan, Shandong, Anhui, and Jiangsu provinces. In Hebei the annual mean temperatures increase from 1? C in the mountainous north to 13? C in the south, and the average January temperatures are ?21? C and ?1? C, respectively, with extreme lows down to ?43? C in the north. July mean temperatures range from 18? C in the north to 27? C in southern Hebei, where summer temperatures above 40? C are common. Up to 80 percent of the annual precipitation of 350–750 millimeters falls during the three summer months, with little or no rain on the leeward slopes of the mountains. The remaining part of the Huang River plain has a more uniform climate, with four well-defined seasons. Average winter and summer temperatures vary only slightly, ?2? C to 3? C in January and 24? C to 29? C. The northern plain in eastern Henan and Shandong has significant higher differences between absolute high and low temperatures, and torrential rainstorms alternate with periods of drought. The annual precipitation averages 600–900 millimeters..

Huang River

The severely eroded loess plateau, which covers southern Gansu, Ningxia, Inner Mongolia, Shaanxi, Shanxi, and the western part of Henan, is drained by the Huang River. Except for the southern tips of Gansu and Shaanxi the plateau has a temperate continental climate, and it is considerably colder in Ningxia and Inner Mongolia in the north, with average January temperatures from ?30? C to ?10? C, as opposed to ?3? C to 3? C in the south. July temperatures average between 15? C and 26? C in the north and 20? C and 28? C in the south, where summer temperatures above 40? C are frequent. The southern plateau receives 500–860 millimeters of rain a year, 60–70 percent of which falls between July and September. The annual precipitation decreases from south to north and east to west to as little as 100–200 millimeters in Inner Mongolia.

The topographical features of western China are arguably the most extreme on the planet, with the world’s highest mountain range and plateaus, deep river canyons, huge deserts, and depressions below sea level next to snow-capped peaks rising to 5,400 meters. The area consists of the autonomous regions of Tibet and Xinjiang Uighur in the southwest and northwest, respectively, the former covering 1.2 million square kilometers and the latter almost 1.7 million square kilometers. Qinghai Province and the northwestern parts of Gansu add another 1 million square kilometers to this diverse territory, which has a distinct continental climate with marked differences between summer and winter and day and night temperatures. The climate ranges from warm temperate in the comparatively low-lying areas of Xinjiang and Gansu to alpine in the southern Tibetan Plateau, which is situated up to 5,000 meters above sea level. Except for some mountain regions and the valleys in southeastern Tibet, the annual precipitation in the greater part of western China is below 250 millimeters and virtually nonexistent in some parts of the deserts of Xinjiang. In southeast Tibet, which is affected by the southwestern monsoon, up to 90 percent falls in the rainy season between June and September, whereas the annual rainfall in the north is evenly distributed throughout the year.

Xinjiang is divided by the Tianshan range into the large Tarim Basin in the south and the smaller Junggar Basin in the north. The Tarim Basin, which is separated from the Tibetan Plateau in the south by the Kunlun and Altun mountains, is dominated by the Taklimakan Desert. Whereas all of Xinjiang has a warm, temperate continental climate with hot days and cold nights, the temperature differences between north and south are significant. Average January temperatures in the south vary between ?8? C and ?10? C, as opposed to ?15? C and ?20? C in the north. Winter temperatures in the northeast may drop below ?50? C. July average temperatures in the south are between 25? C and 27? C and only slightly lower in the north. The hottest place in Xinjiang (and China) is the Turpan Depression just south of the Tianshan range, which has an elevation of 154 meters below sea level and summer temperatures recorded as high as 48? C. Except for the Tianshan range, which may have an annual rainfall of 500 millimeters or more, the average in the north is between 150 and 250 millimeters and in the south as little as 50–100 millimeters. The Turpan Depression receives only 4 millimeters a year.

Alpine Continental Climate

The Qinghai-Tibetan Plateau has an alpine continental climate and average annual temperatures between ?8? C and 0? C, with many local variations. The slopes of the mountain ranges surrounding the plateau have distinct vertical climatic zones, with temperatures decreasing with increased elevation, whereas the river valleys in the south have an average annual temperature of 8? C and summers without frost. Average January temperatures vary between ?20? C and ?10? C, and the average July temperature is around 10? C. Fluctuations between day and night temperatures are considerable, and because of the high elevation weather conditions may change quickly during the day. The greater part of the plateau receives less than 300 millimeters of rain annually, whereas the valleys in the southeast may get as much as 2,000 millimeters. In the valleys rainfall often occurs at night, and 90 percent falls in the rainy season between June and September. Hailstorms and thunderstorms are common in summer. Winter and spring are characterized by strong winds. The high altitude of the plateau means that the percentage of oxygen in the air is only about 65 percent compared with that at sea level. The number of sunshine hours is higher than anywhere else in China, and ultraviolet radiation is intense.

Vegetation

The vegetation adapts to the climatic zones of the different latitude regions as well as the various altitude belts, and in terms of biodiversity (biological diversity in an environment as indicated by numbers of different species of plants and animals) the vegetation of China is one of the richest in the world. In addition to the factors determining weather conditions, vegetation depends on soil types and the extent to which humans have affected it by cultivation, deforestation, mining, and other practices. Little natural plant life has survived undisturbed in the eastern China plains, where cultural vegetation is dominant. In the northern temperate zone crops such as wheat, millet, corn, and soybeans are widespread, whereas rice is the major crop in the subtropical south.

About 12 percent of the total area of China is covered with forests, and about 50 percent of that consists of coniferous forests, which may be found in all climate zones. Cold, temperate or boreal coniferous forests are common in the northeast and on mountain slopes throughout China and include species such as pine, fir, spruce, and larch. Spruce and fir are especially numerous in the mountainous regions in the southwest, and together with larch they constitute an important source of raw materials for the timber industry. Coniferous forests of warm, temperate zones consist of various types of pine and are mainly found as plantations in northern China and on the lower mountain slopes of northern Sichuan and southern Shaanxi. Subtropical and tropical zones are characterized by a great diversity of local coniferous forests, many of which contain species endemic to China and even species that were believed to be extinct. The Dawn redwood (Metasequoia glyptostroboides) was known only from fossils until it was discovered by biologists in the 1940s in Sichuan and Hubei. In addition to pine these forests include fir, cypress, and cedar; for example, the Chinese cedar (Cryptomeria fortunei) may reach a height of 73 meters and is among the tallest trees in China.

Broad-leaved forests account for about 47 percent of China’s forested area, whereas only about 3 percent are mixed coniferous and deciduous forests; the latter are mainly limited to a few regions in the northeast and some small forests in subalpine mountain areas of southern China. Deciduous broad-leaved forests are common in mountainous regions in all climate zones, and the most important species are oak, beech, alder, birch, and poplar. Many types of oak and birch forests are found, and a larger variety of species, such as aspen, maple, willow, and elm, may be observed in beech forests. In the subtropical zone with high precipitation the evergreen broad-leaved forests, which are characterized by an overwhelming diversity of species, are widespread. Dominant species vary greatly, and in northern areas of the subtropical zone and at altitudes up to 2,000 meters mixed deciduous and evergreen broad-leaved forests are common. Generally speaking, the broad-leaved forests of China are seriously threatened by deforestation, which turns large forest areas into plains or substitutes them with new conifer or bamboo plantations.

Mangrove forests are found along the southern coast and on the island of Hainan, and tropical rain forests stretch roughly from the coasts of Guangdong Province westward until reaching an elevation of about 1,000 meters in southeastern Tibet. Although they are comparatively small, the richness and diversity of species in this area exceeds those of all other regions. In spite of increasing awareness of the need for conservation and the establishment of nature reserves, the areas covered with tropical rain forests are still under pressure from advancing civilization and exploitation by monocultural plantation operations.

The Tibetan Plateau is a treeless wetland and steppe (vast, usually level and treeless tracts in southeastern Europe or Asia), which gradually turn into an alpine desert in the higher and more arid northern part, where elevation is above 5,000 meters. On the southern and eastern edges and in the deep river valleys forests grow in distinct vertical climate belts. Although the greater part of Xinjiang is characterized by sand deserts, salt marshes, and arid grassland, some irrigation-based oasis agriculture produces wheat, corn, and fruit. The forested slopes below the alpine tree line of the Altay and Tianshan mountains are mostly populated with larch, spruce, and fir.

Bent NIELSEN

Further Reading

Chapman, G. P., & Wang Yinzheng. (2002). The plant life of China: Diversity and distribution. Berlin: Springer-Verlag.

Domros, M.., & Peng Gongbing. (1988). Climate of China.. Berlin: Springer-Verlag.

Editorial Board of Vegetation Map of China. (2001). 1:1000,000 vegetation atlas of China.. Beijing: Science Press.

Forest Ministry of China. (1990). Atlas of forestry in China. Beijing: China Surveying Press.

Fu Congbin, Zhihong Jiang, Zhaoyong Guan, & Jinhai He. (Eds.). (2008). Regional climate studies of China. Berlin: Springer-Verlag.

Fu Li-Kuo & Chin Chien-Ming.. (Eds.). (1992). China plant red data book: Rare and endangered plants. Beijing: Science Press..

Hu Shiu-ying. (2003). Food plants of China.. Hong Kong: Chinese University Press..

Keng, Hsuan, Hong De-Yuan, & Chen Chia-Jui.. (1993). Orders and families of seed plants of China. Singapore and River Edge, NJ: World Scientific Publisher.

Xu Fengxiang. (1993). Tibetan vegetation of China.. Nanjing, China: Jiangsu Science & Technology Publishing.

Economic growth, especially as a result of investment in heavy industry, has rapidly increased China’s share of global energy use. Weak enforcement from Beijing and local authorities who appear to opt for profit over environmental efforts emphasize the need for a stronger energy policy in twenty-first-century China.

Between 1978 and 2000, the Chinese economy grew approximately 9 percent annually while energy demand increased 4 percent. At the turn of the twenty-first century, China accounted for 10 percent of global energy demand but met 96 percent of this demand with domestic energy supplies. After 2001, however, economic growth continued apace, but changes in the structure of the economy pushed energy demand up. By 2006, China’s share of global energy use swelled to over 16 percent, forcing the country to rely on international markets for more of the oil, gas, and coal it consumes.

This fundamental shift in China’s energy profile has created both shortages at home and market volatility abroad and raised questions about the sustainability of China’s growth curve. According to the International Energy Agency, China is now the world’s second-largest energy consumer and has likely become the leading source of greenhouse gas emissions.

Evolution of Energy Demand in China

Decades of state planning and ideological aspiration prior to reform in the late 1970s had distorted China’s energy demand profile. Rather than embracing a development strategy compatible with its natural endowments as Japan, Hong Kong, Taiwan, and others had done, Chinese leaders ignored a comparative advantage (that China is rich in labor but poor in capital, arable land, and technology) and dragged China—kicking, screaming, and sometimes starving—toward Soviet-style industrialization. For thirty years, resources sporadically were shifted out of agriculture and into energy-intensive industries like steel and cement. Data from within China claims that between 1949 and 1978, industry’s share of economic output grew from 18 to 44 percent, and the amount of energy required to produce each unit of output tripled.

This command-and-control fiasco resulted in severe inefficiency. In 1978 leaders began to unleash China’s potential. Beijing reformed agricultural production targets and let prices rise, with dramatic results. Farm output increased, and the early 1980s saw rural residents with more time on their hands, cash in their pockets, and freedom to use it as they chose. Much of this new wealth was invested into township and village enterprises (TVEs) set up to exploit what China was best suited for: labor-intensive light manufacturing.

Reform also brought changes within heavy industry, which reduced the energy intensity of Chinese growth. Economic incentives—such as the right to keep profits—were introduced, and awareness of bottom-line profits made enterprises focus more on top-line expenses, including energy. As enterprises were becoming more aware of the impact of energy costs on profitability, their energy bills were growing as a result of the partial relaxation of oil, gas, and coal prices. The introduction of limited competition for both customers and capital, not just from other state-owned enterprises (SOEs) but also from a growing private sector, made energy cost management all the more important. Domestic competition was accompanied by a gradual integration with world markets; lower trade barriers not only exerted pressure on SOEs from energy-efficient foreign companies but also allowed them to acquire the more energy-efficient technology their competitors enjoyed. China’s small existing base of modern plants and equipment enabled it to absorb new technology quickly, significantly improving the efficiency of the country’s capital stock.

By 2000, Chinese economic activity required two-thirds less energy per unit of output than in 1978. Energy intensity improvement on this scale was unprecedented for a large developing country, and it meant that in 2001, China accounted for 10 percent of global energy demand rather than the 25 percent that had been projected based on its 1978 energy performance.

Investment-Led Energy Surprise

At the start of the new millennium in 2001, China’s leaders expected the energy intensity improvements that had been taking place since 1978 to continue. Most energy forecasters at home and abroad assumed that the structural shift away from energy-intensive heavy industry would persist; at least, no one expected the evolution to reverse quickly.

In 2001 both the Chinese government and the International Energy Agency (IEA) predicted 3 to 4 percent energy demand growth between 2000 and 2010.

In actuality, both wildly missed the mark. The economy grew much quicker than anticipated from 2001 to 2006, but the real surprise was a change in the energy intensity of economic growth: Energy demand elasticity (the ratio of energy demand growth to gross domestic product, or GDP, growth) increased from 0.4 (during 1978–2001) to 1.1 (2001–2006). In 2006, energy consumption in China grew to 16 percent of global demand, four times faster than predicted. And yet on a per capita basis, China’s energy demand remains one-sixth that of the United States, triggering anxiety about how much more growth is yet to come.

This discovery not only shocked domestic and international energy markets but also prompted a fundamental reassessment of China’s energy future—and hence the world’s. In its 2007 World Energy Outlook, the IEA raised its 2030 forecast for China’s energy demand to 3.8 billion tons of oil equivalent, up from the 2.1 billion tons it had predicted in its 2002 outlook—a 79 percent upward revision. Under this scenario, China will account for 22 percent of global energy demand, more than Europe, Russia, and Japan combined, easily surpassing the United States as the world’s largest energy consumer.

What caused China’s two-decade history of energy intensity improvements to change course? Many authorities assume that the recent evolution of China’s energy profile reflects growth in consumption and transportation—for instance, air conditioning and personal cars—but this is not correct. Consumption-led energy demand will be a major force in the future, and it is already significant in absolute terms, but the main source of current growth is energy-intensive heavy industry. Industrial energy efficiency has continued to improve over the past six years; every new steel mill is more efficient than the last one. But the late-twentieth-century structural shift away from heavy industry toward light industry has reversed, and a new steel plant—no matter how much more efficient than its predecessor—uses substantially more energy than a garment factory. The IEA asserts that industry accounts for two-thirds of final energy consumption in China today, while the residential, commercial, and transportation sectors account for 12, 5, and 13 percent, respectively.

This industrial energy consumption is high by either developed or developing country standards. (See Table 1.) But when pundits express shock at how much more energy intensive China is than Japan, for example, they usually ignore the important factor of what the country makes. High energy-intensity partly reflects the role of industry in the Chinese development model, as opposed to India, which has taken a more services-heavy approach, or Japan, which has lowered its energy intensity in part by relocating its energy-intensive sectors to China. According to Chinese statistics, industry accounts for 48 percent of all economic activity in China, compared with India at 29 percent and Japan at 26 percent. So the fact that one unit of economic output requires five times as much energy in China as in Japan says more about the type of economic activity taking place in China than the efficiency with which it occurs.

Table 1 Energy demand by sector, 2005 (percent)

Sector China India Russia Brazil Japan EU-27 US World

Agriculture 4.6 7.2 2.3 4.9 0.9 2.2 1.1 2.4

Industry 63.8 52.1 38.4 41.1 38.3 32.4 26.8 37.8

Commercial 4.7 3.0 8.1 6.8 17.7 10.5 13.0 9.0

Residential 12.3 16.7 26.2 10.3 15.7 22.0 16.8 17.1

Transportation 12.8 18.5 22.7 36.9 26.9 29.8 41.4 31.5

Other 1.9 2.5 2.1 0.0 0.0 3.0 0.9 2.0

Total (million tons 890 199 417 128 348 1,249 1,546 6,893

of oil equivalent)

Note: This table excludes biomass but includes nonenergy use of energy commodities.

Source: International Energy Agency,World Energy Statistics and Balances 2007.

Increasingly, economic activity in China is slanted toward capital investment, and from an energy standpoint, the current investment cycle is different than in the past. Rather than importing, China is now producing domestically more of the energy-intensive basic products (such as steel and aluminum) used to construct the roads and buildings for which investment pays. China now accounts for 49 percent of global flat glass production, 48 percent of global cement production, 35 percent of global steel production, and 28 percent of global aluminum production. Some of this production also reflects the migration of industry from other parts of the world not only to meet domestic demand in China but also for export. Whereas China used to be a net importer, it has now become a major global exporter of steel, aluminum, and cement.

The changing composition of China’s industrial structure is also a result of competition among provinces and localities to grow GDP, tax revenue, and corporate profits. Not just Beijing but also local interests (including industrial enterprises) set the rules of competition. And regardless of who sets the rules, implementation is a local matter. Within this context of competition, short-term economic incentives—specifically low operating costs and profits—explain much of the increase in heavy industrial activity.

After-tax earnings in energy-hungry industries have been good, rising from near zero in the late 1990s to a level comparable to that of their light-industry counterparts—ranging from 4 to 7 percent in steel, glass, chemicals, and cement in recent years. With China modernizing over 170 cities of more than 1 million people, certainly there is a large domestic market for basic materials; supply was squeezed by breakneck growth after 2001. But with overcapacity arising almost as soon as the first profits come in, the ability of firms to sell surplus production in international markets has been critical to remaining profitable.

China’s energy-intensive industry enjoys low operating costs, which has allowed for rising profit margins and a dramatic growth in capacity that is at the center of China’s overinvestment in heavy industry. Local governments often provide deeply discounted land, and they often do not enforce regulations to protect air and water. Construction time is short, and labor costs are low. These benefits apply to all industries, however, they are particularly valuable in the energy-intensive sector, where capital costs are large.

Energy Prices and Environmental Costs

Energy prices in China, once highly subsidized, have gradually converged with world prices over the past thirty years. Yet, it can be difficult to accurately assess the price a specific firm pays for coal, gas, oil, or electricity. Chinese prices for raw energy commodities (including coal and natural gas), particularly in interior provinces close to resource deposits, can be significantly cheaper than elsewhere in the world. For coal, low prices result not from subsidization but rather from low extraction costs in areas isolated from international markets; as obstacles to transportation ease, coal prices will rise toward world prices. Beijing also directly controls natural gas prices, attempting to keep them competitive with the Middle East. But this approach has failed to encourage development and delivery of sufficient quantities of natural gas to meet demand, and authorities are allowing domestic prices to increase.

China’s industry increasingly receives its energy in electrical form, and reported prices of electricity are high compared with those in developing and some developed countries; only in Germany, the United Kingdom, and Japan are costs greater. However, based on conversations with Chinese business leaders and industry analysts, it is likely that many industrial enterprises do not bear the full cost provided by national average figures from the Statistical Bureau. China’s National Development and Reform Commission (NDRC) sets electricity tariffs province-by-province based on the recommendations of local pricing bureaus, which answer to local officials. While the NDRC would like to see energy pricing rationalized to reduce overall energy consumption, it is sensitive to local social and economic development concerns.

Energy prices in China have not reflected environmental costs historically. Over 80 percent of the country’s electricity is generated from coal. But at the end of 2006, less than 15 percent of coal power plants had flue gas desulphurization (FGD) systems (used to remove sulfur dioxide from emissions streams) installed and even fewer had them running. Operating an FGD system reduces production efficiency by 4 to 8 percent and therefore contributes to higher electricity prices. If all the power plants in China installed and operated FGD systems, average electricity tariffs could rise by 10 to 20 percent. Industries that burn coal directly (such as steel and cement) are subject to sulfur taxes, but these are generally too low to reduce pollution. Other air pollutants, such as nitrogen dioxide and mercury, are largely unregulated. Regulated or not, enforcement generally falls to the provincial and local governments, which must balance environmental concerns against economic growth priorities. In the absence of a strong environmental regulator, like the U.S. Environmental Protection Agency, that balance is skewed toward near-term economic growth, as industry threatens to cut jobs and tax revenue if enforcement of environmental regulations is increased.

While it is a daunting and subjective challenge to compute the external impacts of China’s penchant for heavy industry, it is important to recognize that they exist: China does not necessarily do the world a favor by overproducing. Moreover, there are other effects to be considered. A rebalanced China, better aligned with its natural endowment of labor, could be a bigger economy, grow faster, and be less prone to collapse; hence it would be a better engine of world growth. Also, heavy industry in China is less likely to attract innovation and technological change due to weaknesses in intellectual property protection and the difficulty of recovering research-and-development investments. Similarly, institutional weaknesses in regulation and enforcement of pollution controls undermine the process of finding innovative ways to remedy environmental damage.

Trevor HOUSER and Daniel H. ROSEN

Adapted from Houser, T. & Rosen, D. H. (2008). “Energy Implications of China’s Growth.” In C. F. Bergsten, C. Freeman, N. R. Lardy, & D. J. Mitchell, China’s Rise: Challenges and Opportunities (pp. 137–145). Washington, DC: The Petersen Institute for International Economics.

Further Reading

International Energy Agency (IEA) (2007). World Energy Outlook 2007. Paris: Organization for Economic Cooperation and Development. Retrieved February 16, 2009, from http://www.worldenergyoutlook.org/

Lardy, N. R. (2006). China: Towards a consumption driven growth path. Policy Briefs in International Economics 06-6. Washington, DC: Peterson Institute for International Economics.

Lieberthal, K & Oksenberg, M. (1988). Policy making in China: Leaders, structures, and processes. Princeton, NJ: Princeton University Press.

Naughton, B. (1995). Growing out of the plan: Chinese economic reform, 1978–1993. New York: Cambridge University Press.

Rosen, D. & Houser, T. (Forthcoming). China’s energy evolution: The consequences of powering growth at home and abroad. Washington, DC: Peterson Institute for International Economics.