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.

Cooperation between China and the United States, the world’s two largest emitters of carbon dioxide, to limit emissions and pursue alternative energy paths has become a major global political challenge. NGOs, academic organizations, and policy think-tanks are involved in breaking through current barriers to cooperation.

Cooperation between the United States and China to reduce climate change (or global warming) is widely seen as one of the most pressing issues for the worldwide community. China’s energy consumption and carbon dioxide (CO₂) emissions could grow more than fourfold in the next twenty years, thus catching up with and overtaking large industrialized nations (with the exception of the United States and Canada) in per capita emissions. Or, China could implement advanced energy technologies and policies to cut energy-demand growth, in which case its carbon dioxide emissions might only double. The first case would impact the global environment very seriously; the second case is more tolerable. If the latter is accompanied by significant reductions of greenhouse gas emissions in industrialized countries and the aggressive development of low-carbon energy technology, the world could be on the way to cutting emissions significantly by 2050.

Strategic mistrust between China and the United States, however, has interfered with a binding global agreement on energy caps. The Chinese believe that a commitment to reducing carbon dioxide emissions could stifle their development; the U.S. speculates that, because of its large trade deficit with China, any adoption of a carbon dioxide cap without a comparable commitment by China could drive the two nations’ trade balance out of control.

A solution to the problem of greenhouse gas emissions depends critically on both countries. China and the United States account for nearly 40 percent of current global energy-related carbon dioxide emissions; they also have the greatest potential to reduce emissions growth. The participation of both nations is essential in the effort to establish a global regime to contain these emissions.

Background History

Fossil fuels—coal, oil, and natural gas—provide most of the world’s commercial energy. When they are burned, carbon dioxide is released; it and other greenhouse gases keep solar radiation (or heat) trapped on Earth. This is known as the “greenhouse effect.” According to the United Nations Intergovernmental Panel on Climate Change, the mean global temperature increased approximately 0.6^oC from 1890 to 1990, and they predict a 1.1ºC–6.4ºC rise during the twenty-first century. This increase in surface temperatures on Earth can have catastrophic results, affecting weather, global water levels, and plant and animal life, among other issues. Energy-related carbon dioxide emissions make up approximately 80 percent of the greenhouse gases in the atmosphere, so their containment is a global issue.

While there is disagreement about solutions to climate change, there are some facts that are generally accepted regarding the historical, current, and anticipated future situation of China and the United States and greenhouse gas emissions.

The first mutually accepted fact is that the United States is responsible for 28 percent of total cumulative emissions of carbon dioxide from energy consumption, while China is responsible for 8.5 percent. Because of carbon dioxide’s long “residence time” in the atmosphere (more than 100 years), the contributions from many years ago affect the global greenhouse as much as today’s emissions. Therefore, the most important measure of energy-use contributions to greenhouse gases in the atmosphere is the cumulative emissions of carbon dioxide.

A country’s energy use conventionally is presented in terms of per capita emissions, in the same way that gross domestic product (GDP) per capita, not GDP alone, is a measure of the economic well-being of a country. (GDP is the total market value of all of a country’s goods and services produced in a given year minus the net income earned abroad.)

In describing contributions of a country, it is useful to present this in terms of per capita emissions, in the same way that GDP/capita, not GDP, is a measure of the economic well-being of a country. That is, over the entire period during which we can estimate carbon emissions due to human activity (roughly since 1850), China’s cumulative per capita emissions of energy-related CO₂ are less than 8 percent of those of the United States.

This is generally seen as a remarkable achievement, as virtually all countries undergoing very rapid economic development—China had 9–10 percent annual GDP growth over those two decades—experience energy growth that is faster than GDP growth. China’s reduction in energy demand growth was the consequence of explicit policies carried out domestically. If energy had grown just at the rate of GDP, China’s emissions of CO₂ would be more than twice as great as today’s emissions.

Notwithstanding these reductions in growth of CO₂ emissions, U.S. CO₂ emissions per capita are 2.5 times greater than those of the European Union countries and 2.1 times those of Japan. The European Union and Japan are not far behind the United States in GDP/capita. But these nations have much less land per capita and have much higher population densities. High population density reduces travel demand and results in smaller per capita emissions.

For industrialized countries, emissions are likely to decline over time in proportion to GDP growth because many activities and products have saturated their markets: For example, not many people are purchasing their first car, and virtually all homes have refrigerators and most are not seeking to have a second. This is confirmed by the fact that from 1975 to the present, the United States reduced the growth of its energy-related carbon dioxide emissions more than any other large industrialized country in the world. GDP per capita grew almost 200 percent while energy consumption (and carbon dioxide emissions) per capita remained constant. But it is useful to use a baseline that has carbon dioxide emissions growing at the rate of growth of GDP when making comparisons among countries.

China and the United States currently produce approximately equal levels of energy-related carbon dioxide emissions and together are responsible for almost half of such emissions worldwide. According to the International Energy Agency’s 2008 World Energy Outlook, China is projected to account for more than 40 percent of new energy-related carbon dioxide emissions globally between 2008 and 2030, thus being by far the largest future contributor to increased concentrations of carbon dioxide in the atmosphere. But in 2006, China instituted a national program to reduce energy intensity 20 percent by 2010; it is noteworthy that in 2006 the energy intensity (energy demand per unit of GDP) decreased by 1.3 percent (that is, energy grew 1.3 percent less rapidly than GDP) and by 3.7 percent in 2007, with greater intensity declines projected for 2008. The program started slowly but is now approaching its annual target.

The United States, meanwhile, has the greatest potential of any country in the world to reduce energy-related greenhouse gas emissions. This is true for two reasons: First, because the U.S. per capita intensity of these emissions is considerably higher than those of other large industrial countries (2.5 times that of the European Union and 2.1 times that of Japan), there is greater opportunity to decrease the numbers; and second, the United States has the scientific, technical, and economic capability of developing viable alternatives to fossil-energy technologies and is likely to be the world leader in any breakthrough technology, if one is developed. Annual growth of energy-related carbon dioxide emissions in the United States in the coming decades is expected to be in the range of 0.5–1.0 percent unless new policies are enacted to cut carbon dioxide emissions.

For the future, neither China nor the United States have agreed to binding commitments on greenhouse gas emissions. In 1992 the U.N. Framework Convention on Climate Change (UNFCC) established an intergovernmental plan to reduce and mitigate greenhouse gas emissions; the resulting agreement is named the Kyoto Protocol. China is a signatory to the Kyoto Protocol, but it actually contains no binding commitment for developing countries. Recognizing that developed countries are principally responsible for the current high levels of atmospheric greenhouse gas emissions as a result of more than 150 years of industrial activity, the Protocol places a heavier burden on industrialized nations. As of 2008, the United States had not ratified the Kyoto Protocol.

In describing contributions of a country, it is useful to present this in terms of per capita emissions, in the same way that GDP/capita, not GDP, is a measure of the economic well-being of a country. That is, over the entire period during which we can estimate carbon emissions due to human activity (roughly since 1850), China’s cumulative per capita emissions of energy-related CO₂ are less than 8 percent of those of the United States.

This is generally seen as a remarkable achievement, as virtually all countries undergoing very rapid economic development—China had 9–10 percent annual GDP growth over those two decades—experience energy growth that is faster than GDP growth. China’s reduction in energy demand growth was the consequence of explicit policies carried out in China. If energy had grown just at the rate of GDP, China’s emissions of CO₂ would be more than twice as great as today’s emissions.

Notwithstanding these reductions in growth of CO₂ emissions, U.S. CO₂ emissions per capita are 2.5 times greater than those of the European Union countries and 2.1 times those of Japan. The European Union and Japan are not far behind the United States in GDP/capita.  However, these nations have much less land per capita and have much higher population densities. High population density reduces travel demand and results in smaller per capita emissions.

Two Viewpoints

It is generally not understood in the West that China has put tremendous effort into reducing the growth of energy-related carbon dioxide emissions through the design and implementation of aggressive and innovative energy efficiency policies. Instead, there is a perception that China has paid little attention to the matter of greenhouse gas emissions. From 2001 to 2006, China’s energy demand and energy-related carbon dioxide emissions grew faster than the 10 percent annual growth of GDP. This led to an increase in China’s emissions from 12.7 percent of global emissions (2001) to 18.4 percent (2006). Many in the United States look at these facts, noting how rapidly China has grown in the past five years, and are aware of the forecasts that predict that a large proportion of the world’s expected increase in energy-related carbon dioxide emissions this century will come from China. Many Americans express concern that emissions reductions applied to the United States could increase the cost of producing goods and services there, thus placing the U.S. at a competitive disadvantage with any country that does not do the same.

But the perspective from China is very different. The Chinese note that per capita energy consumption and carbon dioxide emissions are much lower in China than in the United States. They emphasize the disproportionate cumulative contribution of the United States to the global greenhouse gas problem, pointing out that the United States, with a population one-quarter the size of China’s, is responsible for putting far more carbon dioxide into the atmosphere than has China. This point is made to indicate the inequity inherent in focusing on current emissions while a large part of the problem is caused by emissions over long periods of time.

These views may provide a philosophical underpinning that supports China’s major concern looking forward: China believes that it will need more energy for development—much more. Chinese officials observe that the industrialized countries have already been through the energy-intensive phase of their development, but China is in the midst of its own. The possibility of gaining a competitive trade advantage through a new climate treaty is much less significant to the Chinese than the possible roadblocks to achieving social development goals that could result from a commitment to mandatory emissions targets.

Efforts Towards Cooperation

It is not enough that China and the United States both take steps to reduce carbon dioxide emissions; it is essential that the two countries do this cooperatively. As long as China does little to reduce growth of greenhouse gas emissions (or appears to be doing little), it will be politically difficult for the United States to sign a binding international treaty that commits to a serious cap on emissions. And as long as the United States either does little or appears to be doing little, it is impossible to imagine China committing to any international treaty that limits its own emissions.

At a 2008 hearing held by the U.S.-China Economic and Security Review Commission, representatives from the China Energy Group proposed that the United States and China should engage in regular, formal discussions that focus on working together to reduce greenhouse gas emissions, with the goal of influencing global negotiations. A serious proposal agreed to by both the United States and China is likely to be acceptable to both industrialized and developing countries.

A research group that has worked with energy policy-makers in China for two decades to analyze, develop, and enhance Chinese energy policy, the China Energy Group further recommended that in the short term, the greatest support the United States can provide to China (and other developing countries) is to build capacity in those countries to create and implement policies and programs that reduce greenhouse gas emissions. Western resources can provide training and technical assistance to Chinese enterprises that will in turn establish new energy standards and compliance regulations. The assistance develops the potential for the Chinese to pursue energy efficiency, but does not pay for it. Such a program also will need to engage the full participation of the international community: It should include all industrialized countries as donors and key developing countries as recipients. This is not an investment program; it is focused on building capabilities to design and implement policies, many of which will facilitate investments with funds coming from other sources.

In the long term, the solution to climate change will have to rely on technology that is not yet commercialized. New low-carbon technologies are essential to reduce energy-related carbon dioxide emissions to appropriate levels. For the most part, such technology is not available today, and the intellectual property for these technologies does not exist yet. There is a need for programs to support joint development of such technologies, using the technical and financial resources of many countries. The United States government could play a key role in establishing a basis for performing research and development on these technologies with other nations (including China) and the sharing of intellectual property of these future technologies among nations of the world.

The China Energy Group also proposed that the leaders of the high-level teams from both countries should be policy makers above the level of the climate-change negotiators. These discussions should not be construed as bilateral negotiating sessions; the goal is for China and the United States to reach a consensus that can serve as a model for the European Union and developing nations. Any agreement must include binding commitments that will not threaten China’s growth and internal development goals, and that will give China access to the knowledge, tools, and technology that lower the cost of reducing emissions; for the United States, it is crucial that implementation of the agreement will not exacerbate the U.S. trade deficit with China. A formula that might work in China is a commitment that industrial emissions would grow slower than the industrial value added over the next decade, for example, 80 percent as fast, after which time a new formula could be agreed upon. The advantage of this approach is that it places no constraint on the consumer economy, which China views as necessary to meet its social and economic development objectives. A further advantage is that this approach addresses the industrial sector, which is responsible for 70 percent of all energy-related emissions; it thus speaks to the activities in China that are by far the largest contributor to greenhouse gas emissions.

There are other formulas that could be used for China as well. Most involve the adoption of an emissions target that increases as GDP increases, thus assuring China that growth would not be impacted as long as proper measures are taken to reduce the growth of greenhouse gases. Like the industrial emissions approach, the formula could involve a commitment that greenhouse gas emissions grow at a rate lower than that of GDP with the provision of technical support, capacity building, and/or funds to facilitate reductions in greenhouse gas emissions. Achieving better results could trigger greater levels of assistance.

Trade Policies

Trade remains a major divisive topic, but there are different ways to deal with this issue. One, for example, is based on the concept of “carbon credits,” a tool formalized in the Kyoto Protocol and monitored by the UNFCC that expects to reduce greenhouse gases by having countries honor their emissions quotas and offers monetary incentives for being below those targets. (This system has been adopted by the European Union, and it has resulted carbon credits of about $20 or $30 per metric ton.) To avoid impact on trade in the case where limits on Chinese emissions in early years would produce only small increases in the price of its products for export, China would agree to a tax on exports equal to the cost of a carbon credit (in dollars per metric ton). To avoid this being too cumbersome, it would apply only to products that are energy- (and therefore carbon-) intensive in their manufacture. Under this proposal, China would collect the tax and be required to apply it to its program of reducing carbon dioxide emissions. A program such as this would eliminate the trade advantage that China might gain by having less rigid commitments than industrial countries. It would have the further benefit of assuring that resources in China would be used to address greenhouse gas emissions.

An international commission would be needed to oversee the uses of the tax in China (and presumably other developing countries, if the approach is extended to them) as well as the provision of resources from the United States and other industrialized countries to support greenhouse gas abatement in developing countries.

Protecting Economic Growth

In the United States, economic growth and energy use over a period of a decade or longer are relatively predictable. Absent a multiyear recession, annual economic growth over a period of a decade or more is likely to be 1.5–3 percent. Growth in annual energy demand and energy-related carbon dioxide emissions, without new policies, is likely to be in the range of 0.5–1.0 percent. (With a long-term recession, the growth of energy demand and carbon dioxide emissions will be at a decreased rate, thus lowering the difference between targets and emissions in a base case.)

Forecasts in this range apply to most industrialized countries, for which many consumer products such as refrigerators and cars have already approached saturation. In short, it is possible to understand at a general level what is entailed in achieving certain targets for greenhouse gas emissions over a period of one to two decades.

But for a rapidly developing country such as China, growth in energy demand and resulting carbon dioxide emissions can have much greater variations. The Chinese economy grew at annual rate of 9–10 percent from 1980 to 2000; during this period energy demand grew at an annual rate of 4–5 percent. (In only one year during this period did the increase in energy demand growth exceed even 60 percent of that of GDP.) But from 2001 to 2006 GDP in China continued its growth at 10 percent per year (or greater). One might have predicted that energy demand in China would have grown at a rate lower than 5 percent per year, as it had done over the previous twenty years; indeed, forecasters did predict this. But energy demand grew even faster than GDP during the period, averaging almost 12 percent per year.

Consequently, it is extremely difficult in China, in its present stage of economic development, to predict with any accuracy the energy-demand growth over a ten- to twenty-year period. This is one reason that China cannot accept a binding cap that is expressed in absolute terms, unless such a cap were well in excess of the higher range of expected emissions. (But if a cap were set so high, it would be meaningless.)

China and other developing countries will have the largest emissions in the future, and there is great concern worldwide that China will continue increasing its energy demand and spewing carbon dioxide into the environment forever, or at least for a very long time. But China is in the middle stage of building its infrastructure—housing, commercial buildings, roads, hospitals, schools, and the like. It is at a relatively early stage of increasing the mobility of its population, and large quantities of energy are required to accomplish these tasks. This period is likely to last for fifteen to twenty-five years, depending on whether China continues its breakneck speed of construction and whether large numbers of rural dwellers continue migrating into urban areas. At the end of this construction period, China’s economy will be much like today’s developed countries. Energy-demand growth will decline markedly, just as it now has in the industrialized world. Scarcity of traditional energy sources could slow energy-demand growth even further in this time.

Outlook for the Twenty-First Century

The key question about the future concerns what China’s energy demand will be when its economy becomes mature, or when infrastructure is built out and most amenities have been met. If China has a structure of consumption similar to that of the United States today, and the construction techniques and industrial processes are inefficient in their use of energy and other resources, then not only China but the world will be in serious trouble. But from 1980 to 2000, China has shown its willingness to grow its economy while constraining energy growth to less than half that of economic growth. Today China exhibits a serious willingness to once again limit energy growth, and significant support from industrialized countries can help greatly in achieving this objective. If at the same time the industrialized countries learn to reduce greenhouse gas emissions—and transfer this knowledge to China and other developing countries—then a sincere start at addressing the serious challenge of climate change will be possible. This approach can buy time while energy supply technologies that produce low carbon emissions are developed and deployed on a large scale.

Mark D. LEVINE

Further Reading

Asia Society. (2009). Common challenge, collaborative response: A roadmap for US-China cooperation on energy and climate change. An Asia Society Task Force Report January 2009. Retrieved February 20, 2009 from http://www.asiasociety.org/taskforces/climateroadmap/

Energy Information Administration. (n.d.). Retrieved on January 23, 2009, from http://www.eia.doe.gov/

Levine, M. D. (2008, August 13). Testimony presented at the U.S.-China Economic and Security Review Commission hearing “China’s Energy Policies and their Environmental Impacts.” Retrieved on January 23, 2009, from http://www.uscc.gov/hearings/2008hearings/written_testimonies/08_08_13_wrts/08_08_13_levine_statement.pdf

United Nations Framework on Climate Change. (n.d.). Kyoto Protocol. Retrieved on January 23, 2009, from http://unfccc.int/kyoto_protocol/items/2830.php