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What Does China’s 14th Five-Year Plan Actually Say?

Last week China’s released its 14th Five Year Plan. Running some 300 pages in translation, the plan sets out the key strategic priorities, key targets and broad policies for China from 2021 to 2025.

As the world’s most populous country, the world’s second largest economy, the world’s largest greenhouse gas emitter, the 14th Five Year Plan is immensely important not only for China domestic development, but also for the direction of international progress on key issues like the Paris Agreement on climate change. Those who watched the live stream may have noted how the room broke into applause when premier Li Keqiang read out: “…as a member of the global village, China will continue to take concrete steps to play its part in the global response to climate change”.

This FYP identifies several important transitions. Three are worth highlighting. First, China will continue and accelerate a structural economic shift away from an export-led growth model and towards a domestic consumption-based, fuelled by a middle-class estimated in 2018 at 400 million people and growing.

A second big transition identified in the Five Year Plan is a continued shift in China’s population from rural to urban areas, with some 65 percent of its population living in urban clusters by 2025. The 14th FYP emphasizes a more dynamic relationship between urban clusters and rural revitalization within the context of tackling poverty in all regions. A third important feature of the Plan is the elevation of science, research and development, technological innovation including digitization to a matter of national strategic importance: annual research and development funding will increase by 7 percent, while basic science research will comprise 8 percent of total funding, higher than most OECD averages.

Mainstreaming Green Ambition

A fourth strategic priority in the 14th FYP is green development. A striking feature of the Plan is the extent to which environmental priorities are integrated throughout.

In the case of the shift to a consumption-based economic model – called dual circulation – the Plan envisages green production and green lifestyles by 2035. To get there, the Plan identifies specific steps to increase investment in demand-led growth and to advance green consumption – among the recommendations of CCICED’s ongoing work – including by establishing a “unified, green product standards, certification, labelling system, improved energy efficiency for home appliances, efficient lighting, water savings appliances.” Throughout the Plan, different green products are identified for development, production and distribution at scale, including electric automobiles, energy-saving buildings, green and organic foods, supported by indicators, tax policies and green finance.

A similar mainstreaming shapes the Plan’s ambitious urbanization goals. China has been particularly innovative in using large-scale spatial planning to identify and protect ecosystems both in natural landscapes as well as in urban cluster planning to identify a region’s carrying capacity or green attributes. The Plan identifies multiple actions to advance green urbanization, including the electrification of public transport, expanding urban green spaces, building green corridors, mandating green building materials and other steps to “build low-carbon cities.” The Plan also calls for the ‘elimination’ of major demolition and construction, which is a significant source in all countries of primary material extraction, energy consumption and carbon pollution in the processing of steel, cement and other building materials, landfill waste and other problems – instead favoring the renewal of older neighborhoods. The Plan also highlights the need to make cities more resilient to climate change, including expanding nature-based solutions like restoring the natural flow of rivers to reduce urban flood risk. Some 31 urban areas will advance China’s sponge cities.

In its focus on technology innovation and productivity enhancements, the Plan calls for a market-oriented green technology innovation system that includes focusing on climate change and human health, benchmarking energy and natural resource efficiency targets in key industrial sectors such as the green transformation of iron and steel, petrochemicals and building materials, steps towards green mining and other actions.

Integrating green priorities goes beyond these three priorities. Agricultural reforms are prominent in the 14th FYP and include calls to promote a “green transformation” of agriculture, and the continued expansion of China’s ecosystem service payment system – called eco-compensation – to expand ecosystem and protected areas in two very large-scale water basins – the Yangtze and Yellow Rivers – as well as to increase green zones in China’s northern region.

Protecting Nature

The 14th Five Year Plan is China’s most ambitious and comprehensive strategy to protect nature, anchored first around the expansion of a nature reserve system based on a system of national parks that prohibit non-ecological development.

The Plan calls for additional measures to protect and expand forests, with a goal that over 24 percent of China will have forest cover, with several notable five-year targets that include two million hectares to counter soil erosion in the Yellow river region; the completion of 1.1 million hectares of forests and five million hectares of soil erosion protection in the Yangtze; the addition of 700,000 hectares of forests in China’s northern region and 300,000 hectares of new grassland restoration; the creation of a 90,000-hectare area of protected forests in China’s southern region, and an impressive creation of 110,000 hectares of forests, 20,000 hectares of wetlands and the protection of 400 km along China’s coastline.

Marine and coastal protection is highlighted beyond coastal and wetlands protection, including introducing stricter controls on land-based pollution – including plastic pollution – and enhancing action to prevent and respond to oil spills and other emergencies., greening aquaculture, developing sustainable fisheries, exploring the use of China’s eco-compensation systems for marine ecological restoration, and retaining the natural coastline at no less than 35%.

Climate and Energy

The most scrutinized aspect of the Plan will be climate mitigation. China’s two big carbon mitigation targets – peaking greenhouse gas emissions by 2030 and reaching carbon neutrality by 2060 – were announced last September. The 14th Five Year Plan’s targets – reducing energy consumption per unit of GDP and carbon dioxide emissions per unit of GDP by 13.5 percent and 18 percent, respectively – are more or less at the same pace as the 13th Five Year Plan. Early commentators have voiced disappointment at the lack of details or new announcements. Depending on actual GDP growth (for which no 2025 target was set), absolute carbon emissions could still rise between now and 2025. For example, assuming an average 5% GDP growth over the whole 2021-2025 period, 18% emissions intensity reduction would equate to 0.9%/year growth in carbon emissions.

However, the Plan does set out several new commitments such as mandating a national standard for energy efficiency covering products and equipment, and the Plan makes clear that China’s mitigation efforts will prioritize non-C02 GHG emissions, notably methane and HFCs. The former matters because energy efficiency is estimated to deliver up to 40 percent of energy-related GHG emission reductions over the next two decades, while cutting methane and HFCs now has an enormous and immediate impact on slowing global warming trends.

The Plan also gives several strong signals of pending ambition, such as:

  • China’s national emissions trading system, launched in February 2021 with initial coverage of the power generation sector, will expand to cover “all fixed sources of pollution emissions” in the coming five years.
  • The plan calls to “Resolutely curb the blind development of high energy-consuming and high-emission projects. Focus on controlling fossil energy consumption, and promote green transformation”.
  • In its reference to the Belt and Road Initiative, the “green” principle is listed first.

These and other details are pending: the Plan anticipates the adoption of “stronger policies and measures” in the work ahead. To support implementation, there is a welcome emphasis on an effective, centralized ecological and environmental inspection system and regulatory enforcement, strengthened environmental information disclosure, corporate ESG systems and other steps, as well as continuing to support environmental public interest litigation.

The biggest question in the Plan is how China will reconcile this drive towards carbon neutrality with the expansion of coal, as well as oil and gas. The Plan contains numerous references to coal, most pointedly in its supply security sections, issues, which calls for strengthened coal reserve capacity-building as well as the expansion of oil, and gas, shale gas and coal-bed methane in specific regions. Most of the recent growth in coal has taken place within China, and the Plan makes clear that this expansion will continue, albeit with more ambitious measures to cut harmful air pollutants like PM 2.5, NOx and S0x.

By embedding China’s commitment towards carbon neutrality, the 14th FYP sets the pathway ahead. Details on when interim reductions will occur and how best to implement China’s decarbonization in ways that ensure energy affordability and accessibility for all are at the heart of the urgent work ahead.

A version of this article was originally published by IISD’s SDG Knowledge Hub on March 10, 2021. 

The views expressed in this op-ed are those of the authors and not necessarily those of CCICED.

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