Urban sustainability is a top policy issue for many countries across the globe. This is particularly true for China, which is in a wave of urban expansion unprecedented in history. According to China’s National Bureau of Statistics, China’s urban population has reached 690 million, from 170 million in 1978. If current trends hold, China’s cities will have to accommodate another 300 million people by 2030, the equivalent of the entire population of the U.S.
While offering enormous market opportunities, China’s urbanization also represents a huge challenge for urban energy, utility, transportation, housing and other infrastructures and amenities. To China’s new leadership, striking a sustainable balance between urban growth and resource consumption is not only a policy choice but a necessity.
The challenges are daunting, but to its credit, China has already made important strides towards a more sustainable path and cleaner urban mobility. While it is beyond the scope of this post to examine the result of every program and initiative, encouraging trends are emerging. They include:
1. Increasing investments in alternative public transportation, such as subway, buses, high-speed railway and public bicycles to reduce automobile dependence.
While automobile ownership is increasing rapidly, China’s cities have put significant effort into boosting alternative modes of urban transportation, including taking cars off urban roads which cut emission and congestion. The bus ridership in Beijing, for example, has reached 44% in 2012 and may hit the 50% benchmark by 2015. The Beijing-Guangzhou high-speed rail, the world’s longest high-speed rail line, started operation on December 25, 2012.
Another recent highlight in this regard is the public bike rental service that Beijing has just initiated. In June 2012, Beijing started putting 14,000 public bikes in certain places with high traffic flow, and is projected to put 50,000 in by 2015. Residents can use the bikes free for the first hour, and pay 1 yuan (16 US cents) for every hour afterwards. These efficient and cheap public transit services are starting to prod residents and commuters away from private cars.
Inland cities are following the lead as well, adopting and implementing policies to promote a green and low-carbon transportation service. Lanzhou, for example, aims to add 10,000 public bikes in 2013.
2. Replacing gasoline vehicles with natural gas vehicles.
In addition to reducing the dependence on automobiles, China is also implementing policies to make the automobiles cleaner and greener. Many municipalities have started to require taxi fleets and buses to run on natural gas instead of petroleum. Natural gas fuel combustion produces significantly less harmful emissions than gasoline. Natural gas engines emit 97 percent less carbon dioxide and 72 percent less hydrocarbons. China’s natural gas car ownership has increased from nearly 10,000 units to more than 1 million units during the past 10 years and may reach 3 million by 2020.
3. Government subsidies to design and construct energy-efficient “green” buildings.
On May 6, 2012, China’s Ministry of Finance and the Ministry of Housing and Urban-Rural Development jointly released an official declaration, the first ever in China, to reach a goal of increasing “energy efficient green buildings” to 30 percent of the country’s new construction projects by 2020. The declaration provides a three-level subsidy system to incentivize “green buildings”: any building that reaches “Level II Standard” will be eligible for a government subsidy of RMB 45 yuan per square meter and any building that reaches “Level III Standard” will get a government subsidy of RMB 80 yuan per square meter .
A myriad of efforts are under way, but much work remains to be done. Given the unprecedented scale and pace of China’s urbanization, the problems associated with the urbanization process can only be managed well if China develops and executes solutions at a same scale and pace. A recent warning signal is Beijing’s air quality. Despite enormous efforts to reduce Beijing’s air pollution since before the 2008 Olympics, Beijing’s air pollution level fluctuates dramatically from day to day, and hit a record high in January 2013.
Among other obstacles, several problems appear particularly important.
First, despite many official declarations to the contrary, China’s political structure still rewards local officials for high investment and GDP growth, rather than for sustainability. Given that China still has nearly a billion people living on less than $5 a day, it is understandable that economic growth is still the government’s priority. Many clean energy policies and programs will increase industrial costs. Without strong monitoring and enforcement from local government, these policies will be difficult to execute.
“It takes a crisis to make the politically impossible possible.”– George Soros, Does the Euro Have a Future?
In this sense, the air pollution crisis in Beijing in January 2013 may have its silver lining. People start to appreciate the urgency and critical importance of urban sustainability. After all, while concepts like “carbon emissions” and “resource consumption” are very abstract, “health” and “safety” are tangible concerns for ordinary Chinese people.
With widespread public anger over air pollution, the Chinese government has changed its “don’t ask, don’t tell” approach to become increasingly transparent: hourly air quality updates are available in more than 70 cities. This mindset shift, more than anything else, is going to determine where China’s urbanization is heading. It is the “green vision” that brings the blue sky.
Second, most policy levers call for holistic efforts from various government authorities and industry players to work together to achieve results. Unilateral commitments may become useless without an overall vision and blueprint.
As China is replacing gasoline vehicles with natural gas vehicles, one of the biggest bottlenecks is the relative scarcity of refueling stations compared to what is needed. It has been reported that drivers of China’s natural gas taxis sometimes queue for up to 4 hours a day waiting to refuel.
Another example is the design and construction of subways and buses. Historical efforts of adding bus routes and subway stations have largely been successful to prod residents away from private transportation; however, the marginal effect is decreasing quickly. A more important issue is to devise subway plans and site development plans in a unified way, re-design and re-develop businesses and projects along the subway lines and bus lines. This requires coordination and cooperation of many different groups of stakeholders. Only through a combination of government regulations, government incentives and public education will the policies move from paper to pavement.
Learning from China’s experience
Finally, the growing pains of urbanization that China is currently experiencing are not unique to China. The rest of the world is facing similar problems: air pollution, urban sprawl, trafﬁc congestion, and increasing energy consumption. China’s unprecedented urban expansion presents an unparalleled opportunity for other counties to learn from China’s experience and lessons. China’s new leadership has constantly stressed the importance of urban sustainability. We expect that efforts to enhance urban sustainability will become a core part of the political agenda in China’s new administration over the next decade. If successful, this tremendous undertaking will bring green vision and blue sky to far more than 1.3 billion people.
Howard Chen is a partner resident in the San Francisco and Shanghai offices of K&L Gates LLP. His practice is focused on representing international companies - from blue-chip technology clients to small, aggressive startups - doing business in Asia and the United States. He has deep knowledge of the business environment in China and strong working relationships with local government officials and state-owned enterprises (SOEs).