‘Massive and Strong’ China Needs to Become Massive and Green, Policy Adviser Says
By Ren Huilan and Qing Na
The rapid expansion of China’s manufacturing sector has exacted a heavy toll on the environment, and its unsustainable energy and material consumption poses a critical long-term challenge to the country’s industrial growth and climate commitments.
That was the warning given Tuesday by Huang Qifan, an executive deputy director of the China Institute for Innovation and Development Strategy, at the Caixin Summer Summit in Shanghai. The institute is a state-backed think tank providing policy advice to the government.
“Since 2010, China’s manufacturing has transformed from being ‘massive but not strong,’ focused mainly on low- to mid-end products, to becoming ‘massive and strong’ — a remarkable achievement,” Huang said. “However, its current levels of energy and material consumption per unit (of GDP) are unsustainable,” added Huang, who is also a former mayor of Chongqing, a sprawling municipality in Southwest China with a population of 32 million.
The rise of China’s manufacturing sector was propelled by Made in China 2025, an ambitious 10-year strategy to transform China into a global high-tech manufacturing powerhouse. The plan, officially released in May 2015, outlined 10 key strategic sectors, including next-generation information technology, robotics, aerospace equipment, marine engineering equipment, energy-saving and new-energy vehicles (NEVs), new materials, biopharmaceuticals, and high-performance medical devices.
Before 2015, China trailed the world in all 10 areas overall, Huang said. But over the past decade, the country has taken a global lead in at least five of them, including NEVs, shipbuilding, high-speed rail and power equipment, he said. In addition, the country is competitive with developed economies in capabilities across digital technology, high-end equipment, new materials, biopharmaceuticals and aerospace.
China’s dominance is reflected in the data. In 2010, China’s manufacturing value added (MVA) was already the world’s largest, accounting for 18.2% of the global total, closely followed by the U.S. at 17%, statistics compiled by the World Bank show. In 2023, China’s MVA share soared to 28.8% of the global total, while the U.S.’ share was 17.6% and was less than two-thirds of China’s.
Despite these achievements, China’s consumption of resources is unsustainable, Huang said. The rapid expansion of industrial output over the past two decades has often disregarded environmental, social, and governance (ESG) principles. The manufacturing sector consumed 12.5 billion tons of mineral resources in 2024, accounting for a staggering 50% of global consumption, he said.
China has been working toward a greener development model in recent years. In 2020, President Xi Jinping set a target for China’s carbon emissions to peak by 2030, and for the country to achieve carbon neutrality by 2060.
These goals align with Xi’s emphasis on shifting the country’s growth model to focus on “new quality productive forces,” a term that refers to advanced productivity driven by technological innovation that breaks from the traditional model of economic growth and will lead to a more sustainable and greener development path.
Replacing fossil fuels with renewable energy is crucial as part of this shift, and for manufacturers specifically, reducing energy and raw material consumption will be key, according to Huang.
If China aims to reduce the energy and raw material consumption of its manufacturing sector by one-third compared with current levels in 2035, that would bring per-unit energy and raw material usage down to the global average, he said. By 2050, if energy and material consumption in Chinese manufacturing aims to align with the average levels of developed countries, that will require a reduction of over 50%, Huang said.
To achieve these targets, Huang proposed a five-pronged approach.
The first is to reduce the consumption of raw materials. China’s industrial system consumes over 12 billion tons of mineral resources annually, including more than 4 billion tons of coal and 2 billion tons of iron ore. Reducing these amounts is paramount, Huang said.
Second is to improve energy conservation and reduce emissions. Energy consumption is closely tied to materials use, he said, pointing out that for every 1 trillion yuan of manufacturing GDP, China consumes 50% more energy than the global average.
Third is expanding waste recycling and the circular economy. In developed countries, the recycling rate of industrial products at the end of their life is around 40% to 50%, whereas in China it is only 10%, Huang said. If China brings the figure up to developed-country levels, it could potentially reduce global demand for extracting natural resources by one-third.
Fourth is the re-engineering of traditional industrial processes. Huang noted that China’s steel production is predominantly based on the energy-intensive and iron-ore-heavy long-process method, and proposed that the industry should shift toward electric arc furnace (EAF) steelmaking, which uses scrap metal.
While past policies sometimes shut down smaller, private EAF steel plants due to overcapacity concerns, these smaller operations often employed more environmentally sound practices. Large-scale EAF steelmaking has the potential to transform China’s steel industry to mirror the scrap-based models prevalent in the U.S. and Europe, Huang said.
Fifth is replacing fossil fuels with renewable energy sources and embracing technologies such as carbon utilization, which can capture carbon dioxide and convert it into products, including food or energy, such as ethylene, propylene and gasoline, Huang said. This could be a cornerstone of new quality productive forces and new energy development, he said.
Contact reporter Qing Na (qingna@caixin.com) and editor Nerys Avery (nerysavery@caixin.com)
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