China Unveils Its 12th Five-year Plan on Environmental Protection

In the pursuit of a more environmentally friendly economy, the Chinese government has recently laid out a blueprint on pollution reduction goals between 2011 and 2015. Experts believe the new plan will shift the future investment focus in China from infrastructure development to “green” projects.

The “National 12th Five-year Plan on Environmental Protection (guofa [2011] No.42),” released by the State Council on December 15, complimented China’s achievement in pollution control over the past five years and set new goals for the future.

The Plan states that China is seeking around RMB3.4 trillion of investments to protect its environment within the next five years, with around RMB1.5 trillion of which will be first injected into eight types of “green projects,” including:

• Major pollutants reduction, such as sewage treatment, sludge treatment, desulfurization and denitrification
• Living environment improvement, such as water/air/soil quality improvement
• Environmental protection in rural areas, such as nonpoint source pollution control from agriculture
• Ecological preservation, such nature reserve development and biodiversity conservation
• Environment risk prevention, such as prevention and control of heavy metal/hazardous chemicals pollution and persistent organic pollutants
• Nuclear safety, such as nuclear safety systems/technology development and radiation monitoring
• Environmental infrastructure, such as waste treatment facilities development and projects on water supply security
• Environmental monitoring, such as environmental monitoring capability development and talent training

The government also plans to launch a series of environmentally friendly economic policies, in a bid to encourage the development of “green” industries and make polluters pay a higher price. Some of these policies include:

• Offering incentives to enterprises engaged in sewage treatment, sludge treatment, desulfurization, denitrification and waste disposal
• Improving the pollution charging system so that high-pollution production faces higher costs
• Encouraging bank loan issuance to “green” projects
• Increasing the portion of “green products” on government’s procurement list

The new Plan is believed to be a major step for China as it gradually moves away from its current development model, where most of its GDP is derived from exports and large-scale construction.

“Excessive infrastructure investment over the past years has been a key factor fueling China’s high inflation and also added to financial risks,” said Wang Jun, a researcher at the China Center for International Economic Exchanges. In the future, while the country will continue to build roads, bridges and airports, it will shift its investment focus to sewage treatment plants, water irrigation and other “green” projects, Wang added.

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