Reining in industry’s contribution to carbon emissions will be key to fulfilling China’s carbon neutrality policy. The 230 national economic and technological development zones (NETDZs) that the Ministry of Commerce (MofCom) has approved to date are responsible for 11% of China’s GDP despite only occupying 0.32% of its geography. Targeted and localised action aimed at making the country’s economic zones more environmentally friendly, therefore, holds enormous potential in terms of making Chinese industry greener more broadly.

While numerous economic zones have been quick to adopt green principles when considering their development, further funding is required to realise a green transition of such magnitude. Analysts estimate that China will need to invest over RMB 100 trillion over the next 30 years to reach its goal of carbon neutrality. While extraordinarily high, that number is not an impossible target given that China manufactures much of the technology and equipment necessary for decarbonisation. And the country should expect to continue to receive significant investment – both foreign and domestic – in its green industries as a result.

But a sophisticated policy framework will be required, too. Unfortunately, that is something that is lacking at present. China’s 14th Five-Year Plan simply commits to reducing the carbon and energy intensity of China’s GDP growth. It lacks specific targets. Thankfully, local governments are taking the initiative to formalise their province’s contributions to achieving carbon neutrality. The Hainan Free Trade Port initiative, for example, has put green finance, ecologically-friendly tourism and research and development into green technologies at the centre of its development agenda. Beijing has followed suit in the pursuit of its new professional services pilot free trade zone, and the same negative list for trade and services in Hainan will also be applied in the nation’s capital.

According to MofCom, 36 NETDZs have made “outstanding achievements in green development and upgrading”, but that means there is a still long way to go in terms of harnessing these areas so that they can drive China’s green transition.

Firstly, as industrial clusters, NETDZs have high energy consumption and carbon emissions, the latter of which accounts for 10% of the entire country’s carbon emissions. With various industries and complexities found within the zones, a green transition will be more difficult than it would be for other areas. Secondly, coal still dominates the power supply; transitioning to 100% clean energy within the zones will be a difficult undertaking. Thirdly, the imbalance and mismatch in energy supply and storage between China’s eastern and western regions pose additional challenges. Lastly, there will be no ‘one size fits all’ green technology, strategy, or solution for industries located within the NETDZs, as they have various different technical requirements for carbon reduction.

China’s economic zones have become key to China’s efforts to pursue a green transition and industrial upgrading, and we welcome the growing UK-China collaboration in this field – Andrew Seaton, Chief Executive, China-Britain Business Council

Opportunities for UK-China collaboration as NETDZs go green

COP26 made it clear that international cooperation will be crucial if the goals of emissions reduction and environmental protection are to be achieved. As two of the largest economies, the UK and China not only have important roles to play, but they also have much to benefit from mutual cooperation in green development and technology.

There is great potential for cooperation between the UK and China if both countries play on their strengths to mutually work towards sustainability. UK manufacturing’s strengths, for example, lie in early-stage R&D and technology as well as later-stage servitisation, end-of-life innovation, and high-value manufacturing. On the other hand, China’s strength in manufacturing lies in the medium stage, where production and distribution take place. By taking manufacturing as an example, both countries’ strengths are found at different stages, and thus cooperation between the two will allow for both countries to fill in where they are least proficient and achieve a win-win scenario.

China needs assistance in pursuing structural reform so that it has the policies and institutions in place to support green development and innovation, not only within its various specialist zones, but across the economy at large. UK-China collaboration to this end has been successful so far. The Sino-UK Innovation Industry Park in the coastal city of Qingdao is one example, and hosts several British companies at the cutting edge of R&D in areas such as green and intelligent manufacturing, marine conservation, and AI and big data processing for manufacturing systems.

In the future, when investing in NETDZs, UK companies should pay attention to the NETDZs’ entry requirements, local industry preferences and green technologies, among others. More specifically, foreign investors should:

• Do research and verify whether their own line of business could fit within the industries currently being promoted.
• Evaluate the green, scientific and technological attributes of their own industries and ensure that they meet the green development requirements of NETDZs, so as to achieve more synergy and high-quality development.
• Create a proactive dialogue with the local government of the intended investment areas and explore the availability of potential policies and financial support provided by local government so as to achieve optimal performance by aggregating their own advantages with external facilitation.

Conclusion

Achieving carbon neutrality across China’s NETDZs will be key to hitting the country’s target of net zero by 2060. Given that there are only 230 of these zones and that they are collectively responsible for 11% of GDP, targeted action within these areas will have a disproportionate effect on the country’s ability to go green as a whole. In short, the NETDZs are an easy and effective place to start in terms of improving Chinese industry’s green credentials. “China’s economic zones have become key to China’s efforts to pursue a green transition and industrial upgrading. We welcome the growing UK-China collaboration in this field, and building on our Net Zero Report released at COP26, and believe that the UK and China working together offers great potential in tackling the critical environmental challenges we face,” says Andrew Seaton, Chief Executive, China-Britain Business Council.

While the green transition is an area where the UK has enjoyed a fruitful collaboration with China to date and will continue to do so into the future, whether China hits its target will require the implementation of a sophisticated policy framework that comes from the top. Local leaders in Beijing, Shanghai and Hainan should be commended for taking steps to draft policies that will make their own industrial areas more environmentally friendly, but their locales remain the exception and not the rule. There remain 200 NETDZs in need of reform if China is to rise to the enormous challenge its president has set. The clock is ticking.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research services can help you build knowledge and understanding of the Chinese market prior to investment.

The post How China’s economic development zones are turning green appeared first on Focus - China Britain Business Council.

China and the UK are the largest and ninth-largest manufacturing countries in the world respectively. Despite both countries having made great efforts in developing the green manufacturing sector, there remains a lot of potential for joint projects and initiatives.

A new report produced by CBBC, the Department for International Trade (DIT) of the UK government, and the Centre for International Economic and Technological Cooperation of the Ministry of Industry and Information Technology of China (CIETC-MIIT) aims to explore the scope, attributes, and strengths of green manufacturing in both countries, identify opportunities, and make recommendations for governments, industries and researchers in order to boost trade, investment, and international cooperation between China and the UK. (Click the link at the bottom of this article for the full report).

First off, what exactly is green manufacturing?

There are a number of attributes that can be used to characterise or define green manufacturing:

1. Green manufacturing companies embrace the challenge of de-carbonising at scale and are committed to a net zero or carbon neutral pathway and target.
2. Green manufactured products deliver economic, social and environmental benefits.
3. Green manufacturing companies embrace the circular economy and other strategies to maximising value from resources.
4. Green manufacturing companies and products do not have adverse effects on biodiversity or human health and wellbeing.
5. Green manufacturing companies seek external independent validation of their progress through certification of their plants and operations, their energy, carbon, and resource footprint, or their labelling of products.

The UK is at the forefront of creating the standards and certifications that are used by green manufacturing companies. For example, the world’s first product carbon footprint standard, PAS 2050, was developed by the British Standards Institute.

Comparing a circular economic model and a linear economic model

Green manufacturing in the UK

Green manufacturing in the UK is not just about the goods it makes or the way in which they are produced, but also about the people that make them and the spaces, regions, and ecosystems in which they are made. The UK manufacturing industry excels in areas such as clean technologies, energy efficiency, eco-design, and new and sustainable business models, and the UK government has made great efforts to support green manufacturing geared towards a circular economy.

According to a 2016 UK parliamentary report, a more circular UK economy could be worth £9-29 billion a year and would create 10,000-175,000 jobs across different skill levels by 2030. At the same time, a survey conducted by the Office for National Statistics revealed that the low carbon manufacturing industry was estimated to be worth £15 billion and employed a total of 83,600 people in 2018.

Who are the main stakeholders in green manufacturing?

Case Study: A car manufacturing start-up for hydrogen-powered fuel cell electric vehicles

Riversimple is a UK car manufacturing start-up for hydrogen-powered fuel cell electric vehicles founded by former motorsport engineer and racing driver Hugo Spowers. The company is not only developing revolutionary technologies for next-generation cars, which are lightweight, fast, and sustainable, it also follows a unique value proposal focused on the “systematic elimination of the environmental impact of personal transport.”

Technological innovation is not sufficient to achieve sustainability. It requires a system change and innovations in business models to make sectors such as car manufacturing more sustainable. Riversimple puts a substantial amount of effort into developing sustainable business models. It is a car company, but it does not sell cars; instead of selling cars, the company sells mobility as a service (e.g., the use of cars and customer use of mileage).

I am pleased to see the UK and Chinese governments, academics, industrial associations and businesses working together to deepen international cooperation and boost bilateral trade and investment. I hope the cooperation mechanisms and case studies shared in this report will accelerate the future development of the green manufacturing industry and intensify international cooperation.
– John Edwards, Her Majesty’s Trade Commissioner for China, Department for International Trade

In the Riversimple model, car users are charged for miles travelled plus a monthly fee, or are given a fixed price three-year leasing fee covering all services, such as maintenance, road tax, insurance and, importantly, fuel. Retaining the ownership of the cars, the company has more incentive to design a car that lasts longer and can be more easily reused, re-manufactured and recycled.

Green manufacturing in China

China became the world’s biggest manufacturing economy in 2010 when it surpassed the manufacturing output of the US. Today, China is the only nation that meets all the industrial categories in the United Nation’s International Standard Industrial Classification for All Economic Activities (ISIC). Although its manufacturing industry generates great wealth, it also leads to substantial ecological and environmental problems with an ever-expanding demand for energy and resources and increasing emissions.

Nevertheless,  green manufacturing is being applied as a modern manufacturing model that considers the environmental impact and resource benefits. The Ministry of Industry and Information Technology (MIIT) — specifically, the Department of Energy Conservation and Comprehensive Utilisation — takes the lead in green manufacturing in China.

In 2015, with the implementation of the Manufacturing Power Strategy, green industrial development was promoted to new heights, and green manufacturing was regarded as one of the five key national projects. The Environmental Protection Law, the Law of Prevention and Control of Water Pollution, and other important laws have been revised, and the legal protection system has been improved greatly. Policies implemented include the Manufacturing Power Strategy and the Plan of Green Industrial Development (2016–2020), and the Guide for Green Manufacturing Engineering Implementation (2016-2020).

Read more about green manufacturing policies and opportunities in both countries, as well as some of the companies at the forefront of green manufacturing innovations, in the full version of the UK-China Green Manufacturing Report in English here

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