The ecological impact of growing consumption in China

Thursday, December 20th, 2012
By: 
Ewan Wright
China consumer growth

At the Climate Change Conference, held in Doha earlier this month, United Nation’s Secretary General Ban Ki-moon called on Governments to “accelerate action” to ensure global temperatures do not rise above two degrees Celsius. Beyond this point there is strong consensus in the scientific community that climate change would result in severe human costs through, inter alia, rising sea levels and widespread droughts.

As a powerhouse behind the global economy, and as the world’s largest polluter, China, and more specifically its megacities must be at the center of these efforts.

Data recently released by Brookings Institution reveals just how important Chinese cities are to the world economy. The top five most productive city economies in China accounted for three percent of global economic output in 2012, although representing only one percent of the world’s population. Most strikingly, China is home to 19 of the top 20 fastest growing city economies worldwide over the year, in spite of national economic growth slowing down to 7.5 percent.

Economic growth has of course provided important benefits, most notably by lifting many millions of people out of absolute poverty. On the other hand, growth has come at the expense of cities becoming extremely resource and energy intensive, thereby severely harming China’s ecosystem.

The World Wildlife Fund for Nature’s (WWF) biannual “China Ecological Footprint Report” released last week reveals the extent of the problem. The research illustrates that – driven largely by rising carbon emissions – China’s total Ecological Footprint is now the largest in the world, having increased significantly from approximately 6 percent of the global total in 1960 to 17 percent in 2005 to 24 percent in 2008.

On a per capita basis the Ecological Footprint is now 2.5 times China’s biocapacity – or the capacity to regenerate natural resources and absorb carbon emissions. This remains below the global average and only a third of the size of the per capita footprint in the United States, but the situation is worsening.

Of particular interest, the WWF report argues that the explanation no longer simply lies in China’s rapidly expanding population size or extensive infrastructure projects. Instead, the main driver of ecological harm is the rise of the middle-class and their rapidly changing consumption habits.

This is especially the case in China’s major urban centres, where growing disposable incomes fuelled by the expansion of shopping opportunities, are supporting a consumption boom. Think tank China Institute for Reform and Development recently estimated that residential consumption will almost double to 30 trillion yuan per annum by 2016.

Indicative of this trend, the xiaokang, loosely translated as “the relatively well-off”, in society are increasingly developing a taste for luxury products ranging from designer handbags to sports cars. Growth in the sales of such goods is currently increasing by 18 percent per annum and is projected to reach USD27 billion by 2015, thereby making China the world’s number one market for luxury products according to global consultancy firm McKinsey.

In response to environmental concerns, the Chinese Government has focused on the production side of the economy. The 12th Five-Year Plan targeted a reduction of carbon intensity emissions (emissions per unit of economic output) by 40 to 45 percent between 2005 and 2020. This was supplemented in early 2012 by the planned piloting of carbon emission trading schemes in seven regions, namely in Hubei and Guangdong provinces alongside the cities of Beijing, Chongqing, Shanghai, Shenzhen and Tianjin.

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