China's Boom Brings Fear of an Electricity Breakdown

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China's Boom Brings Fear of an Electricity BreakdownBy HOWARD W. FRENCH

Published: July 5, 2004



<>SHANGHAI, July 4 - With the hottest days of summer fast approaching, Shanghai is making preparations to seed clouds over the city to make it rain, in the hope that a couple of degrees of reduced temperatures will help ward off brownouts, or worse, here in China's commercial capital. </P>
<>Even now, city inspection teams are visiting factories and ordering the least efficient energy consumers to be closed down, and thermostats are being raised in public offices. City officials say they are even contemplating shutting down the huge flashing advertising signs that made the Bund, or downtown riverfront in Shanghai, China's largest city, the neon equivalent of Times Square. </P>
<>With China projecting a 20-million-kilowatt shortfall in electricity supplies this year, actions like these are anything but isolated. With severe power shortages predicted for the country's southern and eastern regions, Guangzhou, China's third largest city, an industrial powerhouse, has had rationing since January, six months earlier than the emergency measures put into effect last year. </P>
<>Discussions about China these days are often dominated by economic terms like "overheating," and "hard versus soft landings."</P>
<>What is described as being at issue, typically, is whether the country's leaders can continue to manage this huge and increasingly complex economy successfully at growth rates that are among the world's fastest. </P>
<>The rush to find short-term, sometimes even fanciful-sounding, palliatives for the country's power shortage, however, reflects creeping doubts of a more profound order. Those concerns have recently been expressed even at the level of China's normally serene and confident-sounding senior officials. </P>
<>The worry, put bluntly, is that the world simply may not have enough energy and other resources for China to continue developing along present lines, especially at its present rate. Furthermore, sharply increased environmental damage might make the country unlivable, even if such growth could be sustained. </P>
<>China's predicament is reflected in a simple statistic: this country is already the world's second-largest consumer of energy, and yet on a per capita basis, the Chinese consume scarcely 10 percent of the energy used by Americans. </P>
<>In material terms, the contemporary Chinese dream is not so different from the traditional American dream, of spacious homes full of power-consuming appliances and a car or two in the driveway, and therein lies the source of concern for the country's leaders - and indeed for the world. As urbanization gathers pace here, there is a growing sense that such dreams will collide with intractable limits. </P>
<>"If we use the patterns of today, China cannot double its economy," said Chen Jinhai, director of the Shanghai provincial government's Energy Commission and Environmental Protection Department. "We would need the energy of Mars or other planets. Our consumption may still be less than the U.S. or Japan, but the key for our future will have to be greater efficiency." </P>
<P>Mr. Chen is far from a lone voice speaking about the severe environmental and resource limitations that will challenge this country's seemingly irresistible rise of late. Indeed, his perspective echoes that of senior policy makers in Beijing. </P>
<P>"If we continue with the massive consumption of resources, shortages will only get worse, it will become very hard to maintain stable, high-speed growth, and the economy risks declining greatly," wrote Ma Kai, director of the State Development and Reform Commission, in a sobering recent article in People's Daily, the Communist Party newspaper. "Now we are at a key point in the industrialization and urbanization process. If we don't transform our economic model, we could lose the ability to grow." </P>
<P>For some, statements like those represent the dawning of a new kind of awareness, not unlike what happened in Japan between the outbreak of a huge industrial poisoning disaster at Minamata, in the 1960's, and the oil shocks of the 1970's, when that country began to question its blind pursuit of growth in its gross domestic product. </P>
<P>They also represent an acknowledgment that whether measured in use of resources, or increasingly, in use of capital itself, the very economic model that has given China growth rates that are the envy of the world is wasteful in the extreme. </P>
<P>According to Zhang Jun, a prominent Chinese economist who has made a comparative study of China and India, China consumes 3 times the energy and 15 times the amount of steel as its neighbor, even though the Chinese economy is only roughly twice as large, and is growing only about 10 percent faster than India's. </P>
<P>Part of this picture comes from an intensive focus on manufacturing and exports, which many economists say has led to overindustrialization and empty growth. A lot of the responsibility for wastefulness can be laid to duplication, with each province - and indeed many city governments - simultaneously pushing for the same kind of growth, based on industrial parks and manufacturing zones. The municipalities that boast of becoming China's Silicon Valley, to take one common example of this trend, are almost too numerous to count. </P>
<P>"China will definitely be facing a huge, huge challenge in a decade or so if the growth patterns don't change," said Dr. Zhang, who is the director of the China Center for Economic Studies at Fudan University in Shanghai. "Ours is an extreme case of the East Asian model, and we are coming quickly toward the limitations in terms of the way we use energy, in terms of the environment, and even in terms of labor." </P>
<P>Dr. Zhang said the government had invited him and other economists to tour the provinces and lecture local governments on these realities in the hope of readjusting priorities, to little avail. </P>
<P>"What we are facing is decentralization and the birth of developmental government in China," Dr. Zhang said. "The local officials all say they understand the new perspectives, but that it has nothing to do with them. They all say, 'My job is to look after local economic development.' " </P>
<P>The toll on China's environment from this growth-at-any-cost strategy has been truly alarming. China's official development goal is to build what the government calls a well-off society by the year 2020, yet today the very growth that makes such dreams permissible has left China with 16 of the world's 20 most polluted cities, according to the World Bank. </P>
<P>Using standards that are relatively lax when compared with those of the United Nations, the Chinese government itself reckons that fewer than half of the country's cities have acceptably breathable air. </P>
<P>The government also says that 90 percent of urban residents face serious water pollution problems. By another estimate, 700 million Chinese must make do with contaminated drinking water. Even the country's seas are increasingly under siege from industrial pollution and are regularly choked by red tide infestations. </P>
<P>If the country's galloping energy needs have caught people's attention throughout China, mobilizing resources to protect the environment has been far more difficult. </P>
<P>"There is nothing about China's environmental situation that is not critical," said Jiang Jilian, a member of Friends of Nature, a private Chinese environmental group. "The government may have a sense they should do more about this, but they still have another priority - economic development." </P>