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Powering ahead

(China Daily)
Updated: 2009-07-02 07:47

Buried deep in the statistical communique on energy conservation issued on Tuesday is a little surprise that China has managed to reach the annual target of reducing energy intensity by at least 4 percent for, not one, but two years.

Now, the country can be more confident about cutting energy consumption per unit of GDP by 20 percent during the five-year plan from 2006 to 2010.

When previous statistics showed that the amount of energy used to generate each dollar of national income fell by only 1.79 percent in 2006 and 3.66 percent in 2007, a rough calculation showed that even the 4.59 percent cut in 2008 looked insufficient to put China back on the track towards its five-year energy-efficiency target.

Yet with such an encouraging retrospective revision, Chinese policymakers have a greater chance to build on the current momentum of energy conservation to win the war they are fighting for greener growth.

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In the first quarter of this year, China's energy intensity dropped by another 2.89 percent thanks to a 3.04 percent increase in energy consumption amid a 6.1 percent GDP expansion. The accelerated improvement of energy efficiency may be largely attributed to the fact that, based on faster investment growth, the proportion of the energy-saving service sector in GDP has increased by 1.6 percentage points while that of the industrial sector fell by 1.9 percentage points.

The seeming discrepancy between a 6.1 percent expansion in gross domestic product in the first quarter and a 3.5 percent drop in oil demand coupled with weak electricity demand during the same period had once raised doubts about the authenticity of China's statistics.

But less production by energy-consuming heavy industries has not only explained the statistical puzzle but also unintentionally accelerated the country's pace to raise overall energy efficiency.

The country needs to seize the chance to deliver its five-year energy-saving goal.

With the Chinese economy rebounding more strongly than expected, policymakers need to prevent back-pedalling on energy conservation. They should press on with industrial structural changes to lay a solid foundation for continuous improvement of energy efficiency.

The latest hike in domestic fuel prices to record levels is a necessary step for making the Chinese economy more efficient in energy use.