Chinese Economic Development and the Environment

Chinese Economic Development and the Environment

New Horizons in Environmental Economics series

Shunsuke Managi and Shinji Kaneko

Over the past two decades, China has become an economic powerhouse. However, as the world’s largest producer of CO2 emissions, the scale and seriousness of China’s environmental problems are clearly evident. This pioneering book provides an economic analysis of the significant environmental and energy problems facing China in the 21st century.

Chapter 9: Iron and Steel Industry

Shunsuke Managi and Shinji Kaneko

Subjects: asian studies, asian development, development studies, asian development, development economics, economics and finance, development economics, environmental economics, environment, asian environment, environmental economics

Extract

INTRODUCTION The expansion of economic activities in China has led to a rapid increase in consumption of natural resources, resulting in limitations of resources not only domestically but also internationally. In order to alleviate the pressure, especially in energy markets, the government has set a numerical target of 20 percent reduction of energy consumption per GDP during the period of the eleventh five year plan. In the literature, changes in energy efficiencies, which are measured as the input of energy per unit of production output, have been widely analyzed (for example, Feng, 1994; Sinton and Fridley, 2000; Fisher-Vanden et al., 2004; Wu et al., 2005, 2006). Unlike primary energy resources such as coal, crude oil and natural gas as global commodities, water is a local commodity which is subject to domestic policies. In China, particularly in the northern part, people and industries are suffering from water scarcity due to decreasing precipitation and rapid increase in water consumption (World Bank, 2008). Therefore, efficiency improvement in water usage is another important policy agenda for resource management. In this context, energy and water shortage appears to pose the most urgent environmental risk to China’s continued high growth (Woo, 2007). Since government treats energy and water policies differently, the past achievements in efficiency improvements might not be the same when comparing the two. Energy and water resource efficiency improvement in manufacturing production has emerged as a formidable challenge to improve industry productivity. When compared with other industries, the iron and steel industry requires a...

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