Identifier
Created
Classification
Origin
09BEIJING808
2009-03-26 23:30:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Beijing
Cable title:  

Response to Request on Green Investments in

Tags:  EFIN ENRG SENV KGHG CH 
pdf how-to read a cable
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PP RUEHCN RUEHGH
DE RUEHBJ #0808/01 0852330
ZNR UUUUU ZZH
P 262330Z MAR 09
FM AMEMBASSY BEIJING
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RUEHRO/AMEMBASSY ROME PRIORITY 1042
RUEHUL/AMEMBASSY SEOUL PRIORITY 1139
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RUEHBS/USEU BRUSSELS PRIORITY
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RUEHCN/AMCONSUL CHENGDU PRIORITY 9699
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UNCLAS SECTION 01 OF 03 BEIJING 000808 

SIPDIS
SENSITIVE

STATE FOR OES/EGC BARBARA DEROSA-JOYNT, ED FENDLEY
STATE ALSO FOR EAP/CM

E.O. 12958: N/A
TAGS: EFIN ENRG SENV KGHG CH
SUBJECT: Response to Request on Green Investments in
Stimulus Packages

Ref: a) State 026022; b) Beijing 0665; c) Guangzhou 0157

UNCLAS SECTION 01 OF 03 BEIJING 000808

SIPDIS
SENSITIVE

STATE FOR OES/EGC BARBARA DEROSA-JOYNT, ED FENDLEY
STATE ALSO FOR EAP/CM

E.O. 12958: N/A
TAGS: EFIN ENRG SENV KGHG CH
SUBJECT: Response to Request on Green Investments in
Stimulus Packages

Ref: a) State 026022; b) Beijing 0665; c) Guangzhou 0157


1. (SBU) Summary. Since November 2008, China has
announced a RMB four trillion (USD 585 billion) fiscal
stimulus package as well as ten industrial sector
revitalization plans, the latter largely without specific
funding. Various parts of the stimulus program and some
of the sectoral plans include "green" elements, although
in most cases it is not clear if they represent new
initiatives or previously existing programs. Also, in
most cases funding levels for "green" portions of the
projects have not been specified. This cable provides
Embassy responses to questions raised in Ref a. End
summary.


2. (SBU) To address the growing impact of the global
economic crisis, in November 2008 China's State Council
announced a comprehensive two-year, RMB four trillion
(USD 585 billion) fiscal stimulus package intended to
boost economic growth, stimulate domestic consumption,
promote economic rebalancing, and create or preserve
employment. Of the RMB four trillion total, the central
government is to provide RMB 1.18 trillion, while
provincial and local governments, banks, and other
enterprises would be responsible for the remainder.
Approximately RMB 230 billion (USD 34 billion) is
designated for disbursal to project implementation
agencies and enterprises in December 2008 and the first
quarter of 2009, with the remaining funds to be utilized
through the end of 2010. Chinese Government agencies,
led by the National Development and Reform Commission
(NDRC),have identified a list of sectors and specific
projects for funding under the stimulus program. It
appears that some of the projects selected had been
approved previously but not funded, and were therefore
able to be implemented quickly.


3. (SBU) According to the NDRC's outline, the RMB four
trillion will be allocated to the following sectors:

-- Livelihood projects (RMB 400 billion),including
residential buildings, low-cost housing, and living
quarters in forestry, agricultural and mining regions;

-- Rural infrastructure (RMB 370 billion),including
rural water resources (RMB 40.1 billion),drinking water
safety and electricity (RMB 43 billion),and small

hydrology projects (RMB 63.5 billion);

-- Infrastructure (RMB 1.50 trillion),including
railroads (RMB 73.2 billion),highways (RMB 103.5
billion),airports (RMB 24.2 billion),and ports (RMB
10.3 billion);

-- Social welfare (RMB 150 billion),including education,
health care, culture, and family planning;

-- Energy efficiency, emission reduction, and ecological
projects (RMB 210 billion),including ten key energy-
saving projects (RMB 32.5 billion); urban waste water,
solid waste treatment, and pipeline construction (RMB 13
billion); and key water bodies pollution control projects
(RMB 4 billion);

BEIJING 00000808 002 OF 003



-- Industrial restructuring and technology upgrade (RMB
370 billion),including science and technology special
projects (RMB 12.5 billion) and enterprise innovation and
high-tech projects (RMB 20 billion);

-- Post-earthquake reconstruction (RMB 1 trillion);

-- Other social services (RMB 39.4 billion);

-- To be determined (RMB 65 billion).

Energy and energy efficiency
--------------

5. (SBU) The energy industry in China will benefit
greatly from the stimulus package, with RMB 580 billion
(USD 85 billion) slotted for construction of new nuclear
and wind power capacity. According to the stimulus plan,
China hopes to increase the renewable share of total
energy output to ten percent by 2010, in order to reduce
pollution and decrease dependence on coal and oil.
Specifically, the stimulus package details 44 clean
energy projects, including 29 for wind power. Although
not included in the stimulus package, the NDRC also has
approved hydropower and windpower plans to generate
approximately two gigawatts of energy. According to
media reports, the Chinese Government wants wind power
installed capacity to reach ten GW by 2010. Ref C
describes China's efforts in Fujian Province to develop
alternative energies.

Power Grids and Power Lines
--------------

6. (SBU) The infrastructure development segment of the
stimulus package includes approximately RMB 810.8 billion
(USD 119 billion) for upgrading power grids in 2009. The
prime recipients for this funding will be China's two
major power grid companies: the State Grid Corporation of
China (State Grid) and China Southern Power Grid. State
Grid operates electricity transmission grids in 26 of
China's 31 provinces, and plans to invest RMB 83 billion
(USD 12 billion) of stimulus money to construct more
ultra-high voltage (UHV) power lines to improve power
transmission and reduce losses. Completion date is the
end of 2010. In addition, State Grid plans to utilize
RMB 1.16 trillion (USD 170 billion) from bond issuance to
finance new power grid construction, with supplemental
funding from local governments. China Southern Power
Grid plans to invest RMB 60 billion (USD 8.8 billion) to
renovate its power grids.

Conversion and Clean Technology Projects
--------------

7. (SBU) Approximately RMB 350 billion (USD 51 billion)
of China's fiscal stimulus package is assigned to
ecological protection to improve tainted water supplies
and expand recycling and water pollution projects. This
includes 120 major water conservancy projects, 65 large
and medium-sized reservoir reinforcement projects, and 40
large-scale irrigation and water conservation projects.
Separately, the Ministry of Water Resources plans to
invest RMB 20 billion (USD 2.9 billion) to construct
reservoirs and irrigation systems. Finally, an

BEIJING 00000808 003 OF 003


unspecified amount of stimulus money is intended for
reforestation projects, treatment of chromium residue,
and sewage treatment systems.

Sectoral Revitalization Plans
--------------

8. (SBU) In addition to the fiscal stimulus package, in
January and February 2009 the Government issued ten
industrial sector revitalization programs, some of which
may overlap with and/or receive funding through the four
trillion stimulus package. Although funding levels were
not specified, in general these programs are designed to
stimulate domestic consumption and accelerate
consolidation and modernization of the designated sectors.
Some of the ten plans contain some "green" elements, such
as improving water treatment and factory effluent in the
textiles sector, but they are not quantified. Similarly,
the automobile, machinery, light industry and nonferrous
metals plans all include energy saving and environmental
protection as goals, but only the automobile plan -- the
"greenest" of the ten -- provides any specifics about
funding (a RMB five billion subsidy to encourage farmers
to upgrade their vehicles). The auto plan includes
measures to protect the environment by reducing the sales
tax on vehicles with smaller engines and encouraging the
development of environmentally-friendly cars. The
petrochemical plan focuses in part on construction of new
refineries and new processing technologies (ref B),and
may help address urban pollution by improving the quality
of petrol and diesel while reducing emissions.

Not Mentioned
--------------

9. (SBU) Much of the detail remains lacking in China's
fiscal stimulus package and industrial revitalization
programs. Broad areas that have not been addressed
include research and development of low-carbon
technologies, low-carbon transportation, mass
transportation, and incentives to reduce the use of
fossil fuels. Nor are there any indications that "green
jobs" or "green worker training initiatives" will form
part of the plans.

PICCUTA