China’s Green Lining in its Stimulus Package

Lots of countries are handing out stimulus packages to try to stop economic turmoil. It’s great to see that China realizes that the future of the economy is green. China is investing in knowledge-based employment and green infrastructure.

For several years, the Chinese government has been sponsoring a shift from energy-intensive to knowledge-intensive jobs and economic activity. China’s recently-announced $586 billion stimulus package (Rmb4,000bn, £380bn) will transform its economy even faster, by promoting economic restructuring and essential green infrastructure.

The slowdown makes this transition all the more urgent, because GDP growth in China’s service sector produces more jobs than does the industrial sector. With recent GDP growth rates above 10 percent, China’s heavy industry generated enough new jobs.

But with slower growth forecasts, continuing large cohorts of high school and college graduates, and its rural population moving to non-agricultural employment, China needs to generate even more jobs from its economic investments.

Many details on China’s stimulus package have yet to be released, but what we know so far is promising. It includes 12 percent for direct energy efficiency and environmental improvements. In addition, the programs doubles—to $85 billion—investment in rail transport (a lower-carbon alternative to road and air transport), and adds $70 billion for new electricity grid infrastructure.

New, more flexible and sophisticated grid infrastructure is vital to increasing the efficient use of both traditional fuels and renewable energy sources. Furthermore, the stimulus package promises considerable investment in health, education and rural services. These sectors are both less energy intensive and strong on promoting jobs and welfare.

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