China’s economic development of the past decades has been unprecedented, and it has lifted 500 million people out of poverty. However, it has also been accompanied by structural problems, such as environmental degradation. As its future growth trajectory will be less determined by headline numbers but by its quality, China’s new normal will become greener.

Our observations

• Xi Jinping stated at the National Party Congress that China’s future economic growth will focus more on quality, and he skipped naming a specific GDP growth target during his 3.5-hour-long speech.
• China will open the world’s largest carbon emission market in 2018 in order to meet the goals set under the Paris Agreement, of which China has become an outspoken proponent.
• Starting in 2018, Chinese party officials in Guizhou will be assessed on their environmental accomplishments instead of only economic before they can be promoted to key positions.
• China is the world’s largest producer of solar energy, hydroelectricity, and wind power.

Connecting the dots

Generally, rising incomes lead to higher ecological footprints. To curb the coupling of rising Chinese incomes with a more ecological degrading lifestyle, the Chinese government outlined a plan last year to reduce citizens’ meat consumption by 50% and issued guidelines to promote green consumption. Furthermore, while many countries are struggling to push towards electric cars, the Chinese government said to ban internal combustion engines, and its generous subsidy schemes helped China to become the biggest market for electric vehicles. These examples do not stand on their own. Strategic government plans, such as ‘Made in China 2025’ and China’s 13th five-year plan, all make sustainable growth a key pillar. However, improving environmental conditions have been a strategic priority since Hu Jintao took office in 2002, but no significant improvements have been realized. What is different this time?The political legitimacy of China’s Communist Party is founded upon the premise that a Chinese government provides peace and prosperity to its people, a dictum with roots in Confucian philosophy and ancient philosophical and religious doctrines called the “Mandate of Heaven”. In the past decades, China’s rapid economic growth has provided this, but it was accompanied by structural imbalances and problems, such as income and wealth inequality, rising (mostly corporate) debt, financial instability and risks, significant overcapacity, and an overreliance on (often inefficient) SOEs. Nonetheless, as these problems are largely economic by nature, they can arguably be solved by economic policy alone. However, environmental degradation puts more pressure on the Communist Party’s social contract since it demands both economic and socio-cultural changes as it significantly effects Chinese living worlds (for example pictured by the documentary Under the Dome or Yang Yongliang’s photographic collages).President Xi Jinping has the political power to push forward painful reforms. Immediately after the National Party Congress where he consolidated his power, he announced a crackdown on polluting industries. The first data shows that these measures will have a significant impact on China’s GDP growth, showing the willingness of China’s policymakers to sacrifice growth for green. Furthermore, as Xi is determined to improve China’s global leadership, China can leverage its stance on clime change as a source of its soft power, especially in comparison to the Trump administration. For example, European countries like France are already engaged in further cooperation with China on the basis of their consensus of climate issues. Moreover, there is a pragmatic stance: as China is the world’s leader in terms of renewable energy production, sustainability can become a Chinese export product in the near future. As we have argued before, renewable energy can be considered as an important element of the next socio-economic paradigm. This movement is accelerated because China’s economy is at a historical junction, as China’s economy should shift towards a new growth model. Coupled by its expertise on renewable energy and sustainable production technologies, there’s momentum to transform its economy towards a ‘new green normal’ in the coming years.From a consumer’s perspective, environmental issues are also gaining traction. Chinese citizens are complaining more frequently about environmental pollution, pressuring the legitimacy of the Communist Party. Furthermore, China’s middle-class consumers are willing to spend more on green consumption, in line with our previous analysis that post-material values become more important along the growth trajectory of countries. And there is also a generation gradient as Chinese millennials are becoming more and more environmentally conscious compared to previous generations, matching the broader general trend of more conscious and sustainable consumption. This possibly to the current resurgence of Chinese philosophical and religious traditions in China’s modern society, in which ‘natural’ concepts such as harmony and the animated living world play an important role, as we have explained before.

Implications

• If China can manage its economy’s transformation and put its money in sustainable and green industries, China’s new green normal can join ‘China’s new economy’ universe, which is already outperforming its ‘old economy’.
• Chinese companies that invest in green and sustainable technologies might be spearheaded by the Chinese government as ‘green national champions’.