China’s economic slowdown: Good news for the environment?

The economic growth that China has experienced since the turn of the millennium has exerted environmental pressures, domestically and globally, on a scale unprecedented in history. But now there are strong indications that China’s investment- and supply side-driven development model, which has been built around relentless growth in heavy industry, is faltering. While this presents major challenges for China and for the world in terms of lower growth expectations, it holds out the tantalizing prospect of a substantial decrease in the country’s massive carbon emissions and endemic air pollution. Whether these reductions materialize will depend on how the Chinese government responds to the slowdown, in particularly how it implements its recently announced grand strategy for outward investment, One Belt, One Road.

Although official economic reports appear to show that China is on track to meet its new target of 7% annual growth in 2015, statistics on coal consumption and heavy industrial output suggest that growth is probably much slower.

If this is the case, the government will need to find new drivers of growth in order to reach the target. There is a danger that these will include moves to sustain subsidy-dependent heavy industries, despite massive overcapacity – in particular through outward investments in countries along the “New Silk Road” and “Maritime Silk Road” routes under the One Belt, One Road initiative.

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Figure 1: China’s domestic coal consumption and net imports, 2005–2015



Figure 2: The slowdown in China’s heavy industry



Figure 3: Indicative map of One Belt, One Road routes