China’s unprecedented economic growth over the past 30 years has come at a huge cost to the environment and this is no surprise for most of you who live in urbanized areas. In fact , 20 of the 30 most polluted cities in the world are in China. 400,000 people die of pollution related diseases each year. One third of Chinese territory is affected by acid rain and approximately 70% of its water supply is polluted.
The damage has not only been to the air the Chinese breath or the water in their rivers, but also to its reputation across the world. But there are signs that China is serious about tackling pollution to prove to the world that it can develop while causing less damage to the environment, plus giving a better quality of life to its citizens. $184 billion is being devoted to China’s renewable energy markets – set to become the largest in the world. And yet if that wasn’t enough, the chief economist from Deutche Bank predicts that China will invest an astounding $754 billion over the next 36 months to reduce the magnitude of this growing, enormous problem.
POTENTIAL LARGE SECULAR GROWTH OPPORTUNITY
If that plays out correct, it will create one of the largest secular growth opportunities the country has seen aside from massive infrastructure and real estate development which have moved the country to Third in the World according to GDP. China is currently the world’s biggest consumer of coal, the cheapest yet most polluting source of energy. The country uses a quarter of the world’s coal reserves and depends on it to provide more than two thirds of its energy needs, while 2 new coal-fired power plants come on line each week.
The rapid growth has also altered old Chinese habits that used to be environmentally friendly. As soon as you walk out from your hotel onto the street of Beijing you realize that the typical image of Chinese city streets being packed with bicycle-riding commuters is becoming a thing of the past. During the first quarter, China surpassed the US with the number of vehicles sold and for the first time surpassed 1 million vehicles in March.
Pollution problems in China are estimated to cost the country more than $200 billion annually, and it should be no surprise that pollution is widely considered to be the #1 challenge to China’s sustained economic growth. World governments are fast adopting carbon standards which will penalize businesses for producing greenhouse gases. China’s Eleventh Five Year Plan calls for more than $190 billion in investment by industrial companies for cleanup. As a result of this focus, China’s environmental protection industry is growing at an annual rate of at least 23%, substantially faster than China’s normalized GDP growth (forecast for 2009 at 7%).
COMPANIES THAT MAY BENEFIT FROM CHINA’S MASSIVE INVESTMENT IN GREEN ENERGY
