China’s NDRC will provide green subsidies to projects that address significant environmental problems.
China’s National Development and Reform Commission (NDRC) has announced plans to provide subsidies of up to 60% for “green” investment projects in the Yangtze River Economic Belt (YREB) in China’s latest attempt to combat pollution while stimulating growth.
Yangtze River Economic Belt Development Plan 2016
The Chinese government announced the launch of the YREB in 2016. President Xi Jinping stated that the YREB should focus primarily on environmental protection rather than economic growth, due to rapid deterioration in the Yangtze River and the Yangtze Delta. Previously, steel mills and petrochemical factories lined the riverbanks to access cheap water transport, and in 2016, more than 45% of China’s sewerage was discharged into the Yangtze River.
The YREB Development Plan, published in March 2016 following approval by the Central Committee Political Bureau, outlined a “one axis, two wings, three poles and multiple points” pattern of improvement, focusing on ecological and green development.
“One axis” refers to the status of the Yangtze River as a major waterway, and to the development of a green axis along that waterway. “Two wings” refers to the Shanghai-Chengdu Highway and the Shanghai-Ruili Highway — transport networks encouraging population and industrial development. The “three poles” are three city groups: Yangtze River Delta; Chengdu-Chongqing; Changsha-Zhuzhou- Xiantan, Wuhan, and Poyan Lake. The “multiple points” are other cities that support the three poles.
Today, the YREB runs along the Yangtze River, covering nine provinces — Jiangsu, Zhejiang, Anhui, Jiangxi, Hubei, Hunan, Guizhou, Yunnan, and Sichuan — and two centrally administered municipalities — Shanghai and Chongqing. The YREB covers a land area of more than two million square kilometres, is home to more than 580 million people, and supplies 36% of China’s freshwater resources.
Green Subsidies 2019 – 2020
Beginning in May 2019, NDRC plans to award green subsidies in support of green development projects in the YREB. These green subsidies will fund projects that address significant environmental problems along the Yangtze River and projects that aid and improve infrastructure by linking the Yangtze River to road and rail networks.
The subsidies will differ according to project and location, and no single subsidy will exceed CNY100 (roughly US$14 million). A cap of 45% will be applied to subsidies for water treatment projects in central provinces. The cap will be increased to 60% in poorer western provinces.
Although the subsidies are advertised as supporting 11 provinces, the NDRC has stated that, in principle, the plan will only be implemented in eight provinces in China’s less-developed interior: Anhui; Jiangxi; Hubei; Hunan; Chonqing; Sichuan; Guizhou; and Yunnan.
Earlier this month, the World Bank approved China’s US$200 million loan to be used in the green subsidy plan, and to launch and operate the Shanghai Green Urban Financing and Services Company, which will focus on the management of water, wastewater, and solid waste. The green subsidy plan will be supplemented by a €150 million loan from the German Development Bank.
The NDRC has stressed that local governments should not experience additional strain on local finances, nor should they be surprised by hidden debts associated with the subsidies. The green subsidies are to be applied to new projects or projects currently in the planning stages, rather than projects nearing completion.
The green subsidies will be effective immediately, and will run until year end 2020.
The authors would like to thank Martin Cassidy for his contribution to this blog post.