Opening up – China, the environmental leader via the GBA

Solar panels on a roof are seen near the sunrise over Jiangmen,
Guangdong province

Analysis

Underlining Xi Jinping’s 2021 statement to the UN General Assembly, in late October of this year Beijing reiterated China’s goal of carbon neutrality by 2060. Key targets have been set under a new development philosophy which sees carbon dioxide emissions peaking by 2030 followed by a decline to net zero 30 years later. The recent pledge is for a vision of a low-carbon, green, circular economy.

Although this is an incredible undertaking for an economy of this size and structure, China already holds a position of pride as the supplier of 80 percent of global solar equipment and installation technology and 50 percent of the global wind power equipment and technology as highlighted by Zhang Chuanwei, founder of the Mingyang Group in Zhongshan. Speaking at the 2024 Understanding China Conference last week, Zhang introduced the successes of his company which include the production of clean energy sufficient to supply 25 million people for 20 years to come. Beyond the GBA, Mingyang’s reach extends throughout Asia, Africa, Oceania, Europe and the Americas. The company’s activities exemplify the innovation and opening up that are the intended consequences of the GBA’s integrated support systems for local, regional and international investors alike.

Due to the unique investment infrastructure, incentives and ongoing economic development, the multinational company Itochu is seeking investment opportunities in the GBA. Itochu’s particular focus is to invest in businesses in environmental sustainability and to leverage from China into the global marketplace. The general manager of the Guangzhou subsidiary, Katae Tomoaki, is another executive that sees the GBA as offering favourable circumstances for business in the decarbonization and low-carbon sectors.

The range of foundational development incentives and (infra)structures makes the GBA an international marketoriented business environment, especially conducive for multinationals keen to enhance their sustainability credentials. Such credibility relies on a deep level of trust in the supply and value chains, and a holistic systems approach from all levels of government and industry leadership in terms of policy, philosophical and ethical positioning, infrastructure, financial and bureaucratic support, including creativity, cultural buy-in and long-term vision.

At the 2024 Global Investment Promotion Conference for the GBA in Guangzhou in early November – another of the many facilitation and promotion conferences – BASF chairman, Markus Kameith praised local governmental bodies in Guangdong for understanding and meeting the needs of multinationals in an environmental-conscious market. The fact that the corporation will be able to manage operations entirely on renewable energy from 2025 is indicative of the type of GBA support required by these enterprises. Such environmental incentives and supporting systems and the messaging of a strong global environmental protection brand will continue to encourage global business investment in the GBA and on Chinese soil.

Given the levels of emissions from China’s economic activity historically, much of the rhetoric and policy announcements risk being perceived as propaganda. However, a number of sections in the 2019 Outline Development Plan for the Guangdong-Hong Kong Macao Greater Bay Area acknowledge ecological and environmental concerns and resource limitations in robust terms. Ecological and environmental protection are areas of strengthened cooperation between the three geographical regions. Under a listing of opportunities and challenges, “growing constraints on resources and energy supplies, escalating pressure on ecology and the environment” recognizes the material limits to growth. Further, the section on Basic Principles lays out the systemic perspectives – the interconnectedness of places, peoples, policies and resources in a holistic and highly coordinated fashion: “To pursue green development and ecological conservation. To vigorously take forward ecological conservation, establish the approach of green development, uphold state policies on saving resources and protecting the environment, implement the most rigorous ecological protection system”.

Indeed, it was a half-decade prior to this when in 2014 ClientEarth, an environmental law organization based in the UK but active across Europe and the US, was approached by the Ministry of Ecology and Environment and the Supreme People’s Court to consult on environmental laws, and to train environment court judges and prosecutors. The aim was to encourage the establishment of more environmental groups in China and to enable NGOs to pursue polluting companies and even governmental bodies in the fight against environmental harms. According to James Thornton of ClientEarth, this legislation was the first to allow Chinese federal prosecutors to sue the government. The recommendations were put in place to make it easier for citizens to enable enforcement of environmental protection laws. In 2020, 80,000 environmental cases were brought before the courts. By March 2022, 1,500 environmental judges and 1,200 prosecutors had been trained; all in efforts to raise environmental standards across China. On the financial front, more recently, banks have been lobbied and advised on appropriate investment targets and which investments to avoid that will be of little value in the long run due to environmental and sustainability risks, such as coal-fired power stations.

Systemic change and development rely on integrated legal, financial, economic and cultural elements coming together.  It takes time and concerted efforts for policies to be realized, and to be embodied by institutional systems, then to infiltrate through markets and for the message to be trusted. At some point, the momentum gathers, and positive developmental outcomes start to be visible, first to those with interest to test the waters and then invest, and finally to the average citizen. We appear to be on that trajectory, seeing those elements come together.