Four Out of Five Chinese Cities Fail to Achieve Resource Efficiency, Sustainable Growth
Eighty percent of Chinese cities are failing to achieve a balance between economic growth, resource efficiency and sustainable development, according to a study by Accenture and the Chinese Academy of Sciences. The joint research, covering 73 cities, also shows that China’s mid-sized cities are in the best position to achieve that balance in the future.
The study, published in a report entitled Creating Prosperous and Livable Chinese Cities, was conducted to help city authorities benchmark their progress in sustainable development in the context of China’s urbanization policy agenda. It includes the New Resources Economy Index, designed by Accenture, China’s first multi-level indicator of sustainable economic growth applied across such a large number of cities. In addition to assessing economic performance against resource efficiency and environmental management, the Index scores cities’ capacity for future sustainable growth by measuring their level of infrastructure, technology innovation, and investment on environmental protection, as well as their institutional and policy capabilities.
The Index categorizes Chinese cities into four groups. Twenty five ‘Conventional’ cities face the greatest danger, given their underdeveloped but resource-based economies, high emissions, reliance on heavy industry and a tendency to ‘grow first, clean up later.’
Beijing and Tianjin are the two mega cities classified as ‘Wealthy,’ along with cities in the Bohai Rim and Yangtze River Delta regions. These enjoy leading rates of economic growth, but face deteriorating environments, characterized by rising levels of congestion, smog and waste, coupled with shortages of water and other resources.
The ‘Balanced’ group of cities achieves strong economic performance, environmental quality and managed emissions. Smaller cities dominate this group, but are joined by Shanghai, Guangzhou and Shenzhen, three megacities in southern China.
Accenture and CAS regard cities in the ‘Potential’ category as having the greatest chance of becoming champions of the New Resource Economy, thanks to the opportunity for strong growth combined with a lack of existing environmental degradation. They are dominated by medium-sized cities with populations of 1 to 3 million or per capita GDP of between 50,000 and 70,000 RMB yuan (US$7,738 and US$10,833).
“The New Resources Economy is a model for achieving sustainable growth with less resource consumption and less environmental impact through innovation in technology, management and institutions,” said Gong Li, Chairman of Accenture Greater China. “Our analysis shows that a focus on developing mid-sized cities rather than more megacities provides the greatest chance of making the New Resource Economy a reality. We urge the governments, businesses, citizens and social organizations to work together to contribute to China’s harmonious urbanization and ecological stewardship.”
The report suggests a range of actions that authorities can take to position their cities to achieve balanced and sustainable growth. These levers can be applied in different configurations depending on their particular local challenges. They include greater investment in and commitment to:
- Innovation in policy and strategy: Manage common and conflicting interests through regional and national strategies covering multiple cities and through integration between departmental city silos; set national and regional energy efficiency targets and policies that transform user behavior; diversify funding channels e.g. with equity investments, municipal bonds and tax reform. —
- Innovation in technology: Develop intelligent buildings to improve energy efficiency; implement smart grids to balance demand and supply and to automate the maintenance and management of infrastructure; create Intelligent Transport Systems to improve traffic flows and incentivize use of public transport; improve actionable insights by integrating data between silos and applying analytics. —
- Innovation in cross sector and cross regional co-operation: Foster intercity collaboration on ecological and resource protection; draw in the private sector into the public sector’s policy making, planning and financing; Improve energy efficiency through greater integration between utilities, property developers and building management companies.
For the mid-sized cities that have the greatest potential to be pioneers of the New Resource Economy, Accenture and CAS suggest that creating new sources of green investment and building the infrastructure, institutional capabilities and technology innovation required for long term sustainable development will be the priorities.
“China has an opportunity to encourage healthy competition between its cities as a way to incentivize more sustainable urbanization,” said Peter Lacy, managing director, Strategy and Sustainability Services, Greater China and Asia Pacific. “But competition between cities should not prevent them cooperating on the development of common frameworks for technology, governance and financial models within which they can design specific solutions for their local needs. China’s New Resource Economy depends on such frameworks that can only be developed if its governments, businesses and other stakeholders work more closely together.”
“We’re very pleased to work with Accenture on this long-term research,” said Shi Minjun, Deputy Director of Chinese Academy of Sciences’ Research Center on Fictitious Economy & Data Science (FEDS). “The New Resources Economy Index not only reflects the current macro challenges faced by Chinese cities, but also helps cities assess their own performance in balancing economic growth, resources efficiency and capacity for sustainable development. The Index will assist Chinese cities to make the most of their attributes and work more creatively within their constraints. We look forward to further discussion with more Chinese cities and researchers to enrich this assessment model.”
The New Resource Economy City Index assesses the performance of cities in three areas: economic performance: a city’s level of economic development and capacity for further development; resource and environmental sustainability: a city’s ability to preserve the environment, its dependence on natural resources and how efficiently it uses them; development capacity: the social capacity for a city’s transformation into a new resource economy, including infrastructure, IT development, and institutional and management innovation. The indicator system uses a weighted composite based on a total of 32 performance indicators. Included in the analysis were 73 of China’s 287 largest cities at the prefecture level and above, covering 31 provinces, municipalities and autonomous regions to ensure broad representation.
Accenture is a global management consulting, technology services and outsourcing company, with approximately 266,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.
About CAS & FEDS
Chinese Academy of Sciences (CAS) is China’s highest academic institution in natural sciences and its supreme scientific and technological advisory body, and national comprehensive research and development center in natural sciences and high technologies. With over 50,000 staff, CAS has 12 branch offices, over 100 institutes, more than 100 national key laboratories and national engineering research centers, and 212 field stations throughout the country. The Research Center on Fictitious Economy & Data Science (FEDS) is one of research institutes of the Chinese Academy of Sciences. FEDS is dedicated to interdisciplinary scientific research of the non-productive and green economy using economic models and data mining technology.