In China Every Square Meter Counts

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XINXIANG — The fields of Henan Province, one of the important centers of global wheat production, spread beyond this city’s high-rises, a prairie of dusky grain in every direction to the horizon. Every meter, every mu, a Chinese measurement of land expanse — 15 mu fit into an acre — is taken with ripening wheat.

The harvest has begun. Workers cut stalks with long blades and haul the wheat out of the fields on their backs. Farmers spread the straw and seed heads on the broad boulevards, just built and reach far from the city. They rely on trucks and cars to roll over the piles, the streets serving as long linear threshing tables. Then, with pitchforks, men and women stab hard at the crumbled piles and toss the grain high in the air, the wind carrying the bits of straw away from the seeds. The streets at this time of year are an inch deep in drying wheat the color of a dull yellow sun.

China confounds this visitor from the West. Service in restaurants in Chengdu is distinguished by such indifference to detail that the only prompt response comes with a request for the check. Checking in and out of a hotel in Gansu Province takes 25 minutes. It grinds up so much time you have to build the checkout into your travel schedule. Taxi drivers in Beijing are surly and difficult, like mood-swinging teens. Flagging a taxi in China’s capitol reminds me of the hit and miss uncertainty of junior-high dating.

Yet China’s stunning airports are so well dsigned that even with the crowds, moving from the dropoff curb to the gate — through seat assignment, bag check, and security — took 12 minutes this morning in Zhengzhou. The high-speed train from Beijing to Xin Xiang, a 660-kilometer trip, cost $25, took five hours at a top speed of 155 kilometers per hour, or nearly 100 mph. Almost every seat on the 15-car, 1,500-passenger train was taken. Bathrooms were clean, even near the last stop. In the United States we have a political party that views high-speed trains in the same dimension as gay marriage — an aberration in the human condition.

And here in Henan, farmers work so hard and efficiently at raising enough grain for a nation whose appetitie for noodles and rice steadily grows larger that every available square meter is planted, even the space between the headstones in a graveyard. (See pix below)

The average Henan farm, according to experts I talked to at the Institute of Agriculture here, measures about one mu. That makes western style mechanization with big tractors, big planters, big harvesters impractical. But China also hasn’t experienced the rural depopulation that drove farm families and workers from the American countryside from 1960 to 1985, and essentially drowned one stoplight towns in a sea of business bankruptcies and empty storefronts.

There are no such empty spaces in rural China. Men and women scrub the fields clean of weeds by hand. They toss wheat to the wind by hand. They pull vegetables from the fields, stack greens and tomatoes and corn and squash in the back of three-wheeled electric carts. With their pre-school children standing beside on the seats beside them, they transport the harvest at dawn to big street markets that by 6:00 a.m. are jammed with buyers. The outdoor markets hum with the same high-amp crowd noise that accompanies high school football games in the United States.

I am here for three weeks to study how the Chinese economy can sustain the high growth rates that have marked its rise to global prominence in the last two decades. Demand for energy and food confronts this nation’s declining reserves of fresh water. The choke point, which we reported on last year for Circle of Blue, is tightest in Henan and provinces north and west of here.

China’s central government asserts that the nation, already the world’s largest grain producer and energy consumer, can solve its water supply dilemma and simultaneously grow with the immense speed and scale that Chinese citizens and world markets have grown used to.

How to execute that trick is very much a subject of serious consideration and research in Beijing and provincial governments. The U.S. economy, as we’ll see in future posts from here in ModeShift, depends on China’s succeeding to an extent that most Americans will find revealing.

I like China’s chances. All that grain, tossed to the sky, little brown clouds that for a brief moment look like a swarm of bees scattering from a broken hive, are evidence of a determined and hard-working people that know what it takes to thrive.

— Keith Schneider

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The Global Fossil Energy Boom: Perspective From China

China's energy demand is soaring to support massive new development, like this apartment complex under construction in Xi'an, a city of 8.5 million and the capital of Shaanxi Province. Photo/Keith Schneider

All those natural gas wells that are popping up by the thousands across the United States — they’re starting to appear in China, too. The global fossil energy boom, which in China has mostly meant soaring production of coal, is now beginning to include natural gas. And American and European multinationals are providing financing, equipment, and technical assistance.

The U.S. Energy Information Administration projects that China’s recoverable shale gas resources total 36 trillion cubic meters, or all but 9.5 percent of the shale gas reserves in Asia. China’s Ministry of Land Resources puts the reserves at 25 trillion cubic meters.

Given those resources, and the capacity to develop them, Chinese authorities are intent on doubling natural gas production over the next three years, boosting the fuel from 4 percent of China’s energy to 8 percent, according to the central government’s most recent five-year plan.

According to Ksenia Kushkina, a researcher at the Russian Academy of Sciences who made a presentation in Washington earlier this month, Shell and PetroChina completed the first horizontal well in Sichuan Province, in southwest China, in April 2011. The two companies drilled a dozen more since then, and plan 20 to 25 more wells in the field outside Chengdu. Exxon/Mobil and Sinopec completed a well in Hunan Province in January. Hess and Sinochem are working in Anhui Province. Dart Energy and CBM Henan have a joint agreement to explore for gas reserves in Henan Province.

Pete Marsters in Chengdu in April 2011. Photo/Keith Schneider

Pete Marsters, a colleague and friend who’s studying in Chengdu, is closely following the development of shale gas resources in Sichuan. He sent this assessment yesterday: “What is going on now in shale is a test phase. China is setting up a lot of test wells in a lot of shale blocks (Sichuan, Anhui, Jiangsu, Zhejiang, among others) to, in my opinion, see which will be the easiest to bring to scale commercially.

“There are still a lot of questions to be answered before the large-scale feasibility of shale in China is determined. The first of which is economics.  So far,  wells here cost more than double those in the U.S. due to supply chain issues, newness of the industry in China, and the difficult nature of geology here (much deeper and more complex shales). Additionally, the ultimate productivity of Chinese shales is still up in the air.

“Then there are the water issues. At this stage and specifically in Sichuan, water doesn’t seem to be the main hurdle as resources are relatively plentiful. A large portion of China’s shale, though, is in extremely dry areas. This will be a future issue once the “easier” shales have been successfully tapped.  There is a lot of money for foreign firms to come here, share technology, and help assess China’s shale potential. They are going gangbusters to do it (Chevron,Shell, Dart, Total, EOG, etc.).”

— Keith Schneider

China’s First (And Still Only) Sustainable Business Magazine

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SHANGHAI — The second edition summer issue of Eco-nomy, the new compendium of news and ideas about sustainable business, includes a piece from Circle of Blue’s Choke Point: China project earlier this year on the confrontation between water and energy in China. The page-long article is in Chinese, which is appropriate given that Eco-nomy is a fresh voice in Asia for describing the profitable alliances that develop when companies apply ecological principles to their business models.

The current issue includes pieces on London’s plan to turn the 2012 Olympics into the greenest games ever, Michigan-based Haworth furniture company’s two environmentally-sensitive and worker-safety oriented factories in Shanghai, and a smart piece on green marketing in China by Olgilvy and Mather’s Hannah Lane that asks whether Chinese consumers are willing to value sustainability in their purchasing habits. She is convinced they are.

I also like the solid piece on China’s challenge to ensure safe food. The latter was reported and written by Haiyan Sun, the magazine’s chief editor and co-founder, who gave birth on Saturday to a baby boy, her second child.

This week I arrived in Shanghai, my fourth trip in the last year to China, and my second to this modern supercity of 23 million people. On Tuesday I sat down with the magazine’s other co-founder and editorial director, 29-year-old Yang Sun, a business journalist from Jilin City in China’s northeast (and pictured above). The magazine’s goal, in a polluted nation where environmental principles do not yet figure prominently in mainstream values, is to show Chinese business leaders and government officials just how much more money can be made by embracing cleaner and greener practices.

That’s an essential thought in a country that is pushing its natural resources to the limits of productivity, running low on water, adding to an already astonishingly large number of people, and climbing a steep upward curve on energy production. Frankly, China’s economic and environmental security rests on its capacity to be much more inventive and efficient than the West has been in tapping its natural wealth for economic development.

“We believe that in the future sustainable practices will be most important in doing business,” Yang told me. “We are reporting best practices from around the world. We want to show there is a wave of sustainable businesses. It’s a systematic way of thinking. We have emerging companies and technologies in China. But we find that the best practices are outside China.”

Yang said the magazine developed from “The Age of Green Gold,” a book on sustainable business that she and Haiyan published last year. A Chinese executive who read the book approached the two young writers with the idea of producing a magazine, and has provided the financing for the first year of operation. The two editors developed a string of correspondents to file dispatches from around the globe. Each of the two editions have articles in Chinese and English and have been distributed at no charge to readers. Expenses run about $16,000 a month, and the magazine has established a non-profit business model.

Unfortunately Eco-nomy has not developed a Web site, which is in the design stage, Yang said. To secure a copy write the editors at tanshang2011@gmail.com.

— Keith Schneider

In U.S. Big Ideas Prompt Big “No!” In China, It’s The Opposite

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In an era of economic turmoil that has produced massive unemployment, accelerated industrial decline, and sowed fear and doubt across much of North America and Europe, China last week offered a much different lesson on growth and development.

In the latest draft of its new 12th Five-Year Plan to manage the world’s fastest growing industrial economy, China’s leadership called for restraining the runaway growth that is raising the incomes of more than 400 million people, but is also drawing China ever closer to a potentially calamitous confrontation over energy, water, and the quality of the nation’s environment. You can read more about the 12th Five-Year Plan and other developments in China over at Circle of Blue, where we’ve been rolling out weekly chapters of our Choke Point: China series.

Take a look at the series. It provides a first-of-its-kind journalistic window on the big steps China is taking to close a critical resource shortage affecting its modernization — the diminishing supplies of fresh water needed to process and cool the coal-fired energy sector. The series also invites readers from western democracies, particularly those in the United States, to peek into a centralized governing system that operates on a much different set of principles and values.

At this point, the U.S. system is almost entirely geared to shutting down, turning off, saying “No!” to big ideas. The result is a nation in stasis at a time of swift transition. China, meanwhile, has no veto power in its system and it attacks and executes big ideas — clean energy, rail transport, urban development, water transport, high-tech manufacturing, infrastructure construction — at a speed and scale never before experienced in human history. (That’s high-rise residential construction in Xian, a city of 8 million, in pix above.)

The new Five-Year Plan, which serves as China’s master development strategy, reflects the ambition of a huge nation intent on supplanting the U.S. as the most prosperous and powerful on Earth. Given the arduous path America has set for itself in the 21st century — fearful, suspicious, and reluctant to seize the new opportunities of the 21st century — it’s easy to see how close China is to reaching its goal.

The 12th Five-Year Plan, submitted for review on March 5 at the start of China’s annual plenary session in Beijing and signed on March 10, sets a new limit on energy consumption in order to spur efficiency and conservation measures. But it also envisions record high levels of water use, which is expected to rise to 620 billion cubic meters (163 trillion gallons) by 2015-up from 599 billion cubic meters (158 trillion gallons) in 2010-and as much as 670 billion cubic meters (177 trillion gallons) by the end of the decade. The restraints on coal production, which supplies 70 percent of the nation’s energy and is the largest industrial consumer of fresh water, will serve to keep water use from climbing even higher.

In public statements and in interviews with Chinese media, the nation’s top leaders said the central focus of the new Five-Year Plan is to curb inflation and provide investments and guidance that improves the quality of life by ensuring the continuing development of manufacturing, transportation infrastructure, domestic production, the energy sector, research, science, health care, and education. But the leaders asserted that the 12th Five-Year Plan, the master economic blueprint that will chart China’s development through 2015, also is meant to reckon with the damage that the nation’s modernization is causing to air, land, and water, a steadily diminishing resource.

From 2000 to 2009, total water reserves in China dropped 13 percent, and water scarcity is especially evident in the northern and western provinces, where China’s major coal reserves lie. By calling for limits on energy production, China’s leaders are apparently mindful of the dangerous choke point developing between the nation’s surging economy and its demand for opening new coal reserves in the dry provinces that cannot currently be tapped because of water shortages.

“The 12th Five-Year Plan period is crucial for building a moderately prosperous society in all respects and for deepening reform and opening up and speeding up the transformation of the pattern of economic development,” said Premier Wen Jiabao in a statement.

Largest and Fastest-Is Restraint Possible?

But it is not at all clear that China’s provincial and industrial leaders-never mind the hundreds of millions of workers benefiting from modernization-will be eager to comply with the goals of the new development strategy.

During extensive reporting in December for the Choke Point: China series, Circle of Blue found a nation that grumbles about pollution, inflation, and corruption, but also is tremendously enthusiastic about modernization and the economic opportunities it has provided.

The restraints on economic growth described in the 12th Five-Year Plan come in the midst of a massive and politically popular economic transition that is rapidly converting China’s economy from its previous focus on export-related revenue to one devoted to building domestic markets.

Just to name a few, China now has either the fastest-growing or the largest-markets in the world for:

  • Cars
  • Steel
  • Cement
  • Glass
  • Residential housing
  • Rail construction
  • Fossil fuel energy
  • Highway development
  • Power plant construction
  • Grain production

Over the next five years, China will continue to build one of the world’s largest water transport projects, the world’s largest highway and high-speed rail networks, and the world’s largest network of hydropower dams. China also will continue to construct the world’s largest industrial manufacturing installations, or “bases,” to produce the components and plants that generate energy from coal, wind, solar, and nuclear power.

Read more here.

— Keith Schneider

New Wind and Solar Sectors Won’t Solve China’s Water Scarcity

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JIUQUAN, China-Business for wind and solar energy components has been so brisk in Gansu Province-a bone-bleaching sweep of gusty desert and sun-washed mountains in China’s northern region-that the New Energy Equipment Manufacturing Industry base, which employs 20,000 people, is a 24/7 operation.

Just two years old, the expansive industrial manufacturing zone-located outside this ancient Silk Road city of 1 million-turns out turbines, blades, towers, controllers, software, and dozens of other components for a provincial wind industry already capable of generating more than 5,000 megawatts per year.

Chen Xiao Yan, a 25-year-old assistant in the New Energy Industry office, said Sinovel, Goldwind, Dongfang, Sinomatech, and 21 other clean energy manufacturers have established plants at the base. Two of those developers also produce equipment for Gansu’s expanding solar photovoltaic industry, which at the end of this year will have 120 megawatts of electrical generating capacity.

Within three years, 10 additional manufacturers will build plants in the base, increasing the workforce to 50,000 employees, Chen said in an interview with Circle of Blue.

“It’s what we do here,” she said with a shrug. “We produce energy.”

Northern Gansu is doing that and considerably more. As part of Circle of Blue’s new Choke Point: China project, I spent much of a week in Gansu reporting on alternative energy and water use. This region of dust and industrial innovation-about as far west from Beijing as Montana is from New York-has very quickly become a vital outpost in China’s rocket ride to the top of the global water-sipping clean energy heap. Prompted by a national decision in 2005 to diversify the nation’s energy production portfolio, and to do so with the goal of reducing water consumption and climate-changing carbon emissions, Gansu and its desert neighbors are pursuing clean energy development with a ferocity unrivaled now in the world.

Along with northern Gansu, there are six other wind energy zones and eight other solar power zones being built in China-most of them in the desert regions of northern and western China. China also has a burst of seawater-cooled nuclear power plants under construction along its eastern coast.

China’s National Energy Administration projects that, over the next decade, generating capacity from wind, solar, and nuclear power will more than quadruple, from 53 gigawatts in 2010 to 230 gigawatts in 2020. The other big non-carbon electrical producer is hydropower, which is expected by the government to grow to 400 GW of capacity by 2020, up from 213.4 GW last year.

Wind energy now accounts for 42 GW, or 16 percent of China’s non-fossil fuel generating capacity. China’s energy agencies projected last year that wind generating capacity will rise to 150 GW by 2020, though many wind industry executives predict the number will reach more than 200 GW. (See sidebar)

Solar generating capacity is expected to jump from less than one GW in 2010 to 20 GW by 2020. Nuclear power is projected to increase from 11 GW to 60 GW in the next decade. (For reference, one gigawatt, or GW, is equal to 1,000 megawatts, or the generating capacity of a big nuclear- or coal-fired power plant.)

Yet China’s demand for electricity is rising so quickly that the massive investment in new generating technologies will not make nearly as large a dent in production-or in freshwater conservation-as many people might expect. Simply put: wind, solar, and nuclear power will climb to around 13 percent of the 1,900 GW of generating capacity expected by 2020, according to government data. That’s up from the nearly six percent of the 962 GW of generating capacity today.

The new wind, solar, and seawater-cooled nuclear plants will replace roughly 100 big coal-fired generating stations, which equates to a savings of 3.5 billion cubic meters (nearly one trillion gallons) of water annually, according to academic and government estimates. The clean energy stations also will eliminate around 750 million metric tons of climate-changing emissions annually. (That’s Ren Tao-a 42-year-old engineer and general manager of SDIC’s 10-MW solar photovoltaic demonstration plant in Dunhuang, in pix above.)

But China’s annual national water use-591 billion cubic meters in 2010-is anticipated to grow by 40 billion cubic meters by the end of the decade. And the increase in water use , a good portion of which is  spurred by new coal production, is occurring in a nation that is steadily getting drier.

Put another way, the $US 738 billion that government authorities promised last year to spend on non-fossil fuel power generation over the next decade will jump start China’s clean energy economic transition. The enormous solar and wind-related manufacturing plants across China already employ tens of thousands of people. They are irrefutable evidence of the capacity of clean energy to spur job growth. They also are a signal to the United States and other nations that China is prepared to dominate wind, solar, nuclear, and other cleaner sources of power that global energy economists predict will eventually generate trillions of dollars in revenue each year.

But clean energy development will not solve one of the most significant threats to China’s modernization – the confrontation between rising energy demand and declining reserves of fresh water. Over the next decade, and likely well beyond that, the water savings from solar, wind, and seawater-cooled nuclear power will not be nearly enough to loosen the noose that water scarcity is steadily tightening around China’s coal production and combustion sector, and its national economy. (See sidebar)

“There may be an ultimate day of reckoning approaching,” said Nicholas Lardy, a senior fellow and China specialist at the Peterson Institute in Washington D.C. “But there are a lot of intermediate steps China is prepared to take and already is taking to hold it off as long as possible.”

See the rest of the article here.

— Keith Schneider