British and Chinese experts have found that drought and flood are the biggest threats China faces as a result of climate change. They recommend transferring to a low-carbon economy and installing new technologies to avoid a lock-in effect in the fast growing economy.

China was one country British economist Nick Stern visited in the course of compiling his report on the economic impact of global climate. Published on October 30 this year, the Stern Report is an unprecedented, broad-based, sophisticated research project into the economics of global climate change. Mr. Stern concluded that climate change will cut between 5 and 20 percent from world GDP, while measures to reduce greenhouse gas emissions would only cost 1 percent of the world's GDP. The report warned that a delay of 15 to 20 years will increase risks and costs, and called for immediate global action on the issue.

Stern visited Beijing last month. His meetings with Chinese officials focused on the "practical" issues of finance and technology that will be needed for a transfer to a low-carbon economy. "China is not waiting for anyone else," he said, referring to the ambitious energy efficiency goal stated in China's 11th Five-Year Plan, its commitment to the use of renewable energy in power generation, and its high standards for car emissions.

Mr. Stern stressed that the shift to a low-carbon economy will create more business opportunities rather than slowing down economic growth. In an interview with the Chinese press last month, he expressed the same opinion when asked about the costs China was likely to wear. He recognized that some industries were like to suffer but insisted that the economy as a whole would benefit.

For any country, a low-carbon economy is only possible when both the financial support and the necessary technology are in place. Mr. Stern outlined three pillars necessary for the transfer. Firstly, energy should be used more efficiently. Secondly, finance should be accessed through an international market for emission trading, government support and external sources. Finally, adaptation to climate change should be realized.

As part of the supporting research commissioned for the Stern Review, a Chinese report has been compiled by local experts to assess the impact of climate change on China. They have found that drought and flood are the biggest risks for China and that agriculture is the most vulnerable industry.

The Chinese Meteorological Administration announced on December 1 that China had experienced the warmest autumn since 1951 and less rain on average than in previous years. One reason for this is a 0.6 degree centigrade rise in global temperatures over the last 140 years. The temperature in China has increased by 0.8 degrees centigrade over the last 100 years.

Professor Zou Ji of Renmin University, who provides an economic analysis of the report, believes that adaptation makes particular sense to developing nations. The report highlighted the important function of agricultural insurance, the adoption of agricultural policy insurance and financial assistance from the government.

Zou agreed, however, that adaptation is only a band-aid fix and that mitigation is the solution in the long-term. Professor Zou expressed his concerns about soaring emissions in 30 to 50 years time, if inefficient energy technology is not installed today, which is particularly relevant given the boom in infrastructure construction around China.

Zou hopes that new technologies will be used in new buildings in the next five to ten years. "It's urgent that we avoid the lock-in effect," he said. However, this is not easy for medium and small-sized enterprises.

Mr. Stern believes that prices and tax policies are very important incentives to change to low-carbon content products. He said China's policy to reduce the tax rebate for companies that use a lot of energy and pollute heavily sets a good example.

In November 2005, six Chinese government departments, including the National Development and Reform Commission and the Ministry of Finance, announced a pilot program for a cyclic economy in some industries, hi-tech parks and provinces. This year the State Development Bank has joined the program and offered it credit.

"International cooperation may help," said Zou, when asked about avoiding the "lock-in effect". Mr. Stern has stressed that global efforts are necessary to address the risk of climate change.

By People's Daily Online