China’s Green Future Implodes As Economy Nearly Stalls

  • Date: 22/10/19
  • Chriss Street, The Epoch Times

China’s transition to a green economy is imploding as the economic growth needed to pay for the massive state-funded subsidies hits its slowest pace in three decades.

Vice Premier Liu He was praised for his January 2018 keynote speech at the World Economic Forum (WEF) in Davos, Switzerland for stating that in addition to spending $4 trillion on its “One Belt One Road” (OBOR, also known as Belt and Road) initiative to build the infrastructure to lift a billion people in 70 countries out of poverty across the planet, China had declared “war on pollution and introduced a number of green initiatives” to “dismantle coal-fired power plants, reduce overall emission levels and cut particulate-matter emission rates.”

WEF stated in April 2018 that to subsidize sustainable energy, vehicles and buildings for its global “transition to a greener economy,” China’s Environmental Risk Management Initiative (ERMI) would sell between $6.4 trillion to $19.4 trillion (40.3 yuan to 123.4 trillion yuan) of “Green Bonds” that would be a “win-win for investors and developing countries.”

China sold $167.3 billion of OBOR long-term Green Bonds in 2018, with most of the proceeds mostly used to buy sustainable solar panels, wind turbines, electric and hydrogen powered vehicles, and building materials from Chinese companies. The 30-year bonds committed developing nations to pay the debt through environmental taxes.

But over the last eighteen months as the Sino-U.S. trade war ratcheted up, China’s after-inflation “real” gross domestic product growth withered from 8.8 percent in the first quarter of 2018 to 3.7 percent in the third quarter of 2019. During the same period, industrial production growth fell from 5.5 percent to -1.1 percent, according Endo Economics.

As cash flow withered, China’s annualized fixed asset investment growth plunged from 12 percent growth in the first quarter of 2018 to a stunning -40.4 percent, and retail car sales growth tanked from 8.6 percent to -13.3 percent.

China has been offsetting the $100 billion cost in U.S. trade war tariffs by slashing private business tax rates and increasing lending to state-owned enterprises. But with the International Monetary Fund in June forecasting China would suffer its first balance of payments deficit in twenty-five years, China has quickly abandoned its green economy.

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