Energiatehokkuudesta liiketoimintaaseminaari 22.5.2012Väläys KiinastaKari HiltunenHead of Tekes BeijingCouncelor Science and Technology
The year when the Chinese economy will truly eclipse America’s is insight
Pros and Cons Vast, rapidly growing Market Lack of transparency Predictability Severe competition • FYP, long term strategies, Foreign • Sometimes unfair treatment for Investment Catalogue foreign enterprises Technological advantage Unpredictability • International cooperation wanted • Implementation of legislation Subsidies Public purchasing practices • Go west policy, high-tech status • China hasn’t approved WTO’s public purchasing agreement Still low cost structure Protectionism Country risk? IPR Need to scale up production fast • Capital?
Mapping & Investment At the trend of 80% urbanization population, Chinas cities will need to build 46 billion square meters of new floor space in residential and commercial buildings by 2030. Construction investment for floor space would be a cumulative 39 trillion RMB by 2030. For the next two decades, China would need to spend €150 billion to €200 billion a year —on top of currently planned spending on energy efficiency—to realize the full potential of the technologies. Chinas government is pushing for the expansion of urban mass-transit systems, and spending on transport infrastructure will remain robust. Investment in urban transit will increase between three and five times to 2030 (around 9,399 billion RMB). Up to February 2011, there are 259 cities at prefecture level or above proposed to adopt ecological city development model, and 90.2% are promoting ‘eco-city’ and ‘low carbon city’ as slogans. Source: McKinsey
Real Estate Bubble? Pessimist: China’s housing market is a playground for nouveau riche who buy multiple fancy homes they don’t need. Prices are too high and speculation is rampant.=> Clearly, the trend is unsustainable. Optimist: China is transitioning from a rural to an urban society. New construction is driven by rising incomes and urbanization, and reflects genuine demand for better housing.=> Clearly, the boom has a long way to run. Dragonomics: Both views are correct.
Future? Suisse Group AG: sharp fall in property investment growth Demand is being artificially constrained: prices and sales will drop • Nationwide housing sales fell -15% in Q1/12 after a -8% drop in Q4/11 • Foreign investment in the development of land, the construction and operation of high-end hotels, villas, high-class office buildings and international exhibition centers, as well as foreign investment in secondary real estate markets (e.g.realestate and brokerage firms) are listed as ‘restricted’. The Economist: end of 2011 the residential land bank is expected to be 140.000 hectares => will take 5 to 10 years to profitably digest. Dragonomics: China’s urbanization drive still has at least 20 years to run. 2030: Beijing and Shanghai have more than 50 M people Chinese contractors are targeting to developed market • Slowing domestic market and political turmoil in Middle East and North Africa • M&A, especially infrastructure projects, 2011 1-10: 76.1billion USD revenues from international contracts
Incentive Policies towards low-carbon cities- Solar Energy Roof Plan Providing the project with subsidization.- Renewable energy demonstration city 50-80 million RMB subsidization for each selected city.- More than 50 Eco City project labeled by NDRC Set criterias, monitored annually- More than 100 Smart City projects under development- Heat Metering and Reconstructions for Energy Conservation of Established Buildings- Water-saving city creation
Vice Minister of MOHURD : problems in eco-city projects Wrong location • Often in fragile ecological areas, Chongming Island was mentioned as an example Bad traffic solutions • Lack of density, doubling the density of an area can reduce driving by more that 30 percent Not really eco or smart cities • In the end of the day basic developing business No understanding of local culture and requirements • South Railway Station in Shanghai was mentioned as an example Lack of recycling Too expensive technologies and solutions • garbage collection system was mentioned as an example: expensive and consumes lot of energy Bad general planning • Housing diversity, Occupational integration,Transportation diversity Lack of use of local resources
The eco-city concept is takingoff in China,but with mixed results
Eco-Valley in Mentougou, Beijing Design Phase• Main technology/ Specific technology related to building energy efficiency • Recycling and reuse of urban waste water and garbage • Using clean energy on vehicles • Wind power generation • Self-sufficiency on food, and adopting energy ecological cycles in all the grain fields, orchards and vegetable gardens.
Eco-Valley in Mentougou, Beijing Villas for super rich Construction Phase Selling prices starting from 10 M USD Living area > 1000 sm Very little or nothing to do with ecological ideas
But we have hope? Li Kegian: “ 75% of China’s building stock should be demolished or renovated ” Beijing Government Working Report 2012: the project of reconstruction & renovation simple & old buildings in Beijing will start from the first phase of reconstruction 882 buildings with total area of 15 million square meters and more than 1 million families being involved. The government will finance 15 billion RMB to the project. The first demo renovation project has been carried out at Xinyuanli community in Chaoyang district in April 2012.
"Nothing is easy buteverything is possible in China"