China faces economic challenges in keeping environmental promises

Premier Li Keqiang has pledged that China will honor its obligations on climate change while meeting with business leaders at the ongoing World Economic Forum event in northeast China's Dalian city.

"China has announced voluntary emissions reduction targets and it will brave the pressure to produce what has been promised," Li said on Wednesday, admitting the country is already under huge pressure to meet its goals.

Official data showed that China's factory activity continued to lose steam in August, suggesting the world's second-largest economy faces prolonged downward pressure.

China's manufacturing purchasing managers' index (PMI) for August came in at 49.7, down from 50 for July. A reading above 50 indicates expansion, while that below 50 represents contraction.

The index fell into contraction territory for the third time this year, and the August reading was the lowest since August 2012.

Concerns have emerged that China's economic momentum will be undermined as it presses ahead with environmental protection.

China has promised to hit its CO2 emissions peak by around 2030, after which the CO2 emissions per unit of GDP will drop by 60 to 65 percent compared to 2005. Non-fossil energy will account for 20 percent of primary energy consumption by around 2030.

Facing mounting public discontent over smog and other environmental problems, China "declared a war" on pollution last year, vowing to abandon a growth-at-all-costs economic model. It has started to eliminate substandard industrial capacity and reduce coal consumption.

According to a report published by the Ministry of Environmental Protection on Wednesday, measures to combat pollution, including closure of outdated production facilities and caps on pollutant emissions, have a short-term, limited negative influence on economic growth.

The report estimated that China's gross domestic product (GDP) had decreased 186.9 billion yuan (29.3 billion U.S. dollars) due to the closure of outdated production facilities, a cost of 0.12 percent of GDP, during the 11th Five-Year Plan period from 2006 to 2010.

"The move curbed the growth of traditional industries like thermal power, steel and concrete over a short time, but boosted some emerging industries such as services and environmental protection in the long term," it noted.

The advantages of an improved environment for economic development overweigh its disadvantages, said the report, adding that efforts to clean the environment can advance industrial upgrades and reduce economic losses.

"China must strike a balance between the need to develop and its obligations to fulfill international responsibilities by switching to a more sustainable development mode," the premier said.

China has made strong efforts to achieve green development, including seeking growth from service industries, Li added, citing a 5.9-percent drop in energy consumption per unit of GDP in the first half of 2015. Endi