The investment needs of energy-saving and environmental protection industries will reach 450 billion yuan (US$65.835 billion) over the next five years, a senior official of the State Development and Reform Commission (NDRC), China's top economic planning body, said on August 15, 2009.

Xie Zhenhua, deputy director of the NDRC, said energy-saving industries are facing unprecedented development opportunities in China. Figures show that the gross output of the industry reached 1.41 trillion yuan (US$204.82 billion) in 2008, accounting for 4.7 percent of GDP.

Xie said that 210 billion yuan (US$30.723 billion) of the funds in China's ongoing 4 trillion yuan (US$585.2 billion) stimulus program were earmarked for energy saving, emissions cutting, development of the circular economy, and eco-environmental construction. Developing the circular economy is considered one of the key initiatives in industrial upgrading and restructuring.

"China will encourage and lead non-governmental investment in this industry, encourage enterprises to undertake outsourcing on the construction of major projects, and drive the rapid growth of service industry,"Xie said.

Luo Jianhua, secretary–general of the Chamber of Commence of the Environment Service Industry of the National Federation of Industry and Commerce, believes the entire world has reached a consensus that developing the green economy is a good way to combat the financial crisis. But he said the development of green industry in China is still lagging behind.

Four existing problems hamper progress in China. The first is the country's backward industrial structure. Sewage and waste treatment plants in urban areas are outdated. Salvageable materials are not being recycled, and the energy-saving service industry is still on a small scale.

The second problem is lack of innovation resulting in low-level duplicated constructions, too many enterprises producing equipment and products, and too few focusing on R&D and services.

The concentration of industry is also lagging behind. For example, China's top 10 water supply companies combined only have a 20 percent market share.

The final problem is weak management capacity.

To deal with the problems, a report from the Beijing Sustainable Development Promotion Center of Science and Technology suggests that support policies should concentrate on technological innovation. Enterprises should be encouraged to participate in major national science and technology programs and green industry technology and resources should be shared.

Speaking at a national conference on finance and economic construction, Vice Minister of Finance, Zhang Shaochun, said the Ministry of Finance would intensify its efforts to support the development of emerging industries in the fields of new energy, energy saving, and environmental protection.

"China will support innovation and newly emerging industries, target the expansion of consumption and structural adjustment, while focusing on energy saving, emissions cutting and eco-environmental construction," he said.

(China Development Gateway by Jiao Meng, August 21, 2009)