May 22, 2017

CHINA LEADS IN GREEN BUILDING

China is the world’s largest green building market. With more than 1 billion square feet of certified green, sustainable building space, China has now surpassed the United States. It only took China half the time – about 10 years, compared to the US. China aims for a 50 percent commercial green building rate by 2020, as part of its pledges under the Paris Climate Agreement. If it reaches that goal, about half of green building space in the world will be in the Middle Kingdom.

For green building certification, China uses one domestic and two major Western standards : the China Three Star Standard, the Leadership in Energy and Environmental Design (LEED) standard from the US, and the Building Research Establishment Environmental Assessment Method (BREEAM) standard from the United Kingdom.

The Value of Sustainability

Those three competing standards have their limits. With increasing urbanization – 300 million more Chinese people are expected to live in cities in the next 15 years – more green buildings will be needed. What is crucial now is thinking of green buildings in terms of sustainability.

Construction decisions made in China are often based on short-term costs instead of long-term savings from energy efficiency. Despite initiatives to improve energy efficiency, such as the Chinese Ministry of Housing and Urban-Rural Development’s building energy efficiency label, these programs are still voluntary for the majority of buildings and will unlikely reduce energy consumption in China on a large scale.

Furthermore, the standards should develop new indicators on responding to climate change, such as total CO2 emission reduction or the carbon footprint of one building. The standards should take into account China’s vast territory and differentiated climatic zones. It is difficult to apply standards without considering the local situation.

The cost of green building techniques can represent between 10 – 30% in extra building costs. This remains a significant barrier for further adoption. Even if the Chinese government intends to subsidise around 40 – 50% of the additional building costs through a series of regulations and policies, most of the time, subsidies go straight to public buildings and (Chinese national) buyers of residential units. It is often faster for public buildings to get certification than for private construction. As a result, more than 70% of green buildings in 2013 were public buildings.

The Need for Western Technology

Besides the adoption of green building techniques, China has also seen a surge in ‘eco-city’ development in recent years. One of the best known is an area near the port city of Tianjin. Built in partnership with Singapore’s sovereign wealth fund, the project plans to transform a former uninhabitable swamp into a residential area for more than a million people, as a satellite ‘eco-city’ of the municipality.

More than 100 such eco-projects are scattered throughout China, mainly aimed at establishing new cities of 250,000 to 500,000 people. These cities do create potential showcases and opportunities for Western technologies in a country hungry for foreign know-how. Yet, since green buildings are closely defined by standards, only materials and solutions that contribute to the certification score will have the chance to enter the Chinese green building market.

Digitalizing your company in China

Not merely a tech-business China seems well ahead on the digitization road: use of new technologies in services (e.g. the mobile payments) , use of artificial intelligence and big data analysis in decision-making (e.g. the Court of Hangzhou), consumers’ behaviors (e.g. the shared bikes), public investments (cf VVR’s article on smart energies)… As a consequence...

CHINA’S URBAN MAP

First, second, third and fourth-tier cities A May 2018 report by Morgan Stanley asserts that the future of China’s growth (by 2030) will lie within lower-tier cities (namely the third and fourth-tier). It is more and more common to see economic analyses regarding China make use of this urban classification. While being a useful analytical...

SPOTLIGHT ON THE “TAOBAO VILLAGES”

Taobao : It is Alibaba’s e-commerce platform, launched back in 2003. This C2C platform gathers today over 500 millions of active users. Besides, they also developed a B2C platform in 2008 called T-Mall. These two platforms saw the transaction of some 3 trillion yuans over the year 2017. It is very likely that a large part...