China, People's Republic of: Industry Green Growth Indicators and Innovative Mechanisms for Guangdong Province

Energy / Energy efficiency and conservation

Finance / Finance sector development

Industry and trade / Small and medium enterprise development

The proposed knowledge and support technical assistance (TA) will support the development of industry green growth indicators and innovative mechanisms through research, capacity development, and policy advice to promote green growth of the industries in Guangdong Province, the People's Republic of China (PRC).

The PRC Government has requested the TA from the Asian Development Bank (ADB) as part of its efforts to establish a comprehensive indicator and evaluation framework, system, and implementation mechanism to (i) improve environmental performance of industries in Guangdong, and (ii) support decision-making for future green financing. Following a mission in May 2018, ADB and the government reached an understanding on the TA objectives, scope, implementation arrangements, costs, and terms of reference for consultants. The TA is included in ADB's country operations business plan for the PRC, 2018 2020.

Since the PRC started the economic reform in 1978 and open-door policy implementation in 1979, Guangdong rapidly developed from a lagging agriculture area into the country's key manufacturing base. As of 2016, Guangdong was the most populous region in the country and ranked first among PRC regions in gross regional product, accounting for 11% of the PRC's gross domestic product. Guangdong's economic sectors (primary, secondary, tertiary) is 4.6, 43.4, and 52.0 by gross regional product ratio in 2016. About 79% of Guangdong's gross regional product is concentrated in Pearl River Delta, which creates regional disparity within the province.

Environment degradation is a serious issue for the PRC. Guangdong, which took a leading role at the time of the economic opening, has also been taking very active role in addressing recent environmental issues. As guided by the central government, Guangdong has established various policies to achieve ecological society and promote green growth. However, Guangdong still relies heavily on high-input, high-consumption, and high-emission development model. Industries consume over 60% of the total energy in Guangdong. Manufacturing in Guangdong is largely supported by small- and medium-sized enterprises most of which are at lower hierarchy of the industrial supply chains, that still largely depends on traditional labor, energy, and resource intensive production method. The Guangdong government agencies issued series of policies and measures to promote green growth of industries which are fragmented and do not provide practical measures for enterprises, industrial parks, or cities to adopt and implement improvement measures.

To address the challenges and issues of fragmented and impractical policy guidance for practitioners, the TA will conduct research to propose usable indicator system to evaluate green growth of enterprises, industrial parks, and cities; and propose innovative mechanisms for Guangdong to promote green growth, such as evaluation and assessment mechanism, green financing mechanisms, and selection criteria. The indicators and mechanisms will be developed in consultation with Guangdong Economic and Information Commission (GDEI) and Guangdong Provincial Finance Department. The pilot evaluation exercise will rate the green performance of enterprises, industrial parks, and cities for internal references. GDEI will adopt the research outcomes and recommendations as standardized tools and mechanisms and apply them to the activities such as comprehensive utilization of industrial solid waste, assessment of energy conservation, planning of pollution prevention and control, development of resource recycling base, fund support for industries' energy conservation and environmental protection, and adoption of proposed mechanisms as standardized tools. The policy proposals will be submitted to Guangdong provincial government for inclusion in its Fourteenth Five-Year Plan.

The energy consumption per unit of Guangdong's major manufacturing products reduced

The circular economy of more than 100 economic parks in the province improved

Good practices and lessons on industry green growth and evaluation system studied and documented

Indicators to comprehensively evaluate Guangdong industries' green growth developed

Financial system and mechanism to promote green development and design of innovative financing projects prepared