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Wednesday, March 08, 2006

Efficient solution to resource waste

China Daily 2006-03-08 06:04

To improve energy efficiency, the government must take action, says a signed article in Beijing Youth Daily. An except follow:

The Chinese Academy of Sciences published "Strategic Report: China's Sustainable Development 2006" last month. The research team used the consumption of energy, water, cement, steel and nonferrous metal to calculate the resource-saving index, and ranked China 54th for resource consumption efficiency among 59 countries listed.

To increase the efficiency in resource consumption, the government has a lot of work to do.

First, there are still a great proportion of State-owned enterprises (SOEs) in China. Managers of SOEs normally do not have a strong cost control awareness as they are not owners of the enterprises. The State shoulders the high production costs.

In some monopoly enterprises, the situation is even worse because they lack the drive to lower costs. It becomes common that monopoly enterprises are huge resource consumers.

Second, local governments' decision-making methods also lead to low efficiency of resource consumption. Some local governments intervene in production and their investments cannot be properly managed.

Last but not least, the GDP-oriented political performance assessment system is not good for improving resource consumption efficiency. For many years in China, economic development has been misunderstood as simply the growth of GDP, which has been used as a ruler to measure the political achievements of local officials.

Some local governments increase the fixed-assets investment scale irrationally, which leads to overcapacity and pollution. Others promote the real estate industry blindly, which leads to low occupancy rates.

Therefore, the key to improving resource consumption efficiency is to regulate "official conduct." A scientific and democratic decision-making mechanism should be promoted. And a performance assessment system that honours resource consumption efficiency should be promoted.

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