China is Working on Green Recovery Through New Infrastructure Policies

China’s Central Economic Working Conference raised the New Infrastructure concept in 2018, including 5G, artificial intelligence (AI), industrial internet and Internet of Things (IoT). In April 2020, to cope with the negative socio-economic impact brought about by the pandemic, the National Development and Reform Commission released a revised categorization of new infrastructure to include three elements of next-generation technology: innovative, integrated, and information infrastructure,  integrating more digital economy characteristics such as blockchain, big data centers etc., in the scope based on communication technology.

China has integrated the New Infrastructure plan into the Five-Year Plan (a general guideline for government development) at every level of government, aiming to make it a sustainable engine for China’s economic growth. Following China’s announcement of 30`60 Goal (peak out CO<sub>2</sub> emissions by 2030 and achieve carbon neutrality before 2060) at the UN General Assembly, the Central Planning Committee released further top-level documents which outlined New Infrastructure’s critical role in realizing the commitment. To enhance sustainable economic growth and achieve the 30`60 goal, China will need to take more measures to increase energy efficiency, address social equity issues, and widen the scope of the plan.

Both the public and private sector should pay consistent attention to the efficiency of the energy-intensive industry, such as the data centers and 5G network infrastructure. The main difference between the goal of New Infrastructure and the previous infrastructure plan is that the post-pandemic one involves not only high-pace economic development in China, but also strives for a green and inclusive transition in the industry.

A report from Greenpeace estimates that electricity consumption from digital infrastructure in China will grow 289% by 2035. Electricity use at 5G database stations in China is projected to increase nearly 500% over the same period. Meanwhile, China Electricity Council reports that in 2020, 61% of electricity that powered China’s digital infrastructure came from coal burning plants. Relying on the previous plan will mean that the implementation of next generation technology will dramatically increase carbon emissions in high-tech industry, which will accelerate China’s path toward its carbon emission peak, allowing them to reach peak emissions before 2030.

Apart from the government’s policy orientation, technology companies should also take responsibility to lower emissions through carrying out environmentally friendly projects using wind, solar, and other renewable energy sources. When technology companies’ financial incentives alone are insufficient to reduce carbon emissions, the banks and other financial institutions can also guide the industry towards low-carbon transition by using risk assessments and evaluations about Greenhouse gas (GHG) emissions as part of their criteria when choosing investment projects.

Furthermore, according to a joint report by Greenpeace and China Association for NGO cooperation, although the number of new jobs created by “New Infrastructure” is fewer than that by the traditional one in 2020, the economic benefits of “New Infrastructure” is an additional $4.7 billion. What’s more, “New Infrastructure” may not increase quantity, but it will increase quality of employment opportunities by creating more jobs in high-tech sectors. Such industrial upgrading provides a path towards green development; however, when more and more positions require high-quality skills and academic background, the workers in the traditional infrastructure industry will gradually phase out.

This raises concerns among both policy makers and executives. On one hand, the government and private industry should work together to offer vocational training to workers to make them attractive for employment in the new economy, minimizing the side effects of the industrial transition. On the other hand, the government needs to work with higher education institutions to provide a high-quality workforce for this new industry, easing the restructuring of the country’s workforce. In the aftershock of the pandemic, remote learning with expanded use of information and communications technology now plays an important role in skilled labor cultivation.

Finally, while the seven sectors mentioned above have been defined as “New Infrastructure”, the scope should not be a limitation for further green transition. It is vital to find ways of incorporating “green and sustainable recovery” into all industries—new and existing, encouraging the spread of green innovation. In contrast to high-tech companies, which easily reached a synergy with green transition process, the traditional high-carbon-emission industry, such as electricity, transportation etc., refuses to move on from legacy processes in favor of greener, more sustainable infrastructure due to entrenched interests. Thus, the policy should not only focus on the new high-tech development, but also create incentives for other industries to offer an equal and inclusive environment.

China’s “New Infrastructure” plan has shown its commitment to the 3060 decarbonization goal and the future development direction in high-tech industries. To make the plan inclusive and sustainable, both the government and private sectors should ensure effectiveness and equality during the green transition.