VZCZCXRO1325
PP RUEHCN RUEHGH
DE RUEHBJ #0808/01 0852330
ZNR UUUUU ZZH
P 262330Z MAR 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 3112
INFO RUEHAK/AMEMBASSY ANKARA PRIORITY 0415
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RUEHHK/AMCONSUL HONG KONG PRIORITY 0871

UNCLAS SECTION 01 OF 03 BEIJING 000808 
 
SIPDIS 
SENSITIVE 
 
STATE FOR OES/EGC BARBARA DEROSA-JOYNT, ED FENDLEY 
STATE ALSO FOR EAP/CM 
 
E.O. 12958: N/A 
TAGS: EFIN ENRG SENV KGHG CH
SUBJECT: Response to Request on Green Investments in 
Stimulus Packages 
 
Ref: a) State 026022; b) Beijing 0665; c) Guangzhou 0157 
 
¶1. (SBU) Summary.  Since November 2008, China has 
announced a RMB four trillion (USD 585 billion) fiscal 
stimulus package as well as ten industrial sector 
revitalization plans, the latter largely without specific 
funding.  Various parts of the stimulus program and some 
of the sectoral plans include "green" elements, although 
in most cases it is not clear if they represent new 
initiatives or previously existing programs.  Also, in 
most cases funding levels for "green" portions of the 
projects have not been specified.  This cable provides 
Embassy responses to questions raised in Ref a.  End 
summary. 
 
¶2. (SBU) To address the growing impact of the global 
economic crisis, in November 2008 China's State Council 
announced a comprehensive two-year, RMB four trillion 
(USD 585 billion) fiscal stimulus package intended to 
boost economic growth, stimulate domestic consumption, 
promote economic rebalancing, and create or preserve 
employment.  Of the RMB four trillion total, the central 
government is to provide RMB 1.18 trillion, while 
provincial and local governments, banks, and other 
enterprises would be responsible for the remainder. 
Approximately RMB 230 billion (USD 34 billion) is 
designated for disbursal to project implementation 
agencies and enterprises in December 2008 and the first 
quarter of 2009, with the remaining funds to be utilized 
through the end of 2010.  Chinese Government agencies, 
led by the National Development and Reform Commission 
(NDRC), have identified a list of sectors and specific 
projects for funding under the stimulus program.  It 
appears that some of the projects selected had been 
approved previously but not funded, and were therefore 
able to be implemented quickly. 
 
¶3. (SBU) According to the NDRC's outline, the RMB four 
trillion will be allocated to the following sectors: 
 
-- Livelihood projects (RMB 400 billion), including 
residential buildings, low-cost housing, and living 
quarters in forestry, agricultural and mining regions; 
 
-- Rural infrastructure (RMB 370 billion), including 
rural water resources (RMB 40.1 billion), drinking water 
safety and electricity (RMB 43 billion), and small 
hydrology projects (RMB 63.5 billion); 
 
-- Infrastructure (RMB 1.50 trillion), including 
railroads (RMB 73.2 billion), highways (RMB 103.5 
billion), airports (RMB 24.2 billion), and ports (RMB 
10.3 billion); 
 
-- Social welfare (RMB 150 billion), including education, 
health care, culture, and family planning; 
 
-- Energy efficiency, emission reduction, and ecological 
projects (RMB 210 billion), including ten key energy- 
saving projects (RMB 32.5 billion); urban waste water, 
solid waste treatment, and pipeline construction (RMB 13 
billion); and key water bodies pollution control projects 
(RMB 4 billion); 
 
BEIJING 00000808  002 OF 003 
 
 
 
-- Industrial restructuring and technology upgrade (RMB 
370 billion), including science and technology special 
projects (RMB 12.5 billion) and enterprise innovation and 
high-tech projects (RMB 20 billion); 
 
-- Post-earthquake reconstruction (RMB 1 trillion); 
 
-- Other social services (RMB 39.4 billion); 
 
-- To be determined (RMB 65 billion). 
 
Energy and energy efficiency 
---------------------------- 
¶5. (SBU) The energy industry in China will benefit 
greatly from the stimulus package, with RMB 580 billion 
(USD 85 billion) slotted for construction of new nuclear 
and wind power capacity.  According to the stimulus plan, 
China hopes to increase the renewable share of total 
energy output to ten percent by 2010, in order to reduce 
pollution and decrease dependence on coal and oil. 
Specifically, the stimulus package details 44 clean 
energy projects, including 29 for wind power.  Although 
not included in the stimulus package, the NDRC also has 
approved hydropower and windpower plans to generate 
approximately two gigawatts of energy.  According to 
media reports, the Chinese Government wants wind power 
installed capacity to reach ten GW by 2010.  Ref C 
describes China's efforts in Fujian Province to develop 
alternative energies. 
 
Power Grids and Power Lines 
--------------------------- 
¶6. (SBU) The infrastructure development segment of the 
stimulus package includes approximately RMB 810.8 billion 
(USD 119 billion) for upgrading power grids in 2009.  The 
prime recipients for this funding will be China's two 
major power grid companies: the State Grid Corporation of 
China (State Grid) and China Southern Power Grid.  State 
Grid operates electricity transmission grids in 26 of 
China's 31 provinces, and plans to invest RMB 83 billion 
(USD 12 billion) of stimulus money to construct more 
ultra-high voltage (UHV) power lines to improve power 
transmission and reduce losses.  Completion date is the 
end of 2010.  In addition, State Grid plans to utilize 
RMB 1.16 trillion (USD 170 billion) from bond issuance to 
finance new power grid construction, with supplemental 
funding from local governments.  China Southern Power 
Grid plans to invest RMB 60 billion (USD 8.8 billion) to 
renovate its power grids. 
 
Conversion and Clean Technology Projects 
---------------------------------------- 
¶7. (SBU) Approximately RMB 350 billion (USD 51 billion) 
of China's fiscal stimulus package is assigned to 
ecological protection to improve tainted water supplies 
and expand recycling and water pollution projects.  This 
includes 120 major water conservancy projects, 65 large 
and medium-sized reservoir reinforcement projects, and 40 
large-scale irrigation and water conservation projects. 
Separately, the Ministry of Water Resources plans to 
invest RMB 20 billion (USD 2.9 billion) to construct 
reservoirs and irrigation systems.  Finally, an 
 
BEIJING 00000808  003 OF 003 
 
 
unspecified amount of stimulus money is intended for 
reforestation projects, treatment of chromium residue, 
and sewage treatment systems. 
 
Sectoral Revitalization Plans 
----------------------------- 
¶8. (SBU) In addition to the fiscal stimulus package, in 
January and February 2009 the Government issued ten 
industrial sector revitalization programs, some of which 
may overlap with and/or receive funding through the four 
trillion stimulus package.  Although funding levels were 
not specified, in general these programs are designed to 
stimulate domestic consumption and accelerate 
consolidation and modernization of the designated sectors. 
Some of the ten plans contain some "green" elements, such 
as improving water treatment and factory effluent in the 
textiles sector, but they are not quantified.  Similarly, 
the automobile, machinery, light industry and nonferrous 
metals plans all include energy saving and environmental 
protection as goals, but only the automobile plan -- the 
"greenest" of the ten -- provides any specifics about 
funding (a RMB five billion subsidy to encourage farmers 
to upgrade their vehicles).  The auto plan includes 
measures to protect the environment by reducing the sales 
tax on vehicles with smaller engines and encouraging the 
development of environmentally-friendly cars.  The 
petrochemical plan focuses in part on construction of new 
refineries and new processing technologies (ref B), and 
may help address urban pollution by improving the quality 
of petrol and diesel while reducing emissions. 
 
Not Mentioned 
------------- 
¶9. (SBU) Much of the detail remains lacking in China's 
fiscal stimulus package and industrial revitalization 
programs.  Broad areas that have not been addressed 
include research and development of low-carbon 
technologies, low-carbon transportation, mass 
transportation, and incentives to reduce the use of 
fossil fuels.  Nor are there any indications that "green 
jobs" or "green worker training initiatives" will form 
part of the plans. 
 
PICCUTA