Raising Consumption, Maintaining Growth and Reducing Emissions: The objectives and challenges of China’s radical change in strategy and its implications for the world economy

Nicholas Stern

Published: December 2011

China’s 12th five-year plan represents a radical change in strategy. China now sees its future growth within this strategy and accordingly as driven by: a rising share of consumption; moving to a low-carbon economy; and innovation. Two indicators are examined – capital efficiency and the relationship between greenhouse gas emissions and output. These help us to understand the scale of the challenges and possibilities in China over the coming decades. The power of China’s example will be immense in influencing the world’s transition to a low-carbon economy and thus how successful the world will be in managing the huge risks of climate change. The 12th plan is very likely to establish China as a leader in the new energy-industrial revolution and demonstrate to the world the potential of this revolution. The implications for the rich countries from such radical change are profound and they should be discussing now how they will handle and respond to such massive change.