China’s unparalleled growth over the past decades has come at a price: pollution. The government has made fighting it one of its prime objectives. Its aim of a Beautiful China ties in with other strategic goals, including global leadership in electric vehicles and technological innovation.
At the latest National People’s Congress in March 2018, China’s leaders announced a 19% increase in spending to curb pollution, to an amount of RMB 40.5 billion (USD 6.4 billion). One of the aims is to cut sulfur dioxide and nitrogen oxide emissions by 3% in 2018.
As of 1 January 2015, the New Environmental Protection Law has significantly increased corporates’ pollution cost because of the high penalties that are being enforced. As of May 2017, the Central Environmental Inspections team had imposed 15,586 penalties to a total amount of RMB 775 million. Corporates’ environmental investments have increased to up to 13% of total investments.
Last winter, factories were required to cut their output capacity by 50% on heavy pollution days, and millions of households and industrial shops were ordered to switch their heating systems from coal to electricity in an effort to reduce toxic emissions. In 2018, the country aims to convert another 4 million homes to natural gas or electricity. The government has closed polluting factories and has set up a special police force. This year, it has expanded environmental inspections to more cities and regions in a new round of checks that will be executed until April 2019, as part of a three-year anti-pollution plan.
The environment reform isn’t limited to improving air quality. China has stopped accepting other countries’ plastic and paper trash as well, in response to public concern over pollution and a decreased need for scrap materials.
The war on pollution tallies with many other Chinese objectives. Its focus on environmental reform and technological innovation has made it the global leader in electric vehicles, to name but one result. Robeco Chinese Equities holds several stocks with direct exposure to the electric vehicles theme, i.e. car manufacturers, or indirect exposure, such as battery producers.
China also takes up an important role in clean energy. Throughout the world, solar panel prices are falling, as China is investing huge amounts in clean energy. China invests more than double the amount of the US and two-thirds of solar panels are produced in China1. This offers interesting investment opportunities to (sustainable) investors. In addition to wind and solar energy, China is looking into new clean energy technologies such as hydrogen. Finally, China’s supply-side reforms, aimed at cutting excess industrial capacity, also help clean up the environment.
As the biggest polluters are state-owned, government efforts to reduce concentrations of the smallest polluting particles have been effective. The Chinese government states that heavy air pollution days in key cities are down 50% over the past five years. Last year, Beijing’s average daily concentration of PM2.5 particles – tiny particles in the air which, in large concentrations, pose a risk to people’s health – was almost a third lower than in 2015, compared with declines of around a tenth for some other major cities. As growth accelerated to 6.9% over 2017, there’s no sign so far that the war on pollution comes at the expense of economic growth.
1 Source: Bloomberg New Energy Finance
The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.
The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.
Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is ACOLIN Fund Services AG, Affolternstrasse 56, 8050 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.
Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/RobecoSAM AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/RobecoSAM AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.
This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.