China Asks Industries to Cut Energy Consumption

China's blessing of rapid economic growth may also be the country's greatest curse — if it cannot successfully manage the energy use and raw materials driving the expansion, that is. In just one generation, the world's most populous country has become its second-biggest economy as well as the most rabid consumer of energy products on the planet.

China is today the world's biggest automotive market. It's also the largest market for a wide range of raw materials used in the high-tech and electronics industry, including aluminum, copper, steel, zinc, and a wide range of rare earth metals. The government knows these are finite resources and has been trying to introduce measures to improve the sourcing and usage by manufacturers in the country.

Securing sufficient supplies of critical raw materials is important to China's continuous economic growth. The country also needs to be able to reassure international companies that they would have adequate supplies of raw materials and semi-processed parts needed for the manufacturing facilities those companies are moving to China. This is why China's leading companies have been very active in sourcing raw materials globally. (See: Five Sources of Risk in 2011.)

In recent years, the central Chinese government has quietly introduced a new policy of asking companies to develop products that require fewer scarce raw materials and have lower energy consumption. The policy has implications for the electronic supply chain. Parts suppliers, especially semiconductor vendors, are being compelled to develop and introduce parts that are more energy efficient or that have smaller form factors — an essential element of improved energy conservation.

OEMs and communication services providers are getting in on the action, too. In the latest development, Nokia Siemens Networks has partnered with China Unicom to slash energy consumption in the telecommunication service provider's mobile base transceiver station in Anhui province. The goal of the partnership is to cut energy use 20 percent or more at the base stations.

“This is truly a win-win situation for us,” says Li Chao, general manager of Anhui Unicom. “It will help us meet the government imperative to mobile operators to reduce energy consumption. In the long run, it will also help us reduce our network operating costs from 10 percent to 30 percent while improving service availability.”

Nokia Siemens Networks will provide energy solutions for China Unicom's room air conditioners. “Our solution provides a comprehensive approach to reduce energy consumption in mobile operators' networks,” notes Xue Rui, head of Nokia Siemens Networks' global services business in Greater China. “Not only do we help operators meet their green targets but also help them do so cost efficiently.”

Telecommunications is one of the major sectors where China is pushing for change, but it is not the most critical. Companies operating in the industrial, heavy machinery, manufacturing, and mining sectors are also being asked to dramatically reduce total energy consumption by implementing advanced technology processes and even taking such simple steps as effectively winterizing buildings to conserve heat.

The move towards more effective power generation and usage offers opportunities as well as challenges for companies in the electronics sector. By mandating standards, China allows some companies to generate new sales while forcing others to raise capital expenditure to meet the new demands. After reviewing some of the latest reports on China's intentions I've come to the conclusion that the industry might as well get onboard.

Even if the high-tech sector does not welcome some of the changes being forced upon manufacturers it is quite clear the Chinese government won't back down. Why not exploit the changes rather than fight them?

16 comments on “China Asks Industries to Cut Energy Consumption

  1. Anand
    April 12, 2011

    This is great initiative by China to ask the industries to cut energy consumption. I hope other countries will follow china and implement this policy.  Less energy consumption will lead to  less reliance on nuclear energy.

  2. prabhakar_deosthali
    April 12, 2011

    If this is an initiative by the China Govt then it surely is going to succeed. because in China a govt initiative cannot be taken lightly . It is almost like an order. The way China has managed to contain its population growth by govt initiatives , this measure will also have a resounding success. China's communist govt makes it possible to have the advantages of the open economy alogwith the tight control over the  matters of National Interest.

  3. Ariella
    April 12, 2011

    If it incrases efficiency while reducing cost, what is the problem with it?  Granted in the US, industries prefer to be self-regulating, but in China the government does not claim to believe in laissez faire.

  4. Adeniji Kayode
    April 12, 2011

    @anandvy: And will less reliance on nuclear energy not increase high dependency on fuel for energy consumption?

  5. Anand
    April 12, 2011

    Adeniji Kayode,

    I meant Cut in Energy Consumption will eventually lead to reduced energy demand and thus it might give us that extra flexibility to choose between nuclear and non-nuclear based energy genearators. For example right now developing countries like India/China doesn't have any other option but to opt for nuclear based energy generators.


  6. Anna Young
    April 12, 2011


    The new policy may have implications for the electronic supply chain industries, but if the requirement is to develop products that requires  “fewer scarce raw materials and lower energy consumptions”, then supply chain industries have no option but to comply with the Chinese government.


  7. jbond
    April 13, 2011

    I think this is a great idea, and with the Chinese government at the reigns it will happen. With the ever expanding industries in China and other countries, energy consumption is going to be vital. The process in the U.S. is going to take some time. Many companies don't want to spend the money on upgrades and they don't have direct pressure from the government to do so.

  8. Hardcore
    April 13, 2011

    China is facing a really serious problem as regards power shortages.

    They have the resources, they can build new power stations, but the problem is that the consumption is becoming exponential.

    A decade ago, most people owned a couple of fans, a rice cooker and perhaps a TV, now they own multiple electronic devices including refrigerators, mobile phones (greater than half a billion chargers have a significant impact on consumption), air conditioners, DVD players, computers…. the list is becoming endless

    They can build a power-station in about 3 years, but still demand is outstripping supply,

    Most areas have the power cut 2-3 days in seven, each factory is power rationed all to prevent the network from overloading (and potentially a hidden system to cool the economy).

    In the last few years  they have been 'upgrading' the electric meters of each consumer so that they can monitor and cut your supply if you are consuming excessive amounts of power.

    A quick 5 minute reset of a consumers power is enough to shut down any air conditioners that have been left on in unoccupied premises, but still this is not enough, finally they have started to tackle the issue of poorly designed power hungry devices (in some cases the a Chinese appliance consumes 30% more power than a similar appliance made outside of China)

    If this situation is rectified , that is greater than a 30% saving they can make just by changing the rules.




  9. stochastic excursion
    April 13, 2011

    Which industries drive a country's economic engine also determine how easily it can implement cutbacks in energy consumption.  In the US, oil companies and the automotive industry have weighed in heavily on energy policy in the last decade (though to what extent may never be disclosed).  As a result you see an unwillingness by the US to cooperate in the Kyoto global warming accords.  As oil ceases to be a growth industry, the US may be forced to adapt.  China, with its output being mainly low energy-consuming products, has no vested interest in preserving a high level of energy consumption by its population.

  10. mfbertozzi
    April 14, 2011

    It is a good point Stochastic, on the other side in a recent past several products from China especially in the microelectronics have been refused for example in Europe or US because not compliant to energy saving and power rules in terms of extra-consumption. Till now it is a quite curious matter…

  11. saranyatil
    April 15, 2011

    Definitely it is a great initiative taken by the government, If this works china can be renamed as '' GREEN NATION''.

  12. Eldredge
    April 16, 2011

    I'm sure the Chinese government is using a stronger tactic than 'asking', but it appears to e out of necessity.

  13. t.alex
    April 22, 2011

    I believe there must have been some incentive program rather than 'asking'.

  14. Eldredge
    April 23, 2011

    The motivation for this policy is demand-driven, based on the energy supply shortages that they are experiencing. This is a real, legitimate problem, but it isn't green-driven. On the other hand, real shortages provide a market-driven reason for energy conservation, and may be the best way to encourage efficient use.

  15. Kunmi
    April 25, 2011

    I can see the reason why China want to go green on energy. The rapidly growing industries in the country calls it. It is a good initiative from the Chinese government to advice the industries to cut energy consumption.. a thought gearing towards clean energy.

  16. Mr. Roques
    April 28, 2011

    Where does China get its oil from? I read an article a few years ago that it imported around 30% of its oil but I'm sure that has shifted since their growth far surpasses the oil production. 

    With oil prices being where they are… every KWHr they save per company translates into billions and billions of dollars.

    When you have such a great amount of users, the smallest change helps greatly.

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