In a previous post, we discussed the general challenges posed by China’s statistical system. Despite these challenges, the Chinese government has started making a serious effort to establish a credible data infrastructure. Before such a transparent and reliable statistical system becomes fully functional, any research involving Chinese data will not be easy. This is especially the case for new topics like green economy.
This July, Worldwatch will be releasing a new report titled “Green Economy and Green Jobs in China: Current Status and Potentials for 2020,” the first output of a project sponsored by the Ministry for Foreign Affairs of Finland. Given limitations on green economy data, we had to think creatively to come up with reliable estimations. Although the mixture of methodologies we developed can be improved as better data become available, our report represents the most in-depth sector-based study so far on the job creation potential of China’s green economy.
Although efforts have been made in China to establish a better green economy-specific database, for instance through Green Gross Domestic Product (GDP) Accounting, reform of the statistical system may still take years to achieve its desired effects at the national level. Accordingly, for our study, the first challenge was to capture the “green” part of economic sectors where it was not separately measured by existing statistics. For example, increasing building energy efficiency is one of the most effective ways to reduce nationwide energy consumption and greenhouse gas emissions. The Chinese government has enacted a set of policies, including a range of building energy standards, which have resulted in an emerging building energy conservation sector.
Because we found that there were insufficient precise and reliable data on its scale and employment, we had to leave the green building sector for future studies and focus our report on three other key green sectors: clean energy supply, green transportation, and forestry. In each of these sectors, to effectively differentiate economic activities that could be considered “green” and those that could not, we further select green sub-sectors (for a glimpse of our sub-sectors coverage, please read our previous blogs here, here, and here). For these sub-sectors, which still vary in data availability and reliability, we utilized different methodologies to estimate the economic scale and employment figures to the extent possible.
For instance, we found that there is no reliable first-hand information for China’s solar water heating industry regarding the total number of nationwide manufacturers, let alone a precise employment figure. This industry doesn’t have a nationwide association despite the fact that Chinese manufacturers in this sector now have a remarkable 90 percent share of the global market. We were able to collect estimations and projections by industry experts and organizations. Combining elements from all these sources, we were able to present a cohesive vision for the industry’s future.
China’s wind energy sector is relatively better off, with the existence of several industry associations. Although it was still difficult to generate sector-wide employment numbers, we were able to estimate an employment factor, defined as number of operational personnel needed for every unit of wind power generation capacity installed, based on existing industry survey data from China.
The forestry sector provided the most reliable and precise data. With access to State Forestry Administration (SFA)’s data system, we were able to estimate the work time needed for forestation activities. We were also able to estimate job creation in the forest management sector due to the existence of the SFA work load standard, which states that each full-time forest management worker should oversee no more than 150 hectares of forest per year.
For sectors lacking direct industrial data, we used an Input-Output (I/O) model to estimate the job creation effect. A quantitative economic technique for representing the interdependence between different sectors, I/O models can estimate the direct and indirect employment effect of different branches of national economy. The methodology is rather simple and calculations are quite straightforward as long as the most up-to-date I/O table is presented, and our Chinese partner used the latest version of the China I/O Table, published in 2007. Because the categorization of economic departments in the 2007 I/O table was done in accordance with existing statistical standards, some new green sectors such as wind power generation and solar PV manufacturing don’t have an exact fit. We were able to make estimates by choosing similar sectoral categories as proxies.
China’s data challenges are partially due to the unprecedented growth of its green sectors. The sheer number of emerging green companies and their unstable status make consistent monitoring and tracking difficult. For example, because China’s National Bureau of Statistics (NBS) and its provincial and local subsidiaries only count economic activities from entities above a designated size, many small companies do not make it onto their radar. Even the country’s central planning entity, the National Development and Reform Commission (NDRC), doesn’t know exactly how many companies are in operation in these fast-growing green sectors, which raises further challenges for job estimation. Moreover, due to their relative “invisibility,” the pool of small companies presents a challenge to the effectiveness of the country’s industrial developing plans. The influx of small clean-tech equipment manufacturers could lead to overcapacity in those sectors, a danger which has been noted by the industry and the government.
Better data collection and reporting in the form of a nationwide statistical system reform is critical for government and civil society to provide better guidance for their development. There are also smaller, concrete steps that can be taken to improve data availability and quality in the near term. Industry organizations and associations can and should play a vital role in providing more reliable data for China’s emerging green sectors. With a proper amount of capacity-building, we believe China could significantly improve its statistics; we hope then to get the chance to update and expand our China green economy and green jobs study .
This concludes our series of blog posts on findings from a forthcoming Worldwatch Institute report on China’s green economy. Read the first blog on the forestry sector here, the second on the transportation sector here, and the third on the energy sector here. Please stay tuned for the release of this report in mid-July 2011.