Key industries that will gain from Beijing’s 4 trillion Yuan injection in the new 5-year plan are:

• New energy.

• New materials.

• Information technology.

• Biology and new medicine.

• Energy conservation and environmental protection.

• Aerospace.

• Marine.

• Advanced manufacturing.

• Hi-tech services.

China’s investment in environmental protection, which includes wastewater treatment and pollution control, reached more than $224 billion during the past 11th 5-year plan (2006-2010). China’s 12th Five-Year Plan for Economic and Social Development (2011-2015) aims for an installed solar energy capacity of 10 giga­watts by the end of the period. China plans to to spend $473.1 billion on clean energy investments in the next five years.

Much of the funding will come from the Bank of China, which recently signed a memorandum with the Ministry of Environmental Protection undertaking to increase its support for environmentally friendly, profit-oriented projects, and the development of suitable technology and equipment. Loans for energy-intensive or polluting industrial projects will be cut.

China may start levying a carbon tax and further boost prices of fossil fuel for the next 5 years as a crucial incentive to cut greenhouse gas emissions and help realize green targets. We expect China will start to levy various taxes only if they are helpful in mitigating greenhouse emissions and developing a low-carbon economy.

Apart from a carbon tax, the government may begin also to levy environmental and resource taxes. Meanwhile, China will greatly boost subsidies to support low — carbon technology research and development.

The government is serious about realizing its target of cutting carbon intensity by 40-45% by 2020 from 2005 levels and the government will implement "tougher measures” in the coming 5 years to realize the green goal. China will possibly surpass the United States between 2020 to 2025 in terms of research and devel­opment investment, and become a world leader low-carbon technology.

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