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China cutting energy intensity

World Cement,

Up to 2000 factories engaged in heavy industries will be closed this year in order to meet Chinese national targets to reduce its energy intensity by 20% by 2010. Beijing made the pledge five years ago but has struggled to meet its targets.

Heavy industry has been singled out because it accounts for over 50% of the nation’s energy demand. 18 industries have been singled out by Beijing, including steel and cement; Beijing has also listed each company and the amount of production they must shut down by the end of September.

Beijing has said that companies which fail to comply with the measures will have power cut off or licenses revoked, banks will also be instructed not to extend credit to offending businesses. However, whether these measures will be permanent is a matter of some debate as analysts have pointed out that such measures have been implemented in the past and were merely short-term capacity closures.

The trade off though, is that China may see slower economic growth this year. The principle reason that China’s efforts to lower its energy intensity have been thrown off kilter is because of the economic stimulus package that they implemented to stave off the recession, which led to a boom in construction and higher demand for products of heavy industry.

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