China’s 14th Five-Year Plan, for the period 2021–25, presents a real opportunity for China to link its long-term climate goals with its short- to medium-term social and economic development plans. China’s recent commitment to achieving carbon neutrality by 2060 has set a clear direction for its economy, but requires ratcheting up ambition on its near-term climate policy.

Against this background, this paper extends the discussion on major action areas for China’s 14th Five-Year Plan presented in a previous policy note (Stern and Xie, 2020), focusing on three aspects: the energy transition, a new type of sustainable urban development and investment priorities. First, the authors outline the current context – the COVID-19 pandemic and the international responses to date, and the importance of China’s leadership.

Summary of action points

Energy transition

  • Move away from coal while supporting affected coal workers and communities.
  • Speed up the transition to renewable energy to ensure security of energy supply.
  • Drive forward power sector reforms, including better grid management and market-oriented pricing to avoid irrational prioritisation of coal-fired sources.
  • Support zero-emissions vehicles to build a sustainable future for transport.

New urbanisation

  • Accelerate a ‘rebalancing’ that shifts activities from coastal megacities to clean, compact and connected (CCC) cities in the interior.
  • Design clean and efficient buildings and infrastructure in CCC cities and adopt digital technologies to promote improvements in energy efficiency.
  • Ensure health and education services are more evenly distributed, including sufficient availability within CCC cities, to enhance the attractiveness of China’s interior.
  • Transform already developed areas, e.g. limiting congestion by improving cycling and pedestrian facilities, retrofitting buildings, and creating high-tech innovation zones.

Well-planned investment

  • Invest in the four types of capital (i.e. physical, human, natural and social capital) to promote a strong, sustainable, inclusive and resilient recovery.
  • Invest in infrastructure and technologies that promote energy transition and new urbanisation.
  • Bring forward the peak in China’s greenhouse gas emissions to no later than 2025, and within the 14th Five-Year Plan period, to ensure the carbon neutrality target of 2060 can be achieved and influence other countries to increase their commitments.
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