HELSINKI — The Chinese economy is heading for a hard landing, not a gradual slowdown, Dr Anil Gupta, professor of strategy at the University of Maryland in the US, said on Tuesday at the Global Cleantech Summit.

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A Chinese national flag flutters on the Pearl River near a construction site in Guangzhou, Guangdong province, China.  Picture: REUTERS

A Chinese national flag flutters on the Pearl River near a construction site in Guangzhou, Guangdong province, China. Picture: REUTERS

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The direction of the Chinese economy is being watched carefully around the world, including by SA for which China has become an increasingly important trade partner in the past decade.

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The Global Cleantech Summit, which is organised by the Finnish government, is expected to attract about 800 delegates to the three-day event this week, covering issues and innovations in green technologies from energy to recycling and how they are marketed to the rest of the world.

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Dr Gupta said in the fourth quarter of last year China’s GDP growth rate slowed to 4-5%. Using measurements like electricity consumption and imports, rather than official Chinese GDP figures, he estimated the country’s growth could slow to 2-3% this year.

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China’s economy is geared towards building infrastructure, and change will be very difficult, he said. The Chinese government’s solution so far has been more of the same: taking steps to stimulate more property investment, despite a visibly huge overinvestment in property, which has been funded through debt. The government would like to find a way to control market forces, which is impossible.

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But there are still sectors of the Chinese economy that offer higher-growth opportunities, Dr Gupta said, such as improving agricultural productivity, addressing water scarcity, fossil fuels and renewable energy generation, energy-efficiency solutions and in services to the business and consumer sectors. Clean technology solutions, which have become a focus area for the Nordic countries, are one of the important future growth areas.

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But foreign companies face challenges in China, which has become less welcoming as its economy has slowed and competition from Chinese domestic companies has intensified. Foreign companies can compete with differentiated products but they also have to be prepared to defend their intellectual property, Dr Gupta said.

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India’s economy was continuing to grow and over the next few decades was likely to grow faster than China’s, from a lower base. India’s GDP is only one-fifth of China’s. India offers a more business-friendly environment. It also has a strong leadership, a young population and a free press. But there are serious problems: many dissenting voices, weak infrastructure and significant bureaucracy, Dr Gupta said.

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Dr Gupta’s recommendation was that companies seek opportunities in emerging south-east Asian countries that need clean technologies. They should diversify their investments among these countries, be judicious in their joint venture partnerships and protect their intellectual property.

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Achim Steiner, executive director of the United Nations Environmental Programme said the rapid growth in global populations and urbanisation in the next few decades offered many opportunities for clean technology innovations.

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While the private sector was investing in new technologies, the role of governments was to create an enabling environment.

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Sourcing finance was the biggest single challenge for scaling up innovations in clean technology, Mr Steiner said. In developing countries central banks and regulatory authorities played a dynamic role in facilitating financing. For example, stock markets in India and SA were making sustainability more central for listed companies.

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Successful clean technology sectors were based firstly on research and development and enterprise, secondly on a regulatory environment that offered incentives for success and thirdly on a financial system that supported new technologies, Mr Steiner said. – Bdlive

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