There's a rope about to get stuck around your neck, and the best response is not to scold and complain, but to let it fall away.
--Title

When Made in China becomes more and more competitive, will it definitely be able to pass the world?

The answer is no. Because the world market consists of one national market, the national border is the market boundary. Others can let you in, or not. You like free trade, others can use carbon emissions, labor rights protection, anti-dumping, countervailing and other standards to restrict freedom.

In my article, I said that from now on, strong Chinese companies need to realize - your biggest competitor may not be your peers, but the way the world sees you, and the way it sees China. For this reason Chinese companies must strengthen their awareness of international compliance, follow sustainability and ESG principles (environmental, social, and corporate governance), and be responsible corporate citizens to their stakeholders.

As I continue to exchange these issues with entrepreneurs recently, I feel more and more that without global thinking, Made in China will not go far, not only in a spatial sense, but also in a temporal sense.

But I feel that external pressure, restrictions, and binding standards are precisely the new opportunities to force the transformation and upgrading of Chinese manufacturing.

If there is the vision and vigor to turn crisis into opportunity and open a new bureau in the change, the Chinese manufacturing will open a great new era.

I wonder if you have paid attention to some of these signals.
1, last September, Chinese leaders announced at the 75th session of the United Nations General Assembly, China will take stronger policies and measures, "carbon dioxide emissions strive to peak by 2030, and strive to achieve carbon neutrality by 2060" "By 2030, China's carbon dioxide emissions per unit of GDP will drop by more than 65% compared to 2005, the proportion of non-fossil energy in primary energy consumption will reach about 25%, forest accumulation will increase by 6 billion cubic meters compared to 2005, and the total installed capacity of wind and solar power will reach more than 1.2 billion kilowatts".
2, the central economic work conference held in December last year, it is clear that a good carbon peak, carbon neutral is one of the 8 key tasks in 2021.
(Note: Carbon neutral refers to the balance between emissions and absorption of man-made carbon dioxide, a major greenhouse gas, so that no new man-made carbon dioxide emissions are added to the atmosphere and net zero carbon dioxide emissions are achieved. (Absorption methods include afforestation, energy conservation and emission reduction, use of negative emission technologies such as biochar, biomass energy + carbon dioxide capture and storage, etc.)
3. In January this year, the Ministry of Ecology and Environment officially released the "Carbon Emission Trading Management Measures (for Trial Implementation)", which officially came into effect on February 1. China will build a national carbon emission trading market on the basis of the previous pilot, and the trading product of the market will be carbon emission allowances. In no time, enterprises in the power generation, petrochemical, chemical, building materials, iron and steel, non-ferrous metals, paper and domestic civil aviation industries, as well as units with annual greenhouse gas emissions reaching 26,000 tons of carbon dioxide equivalent, will be included in the list of key greenhouse gas emitters.
The so-called carbon emission allowance is an allocation of an allowable amount of carbon dioxide emissions. The allocation is mainly free of charge. Key emitters are also encouraged to voluntarily write off the allowances they hold for public interest purposes such as reducing greenhouse gas emissions. Voluntary cancellation of allowances in the national carbon emissions quota in the total amount of equal reduction, no longer allocated, registered or traded.
4, February 2 this year, the State Council issued the "guidance on accelerating the establishment of a sound green low-carbon cycle development economic system", proposed to focus on energy conservation and environmental protection, clean production, clean energy, etc. as the first breakthrough, and do a good job of integration with agriculture, manufacturing, services and information technology development, a comprehensive drive of primary, secondary and tertiary industries and infrastructure Green upgrade. Upgrade the proportion of renewable energy use, vigorously promote the development of wind power, photovoltaic power generation, the development of water energy, geothermal energy, ocean energy, hydrogen energy, biomass, solar thermal power ......
These signals clearly indicate that one of the "ceilings" of China's manufacturing is carbon dioxide emissions, and green upgrading is the way to the future of China's manufacturing.

Why is China making a strong push to reduce greenhouse gas emissions and promote green upgrading? 

Here is a little background.

Since the industrial revolution, human activities have emitted large amounts of carbon dioxide, causing a series of environmental and social problems. From 10,000 years ago until the industrial revolution, the Earth's atmospheric carbon dioxide concentration basically remained at 280 ppm (ppm is a unit of measurement of parts per million), 316 ppm in 1958, and exceeded 400 ppm every month through 2016. on May 11, 2019, the concentration detected at the Mauna Loa Observatory in Hawaii exceeded 415 ppm. such a high concentration of CO was last seen 3 million years ago, when the Earth's temperature was 2 to 3 degrees Celsius warmer and sea levels were 20 meters higher than today.
In 2013, one of the most pessimistic predictions for the future by the Intergovernmental Panel on Climate Change was that atmospheric CO2 concentrations would reach 2,000 ppm by 2250, close to the age of the Jurassic dinosaurs, and that the Earth's temperature would rise by 9 degrees Celsius. Some studies point out that if the warming trend is not reversed, by the end of the 21st century, urban areas such as New York, London, Tokyo and Shanghai will be in jeopardy due to rising sea levels, and sea levels will continue to rise by the 22nd century.

It is to avoid a human capitulation that the 2015 Paris Climate Change Conference Agreement set the goal of holding the rise in global average temperature to within 2 degrees Celsius from pre-industrial levels and working towards a limit of 1.5 degrees Celsius.
What is the situation in China?

China has been the world's largest emitter of carbon emissions for many years, and its share of carbon emissions exceeds the world's share of GDP.

As aggregated by Global Carbon Atlas (2017 emissions), China accounts for 27.2% of the world's carbon emissions, compared to 14.6% for the United States, 6.8% for India, 4.7% for Russia, and 4.7% for Japan.

As per the Global CO2 and GHG Emissions Trends report by the Netherlands Environmental Assessment Agency (PBL), the top 6 GHG emitting countries/regions in the world together accounted for 62% of global emissions in 2018, with China at 26%, the US at 13%, the EU at 8%, India at 7%, Russia at 5%, and Japan at nearly 3%.

There has been a perception in the country in the past that carbon emissions are a right to development. China cannot be at the mercy of Western carbon emission standards, they have been emitting for centuries and we are only in the beginning stages of development. For example, the United States accounted for 27.9 percent of the world's emissions from the energy and industrial sectors from 1751 to 2010, with cumulative emissions about three times those of China.

However, in recent years, both from the perspective of global responsibility and from the perspective of promoting its own structural reforms and enhancing the environmental well-being of its citizens, China has pushed for energy conservation and emission reduction, and has accomplished its foreign commitment to reduce CO2 emissions intensity by 45% by 2020 compared to 2005. According to Goldman Sachs, China's emissions reductions are among the highest in the world's most important economic regions, second only to the United Kingdom, which is pushing for a "green industrial revolution". China is also the first country among the world's top carbon emitters to propose "carbon neutrality".

Over the years I have heard some complaints in local research, is that energy saving and emission reduction efforts are too much, "one size fits all", affecting economic development.

But if not vigorously reduce emissions, what will be the fate of China's manufacturing? The answer is: Made in China may gradually lose the "pass" to the world. Simply put, because of the high carbon content of Made in China, some countries and regions may use a carbon tax as a means to raise the entry cost of Made in China and prevent it from entering.

Why is the carbon content of Made in China high? A major reason is that our energy mix is dominated by high-carbon fossil energy, and fossil energy combustion is the main source of carbon dioxide, and the particulate matter produced by its combustion is also the main source of atmospheric pollutants. The share of fossil energy in China is about 85% of the total energy, and coal accounts for 57%. More than 80% of China's carbon emissions come from the power generation sector (accounting for nearly 50% of the country's carbon emissions) and industry, with national CO2 emissions of about 838 g/kWh per unit of thermal power generation in 2019 and 5.28 trillion kWh of thermal power generation in 2020, corresponding to about 4.4 billion tons of CO2 emissions.

What might be the international challenge we face? Because you use coal to generate electricity, electricity to make steel, and steel to make steel plates and industrial products, the whole chain is high carbon, so the international market may impose a carbon tax on your exported industrial products. Carbon emissions are a social cost, and this cost is now "internalized" and borne by enterprises, forcing you to go low-carbon and zero-carbon. Although the specific calculation and implementation are complex and gradual, this is a general trend.

Take the EU as an example. The EU's carbon emissions trading system (EU ETS), launched in 2005, is now the world's largest carbon emissions trading market, covering more than 40% of EU greenhouse gas emissions. The basic operating logic is that each EU member state sets an emissions cap for its own country according to the rules issued by the European Commission, determines the industries and enterprises to be included in the ETS, and allocates a certain number of emission allowances - EUAs - to these enterprises. If a company's actual emissions are less than the amount of allowances allocated, it can sell the remaining EUAs at a profit, and conversely it must buy EUAs on the market or face heavy penalties.

Last September the EU announced increased climate targets to reduce carbon emissions in the EU by at least 55% from 1990 levels by 2030, and to achieve "carbon neutrality" by 2050. The EU is accelerating the reduction in the total number of carbon allowances issued, such that free carbon allowances will be cut at a rate of 2.2% per year from 2021-2030. Due to the increasing climate targets, the price of carbon has also been increasing, with the closing price of carbon trading on the European ICE Futures Exchange at 32.72 euros per ton on December 31 last year, reaching a record high of 34.25 euros per ton (about 41.37 dollars per ton) on January 4 this year.

On February 1 this year, the EUA futures price on the European Energy Exchange (EEX) was 33 euros per ton. With the carbon emission intensity of coal power measured at 800-1000g CO2/kWh, the carbon cost of coal power units is at 0.03 EUR/kWh, which is equivalent to 0.235 RMB for 1 kWh of electricity. According to the EU carbon market quota allocation, the power sector will all obtain carbon quotas through auctions, which means that the carbon cost will be included in every degree of coal power generation. Strict carbon emission limits and high carbon prices make the EU's "de-coal" process irreversible. 

Bloomberg New Energy Finance predicts that the EU carbon price will remain at 79 euros per ton in 2030, and industry analyst Refinitiv believes that the price will likely reach 89 euros per ton by then. The BP World Energy Outlook (2020 edition) predicts that under the rapid transition scenario (carbon emissions fall by 70% by 2050 compared to 2018) and the net zero scenario (carbon emissions fall by at least 95% by 2050), carbon prices in developed countries and emerging economies will reach $250/ton and $175/ton, respectively, by 2050.
The general trend of carbon prices is to keep rising, step by step, so expensive that there is no alternative but to decarbonize.

China has already conducted a fruitful pilot in the carbon market. Currently 18% of global emissions are included in carbon markets around the world, with 6.4% of emissions included in China. The average transaction price of China's pilot carbon market reached 27.48 yuan per ton in 2020, up 23% from 2019, and the cumulative annual volume of the eight pilot cities was about 57.437 million tons of CO2 equivalent, down 18.45% year-on-year.

Some studies show that with the free issuance of quotas, it will be difficult for China's carbon price to break through 200 yuan/ton for quite some time in the future. With a carbon price of 200 yuan/ton, the cost of carbon per kilowatt-hour is about 0.1676 yuan. Since at least 75% of carbon credits are free, the actual cost of carbon per kWh is greatly equalized to less than 0.04 RMB/kWh. But in the long run, the cost of carbon in China will also become more expensive.

Reading the above, one might worry that the Chinese economy, which is highly dependent on fossil energy, might take a huge hit in the globalized green revolution.

The reality is that fossil energy has indeed hit a ceiling, but space has just opened up for renewable energy sources, such as solar, wind, biomass, wave, tidal, geothermal, and so on.

If the use of these energy sources to generate electricity is green power, using green power to replace thermal power for production, can greatly reduce the carbon emissions caused by the use of electricity.

China has proposed to prioritize the development of non-fossil energy and accelerate the green and low-carbon transformation of energy. The proportion of non-fossil energy consumption is expected to increase from 15.8% at the end of 2020 to about 25% by 2030, and the total installed capacity of wind and solar energy will increase from 460 million kilowatts at the end of 2020 to more than 1.2 billion kilowatts by 2030. Wang Zhongying, deputy director of the Energy Research Institute of the National Development and Reform Commission, said that by the middle of this century, China's energy structure is expected to be 2/3 of renewable energy and nuclear power clean green energy, 1/3 is fossil energy. 

Let's listen to the outlook of entrepreneurs.

Zhang Lei, CEO of Visionary Technology Group.
"Wind and solar energy are green, free, abundant and ubiquitous renewable energy sources. In the future world, if there is abundant and near free energy, we can do many things that seem too costly today. For example, we could desalinate seawater and bring fresh water to the Gobi, plant green trees and vegetables in the Gobi, eliminate the need to use boilers to burn coal for heating, and eliminate the need to burn gasoline for transportation. Compared with fossil energy, the nature of renewable energy technology determines its cost will continue to decline in the future, in most areas of the world wind power, photovoltaic can even be cheaper than coal power, in some areas of Inner Mongolia wind power costs can already be achieved 0.1 yuan / kWh, the next five years may still have 30% decline in space, will not be long in the future can achieve the cost of electricity close to free, greatly improving the life and the well-being of the environment."

Li Zhenguo, President of Longi.
"Sunlight gives the earth a selfless gift and unlimited energy. With the rapid development of photovoltaic technology and the continuous decline of production costs, photovoltaic power generation will become the most economical power energy source in most regions in the next two to three years. The continuous advancement of technologies such as pumped energy storage, chemical energy storage, and electric vehicle energy storage, as well as the global energy internet bringing power sharing, determine that 'PV + energy storage' will become the main energy source within 10 years. When the whole industry chain of PV manufacturing is driven by using clean energy, 'zero carbon' production can be achieved. In the future, large-scale desalination of seawater can be carried out on the seashore with photovoltaic energy, while a stepped pumping project can be built with photovoltaic energy to lift the desalinated seawater up into the desert area, turning the desert into an oasis. Once these green vegetation are available, the carbon dioxide in the air can be captured and the carbon in the atmosphere can be solidified to enter the negative carbon emission stage. This work has not been thought of before because it requires a lot of energy to support it, and energy use in the traditional sense means carbon emissions. In the future, once we achieve zero emissions in photovoltaic manufacturing, this work will be very meaningful. If 70% of the world's deserts become oases, it will be possible to absorb and solidify all the carbon emissions since there are humans, and it will be possible to completely repair the earth to the state before the emergence of humans." 

Low-carbon, zero-carbon, and green development will indeed impact the existing energy system and industry and reconfigure the pattern of interests, but it is even a major opportunity for China to achieve new development.

The Zero Carbon China - Green Investment Blue Book predicts that Zero Carbon China will spawn seven major investment areas that will leverage $70 trillion in green industry investment opportunities, including renewable resource utilization, energy efficiency improvement, end-consumer electrification, zero carbon power generation technologies, energy storage, hydrogen energy and digitalization. These areas are expected to reach a market size of nearly 15 trillion yuan by 2050 in that year and contribute 80% of the cumulative emission reductions for China to achieve zero carbon emissions. China's zero-carbon transition will also create a large number of new jobs, with the emerging sectors of zero-carbon electricity, renewable energy use, and hydrogen energy alone bringing upwards of 30 million new job opportunities.
According to Goldman Sachs Research, China's clean energy infrastructure investment is expected to reach $16 trillion by 2060, creating 40 million net new jobs and driving economic growth.

Last week in the program "A Different Moment" produced by First Financial, I had an exchange with Zhang Lei of Vision, and I was very impressed by the following two points he made.
1. Energy use is not the lower the better. Our good life is closely related to energy use, and per capita energy use is an important measure of national affluence. But the lower the carbon emissions, the better. Let the energy everywhere, the cost is low enough, and at the same time does not have a damaging effect on the climate, this is a good energy world.
2. With the increasing proportion of renewable energy in the overall energy mix, China's Three Norths region, which has huge wind and PV resources, will have a major development opportunity. It is expected that the cost per kWh of wind power plus energy storage in the three northern regions will reach 0.2 yuan in 2023. Due to the availability of low-cost electricity in the Sanbei region, more energy-consuming industries (e.g., electrolytic aluminum) can be relocated and concentrated in the Sanbei region, and cheap electricity can be applied to create green electrolytic aluminum centers, green data centers, etc. This will also better solve the problem of wind power consumption. The Sanbei region will become China's energy "granary" and future heavy industry manufacturing center, forming a new industrial pattern with high energy consumption and low and zero carbon emissions.

For China, the new zero-carbon industrial revolution will not only be a technological revolution, a revolution that will help Chinese manufacturers obtain international environmental permits, but also a revolution in the spatial distribution of productivity. In this revolution, there is great hope for the North.
Just as China's power batteries are replacing the engines of the fuel car era and overtaking them, the new zero-carbon industrial revolution brings a new opportunity for China's industrial development to "leapfrog beyond".
The above describes a general trend, but of course it is not so simple. At present, China's non-fossil energy consumption accounts for only 15.8% of primary energy consumption, which is still "non-mainstream". It cannot be done overnight.

Through this article, I would like to share with you the following core ideas.

When China's economy develops to such a large scale and international influence, there are bound to be many "neck" problems. For example, energy constraints such as imported iron ore, environmental constraints such as carbon emissions, commercial compliance constraints, tariff and non-tariff trade barriers, core technology and key components constraints, and so on.

In the face of these constraints, do not simply think that it is all outside forces deliberately card us. We need to think and act from a more long-term and responsible perspective.
The "Opinions on Accelerating the Improvement of the Socialist Market Economy System in the New Era" released last May indicates that China will change from policy-oriented and factor-flow-oriented opening to rule-based opening, and "will accelerate the convergence of domestic rules with the international system. From the standpoint of enterprises, it is necessary to change from "I want to comply" to "I want to comply" and from "I want to change" to "I want to change". ".

We Chinese entrepreneurs are resilient and dynamic enough to turn external constraints into new opportunities for change and development.

It may be better to let the constraints come a little earlier and a little more strictly. This is not only the redemption of the past relatively sloppy growth model, but also the transcendence and sublimation of embracing the future.

Anhui Yuanchen Environmental Technology Co., Ltd (hereinafter referred to as "Yuanchen Technology") is a high-tech enterprise integrating R&D, production and sales of dust removal bags and denitrification catalysts. Over the past sixteen years, Yuanchen Technology has been focusing on the environmental protection field, and now has 4 international PCT, 33 authorized invention patents and 77 invention patents in process, among which many products such as "dust removal and denitrification integrated technology products" have been awarded the Scientific Progress Award of Anhui Province. The products of dust bag (mainly PPS, PTFE, P84 and composite series filter needle felt) and SCR denitrification catalyst have been widely used in cement, iron and steel, glass kilns, waste incineration power generation, biomass power generation, non-ferrous metal smelting and other industries! In the future, Yuanchen Technology will be guided by "becoming the guardian of global ecological environment", always rooted in environmental protection and insisting on the great cause of guarding the blue sky and white clouds. Leveraging on the national ecological civilization construction pattern, we will continue to deepen technology, optimize management, strengthen brand, refine industry, solidify advantages, and create synergistic value for industry through comprehensive and integrated management and services.