The greening of China’s construction industry
The Asian powerhouse is adopting green building standards at a brisk pace.
Although it receives little credit for it in the West, China’s central government is the architect of an ambitious set of green building policies. In fact, the country has spent several years implementing a strategy to ‘green’ its construction sector, and its impacts are being felt in China and across the world, including Australia.
China’s central government first prioritised green construction in 2015 when it drew up the latest in its series of so-called ‘Five Year Plans’ that are intended to guide the country’s social and economic development. The 13th Five Year Plan, which came into effect in 2016, sets aggressive goals for green construction domestically, including a requirement that half of all new urban buildings be built to the government’s own green standards.
“In the building sector, the Chinese government is going gangbusters at introducing its own requirements around sustainability and healthy materials,” says David Baggs, CEO of green-ratings provider Global GreenTag. “It has developed its own green-building rating tools and is enhancing them.”
What’s more, to gain a competitive advantage, many developers in China are choosing to build to a standard over and above government requirements. Mainland China now has more LEED-certified construction projects than any country other than the United States. China has also become the fastest-growing market for WELL projects since that standard for a building’s impact on human health and wellbeing was introduced there in 2018, says Baggs.
According to Global GreenTag’s business development manager Judy Luo, attracting green finance is a major motivator for many Chinese companies. “In the capital market, green projects potentially attract bigger investment and better return,” she says. “Multiple Chinese banks also developed ‘green loan’ tools for real-estate developers.”
The outlook for construction in China looks green indeed. According to the World Green Building Council, 85 per cent of mainland Chinese developers surveyed expect some of their projects will be green by 2021. Respondents cited ‘market demands’ as the top reason for adopting green practices.
The transformation of China’s domestic construction sector will continue to have an impact on the export market, too, Baggs says. “If you look at the current Five Year Plan, ‘Green Materials’ is one of the 10 national priorities, and ‘Green Material Certification’ is a listed sub-target beneath that national target,” he explains.
Prioritising the manufacture of green construction materials will not only help China meet its green goals at home but will also help it remain competitive internationally. After all, China’s export markets, such as the United States and Australia, are becoming more green-focused, too.
Global GreenTag – which can certify materials under a range of standards, including LEED and WELL – launched operations in China in 2017 to take advantage of this shift towards green manufacturing.
“The work we do is becoming a critical part of the export transaction for these Chinese manufacturers,” says Baggs. “We’re like a key in the door to access projects that want to use LEED and WELL. It’s more difficult to get into those projects without the sort of certification we do.”
With the pressure on Chinese manufacturers to adopt green standards, Baggs says Australian importers with environmental priorities are in a strong bargaining position. “That’s where the rubber is really hitting the road for these Chinese manufacturers,” he says. “They sit down with a project manager to talk about selling their product, and the project manager says: ‘Yeah, but we’re doing LEED’ or ‘We’re doing GreenStar’, and if they want to be in the project, they improve their chances if they get certified.”
While the precise pace of China’s transition to a 100 per cent green construction industry is unclear, Baggs and Luo believe that outcome is all but guaranteed. Luo singles out another strategic document: the much-publicised Made in China 2025 manufacturing plan, which the Chinese central government issued in 2015 as a blueprint for the future. That plan lists green manufacturing as a central plank.
Adds Baggs: “There is a lot of movement at a government level. It’s not a short-lived thing. The government is saying: ‘We are doing this’.”