RAMPANT GROWTH SPURS EMISSIONS

Anyone looking for why the world should care about China's economy and its propensity to grow at double-digit rates

may have found it not in Beijing on the 19th April, but in Paris, at the International Energy Agency.

According to the IEA, the country �C whose economy expanded by 11.1 per cent in the first quater �C could overtake the US as the world's largest emitter of greenhouse gases this year or in 2008. This is at least 12 months earlier than its recent estimate of 2009.

"If Chinese coal consumption continues to surprise us [on the up side], it could be well before 2009," said Fatih Birol, chief IEA economist.

China's CO2 emissions per capita remain relatively small, about an eighth of those in Organisation for Economic Co-operation and Development countries. But if China maintains strong growth for the next quarter of a century its emissions alone until 2030 will be double that of all other industrialised countries combined, said Dr Birol.

China's rise has already had a transformational impact on the global economy, bringing benefits to consumers around the world with cheap appliances and clothes, while lifting millions of its own citizens out of poverty. The announcement by the National Bureau of Statistics in Beijing that its already red-hot economy accelerated in the first three months of 2007 confirms that China will continue to shake global markets for years to come.

But buried in the NBS figures is a description of the way China is growing, and the reason for the IEA estimate of greenhouse gas emissions.

The production of energy-intensive industries in the first quarter expanded rapidly. Rolled steel production was up on last year by 26 per cent, alumina by 54 per cent, aluminium by 43 per cent and ferro-alloys by 44 per cent. Such growth rates are especially telling as the government has for some years given priority to policies to control such industries and their use of raw materials and power, to little effect.

In future, Chinese urbanisation and the need for extra electricity, mostly fuelled by coal, will also be big contributors to energy consumption and emissions.

Beijing is shy about neither the urgency of the problem nor the fact that policies have so far made little impact.

"At the current stage, different departments and regions are implementing the reduction of energy and pollution emission policies proactively and there are some achievements," said Li Xiaochao, the spokesman for China's statistics bureau.

"However, we should see that the task of energy and pollution emission reduction is still huge. The current economic structure is still relying on heavy industrial sectors, and the development of the energy-intensive sector is very fast."

Mr Li did cite what he said were heartening figures �C the relatively slow rates of investment on the coast, compared with the larger amounts spent inland, in the poorer provinces China is trying to develop.

He also pointed to higher retail sales and consumption, something China has been trying to encourage to reduce reliance on exports and investment for growth.

But economists said those figures did not amount to a genuine rebalancing of the economy. "The Chinese economy has continued to grow in a traditional fashion," said Minggao Shen of Citigroup in Beijing.

Beijing has been awash with rumours in recent weeks that the government is preparing to announce new headline policies to hasten structural change in the economy, perhaps even at the cost of temporarily slowing growth.

These rumours were fuelled by a delay in the statistics bureau press conference to announce the figures for gross domestic product, and the assignation of Mr Li, a relatively junior official, to do the briefing, instead of the chief of the agency.

Mr Li, however, gave no indication that a short, sharp shock for the economy was in the offing.

"When we strengthen the macro controls, we are alert to the fact that these kinds of measures should not be drastic ones," said Mr Li. "We prefer fine-tuning and making frequent changes. That is the way to guard against the hard landing of the economy."

While refusing to allow the renminbi to appreciate much faster than 4-5 per cent a year, Beijing has taken steps lately to reduce incentives for exports, especially of steel and textiles.

But China-based economists played down the likelihood of acceleration of policy measures, saying high growth rates were exactly what was wanted by leaders eager to see the benefits of economic growth spread.

"This will make the Communist party leadership happy �C it's hard to create a 'harmonious society' without strong growth and job creation," said Andy Rothman, of CLSA, the brokerage, in Shanghai.