Page 178 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
other public buildings. As the plan cascades to the local and Environmental Design (LEED) and China’s domestic
level, over 20 cities have set even more ambitious goals. Green Building Evaluation Standard (GBES). Dezan Shira
Changde, Zhenjiang, Zibo, Wuxi, Suzhou, Shanghai, & Associates strongly suggests that foreign companies
Beijing, Shenzhen and Chongqing all require new entering the market should plan their housing around
commercial buildings to be green buildings as well. one of these two systems (Wrest).
More than 90 percent of China’s commercial building
owners plan to have at least one net or near-zero energy China’s preferential policies for green housing remain
building in the next ten years (Molinaroli). the driver behind commercial viability. About 700
construction projects had achieved the top two levels
National goals are important drivers of investment of green building qualifications in 2016, according to an
and improvements, but significant challenges remain at industry report. In 2009, there were only 20 green building
the local level such as training, business models, financial products across the three qualification levels. By 2015 this
solutions and access to information. Public-private had risen to 3,799 (China Focus). Buildings that rate a 2-star
partnerships are the most effective ways of overcoming in an applicable classification will now receive a subsidy
these problems. The Building Efficiency Accelerator—a of 45 yuan per square meters, and 3-star buildings qualify
global private-public partnership coordinated by the for 80 yuan. Subsidies given to 2-star buildings now cover
World Resources Institute—and the U.S.-China CERC up to 68 percent of the incremental cost for a residential
Building Energy Efficiency consortium are good examples building and 44 percent of public buildings. Subsidies
where researchers at national laboratories, research for 3-star buildings covered 66 percent and 50 percent.
institutes, universities, and industry partners advance Additionally, China’s corporate income tax law stipulates
state-of-the-art monitoring and development of low- that costs of conducting research and development for
carbon and near-zero energy buildings (Molinaroli). green buildings can be deducted from a company’s tax
payments. Furthermore, most local governments have
The State Council released data in 2016 showing China separate preferential policies that can stack on top of
had plans to build 3,500 new urban areas by 2030 with a the country’s national incentives (Wrest). Incentives such
collective capacity of 3.4 billion residents—roughly half as these have propelled China into the world’s largest
of the world’s population. Dezan Shira & Associates noted green market in 2017. China eclipsed the United States
in its China Briefing that even though the plan might be with more than a billion square feet of certified green,
unrealistic, the goal underlines a real problem that China sustainable building space. It took China half the time it
is currently facing. The demand for affordable housing took the U.S. to achieve this goal—10 years compared to
in the country’s cities has outstripped supply. Around 60 20 in America (Mandyck).
percent of households in these areas cannot afford basic
housing at current market rates. The situation will remain Besides China’s 3-star rating system, the U.S. LEED
bleak as long as Chinese cities continue to populate the certification is also prevalent in China. In 2015, LEED-
top global home price growth rankings. The Chinese certified Grade A office buildings exceeded 5.6 million
government is not only trying to increase its supply square meters across 10 major cities in Greater China,
of affordable urban housing, but their plan is to also an increase of 7.4 percent from the previous year, and
make the new housing green in order to cut carbon gas accounting for 28 percent of the total market, according
emissions. The New Type Urbanization Plan for 2014-2020 to a report published by CBRE and U.S. Green Building
mandates that the share of green buildings will rise to 50 Council (USGBC). The report found that rental premiums
percent by 2020. The problem is clear that most Chinese for LEED-certified Grade A offices in key mainland
domestic construction companies are still unfamiliar China cities—including Beijing, Shanghai, Guangzhou,
with green materials, and that is a gap in the sector that Shenzhen and Chengdu—enjoy a higher average rental
foreign firms with the necessary expertise are well placed performance ranging from 10 to 30 percent and are better
to bridge. China has a strong network of incentives in positioned to weather a downward commercial real
place to ensure that foreign investments are worthwhile. estate market. In China’s tier two cities, such as Chengdu,
The country classifies green buildings as those that Tianjin, Hangzhou and Wuhan, LEED-certified Grade A
can conserve resources such as energy land and water, office buildings cover a floor area of nearly one million
protect the environment, and reduce pollution. There square meters, accounting for an estimated 18 percent of
are many rating systems that qualify for these incentives, the total Grade A office area (China Construction).
but the primary two are the U.S.’s Leadership in Energy
178
other public buildings. As the plan cascades to the local and Environmental Design (LEED) and China’s domestic
level, over 20 cities have set even more ambitious goals. Green Building Evaluation Standard (GBES). Dezan Shira
Changde, Zhenjiang, Zibo, Wuxi, Suzhou, Shanghai, & Associates strongly suggests that foreign companies
Beijing, Shenzhen and Chongqing all require new entering the market should plan their housing around
commercial buildings to be green buildings as well. one of these two systems (Wrest).
More than 90 percent of China’s commercial building
owners plan to have at least one net or near-zero energy China’s preferential policies for green housing remain
building in the next ten years (Molinaroli). the driver behind commercial viability. About 700
construction projects had achieved the top two levels
National goals are important drivers of investment of green building qualifications in 2016, according to an
and improvements, but significant challenges remain at industry report. In 2009, there were only 20 green building
the local level such as training, business models, financial products across the three qualification levels. By 2015 this
solutions and access to information. Public-private had risen to 3,799 (China Focus). Buildings that rate a 2-star
partnerships are the most effective ways of overcoming in an applicable classification will now receive a subsidy
these problems. The Building Efficiency Accelerator—a of 45 yuan per square meters, and 3-star buildings qualify
global private-public partnership coordinated by the for 80 yuan. Subsidies given to 2-star buildings now cover
World Resources Institute—and the U.S.-China CERC up to 68 percent of the incremental cost for a residential
Building Energy Efficiency consortium are good examples building and 44 percent of public buildings. Subsidies
where researchers at national laboratories, research for 3-star buildings covered 66 percent and 50 percent.
institutes, universities, and industry partners advance Additionally, China’s corporate income tax law stipulates
state-of-the-art monitoring and development of low- that costs of conducting research and development for
carbon and near-zero energy buildings (Molinaroli). green buildings can be deducted from a company’s tax
payments. Furthermore, most local governments have
The State Council released data in 2016 showing China separate preferential policies that can stack on top of
had plans to build 3,500 new urban areas by 2030 with a the country’s national incentives (Wrest). Incentives such
collective capacity of 3.4 billion residents—roughly half as these have propelled China into the world’s largest
of the world’s population. Dezan Shira & Associates noted green market in 2017. China eclipsed the United States
in its China Briefing that even though the plan might be with more than a billion square feet of certified green,
unrealistic, the goal underlines a real problem that China sustainable building space. It took China half the time it
is currently facing. The demand for affordable housing took the U.S. to achieve this goal—10 years compared to
in the country’s cities has outstripped supply. Around 60 20 in America (Mandyck).
percent of households in these areas cannot afford basic
housing at current market rates. The situation will remain Besides China’s 3-star rating system, the U.S. LEED
bleak as long as Chinese cities continue to populate the certification is also prevalent in China. In 2015, LEED-
top global home price growth rankings. The Chinese certified Grade A office buildings exceeded 5.6 million
government is not only trying to increase its supply square meters across 10 major cities in Greater China,
of affordable urban housing, but their plan is to also an increase of 7.4 percent from the previous year, and
make the new housing green in order to cut carbon gas accounting for 28 percent of the total market, according
emissions. The New Type Urbanization Plan for 2014-2020 to a report published by CBRE and U.S. Green Building
mandates that the share of green buildings will rise to 50 Council (USGBC). The report found that rental premiums
percent by 2020. The problem is clear that most Chinese for LEED-certified Grade A offices in key mainland
domestic construction companies are still unfamiliar China cities—including Beijing, Shanghai, Guangzhou,
with green materials, and that is a gap in the sector that Shenzhen and Chengdu—enjoy a higher average rental
foreign firms with the necessary expertise are well placed performance ranging from 10 to 30 percent and are better
to bridge. China has a strong network of incentives in positioned to weather a downward commercial real
place to ensure that foreign investments are worthwhile. estate market. In China’s tier two cities, such as Chengdu,
The country classifies green buildings as those that Tianjin, Hangzhou and Wuhan, LEED-certified Grade A
can conserve resources such as energy land and water, office buildings cover a floor area of nearly one million
protect the environment, and reduce pollution. There square meters, accounting for an estimated 18 percent of
are many rating systems that qualify for these incentives, the total Grade A office area (China Construction).
but the primary two are the U.S.’s Leadership in Energy
178
