China's energy saving a silver lining to economic gloom

BEIJING Jan 22 (Reuters) - China in 2008 met an unofficial energy-saving target for the first time, government data showed on Thursday, as a serious economic slowdown succeeded where years of exhortations from the country's leaders failed.

The amount of energy used to generate each dollar of national income fell 4.2 percent last year, accelerating from a 3.7 percent fall the previous year as factories closed or cut back production across the country's manufacturing heartland.

Heavy industrial and manufacturing sectors have been worst hit by the crisis, nudging the country's pattern of growth towards the service and retail sectors in a way that, at least temporarily, dovetails with Beijing's plans for cleaner growth.

"These figures show that China, while overcoming difficulties and protecting the stable growth of the economy, has also achieved a positive development in the construction of a resource efficient, environmentally friendly society," the official Xinhua news agency quoted a top economic planner as saying.

Worried about rising reliance on foreign oil, and water and air pollution at home, the government in 2005 set a target of reducing "energy intensity" -- the amount of fuel needed to generate each dollar of national income -- 20 percent by 2010.

It abandoned a yearly target of a 4 percent cut after an unimpressive start to the energy saving programme, but the figure has remained as an unofficial yardstick.

In recent months Beijing has been pushing hard to cushion the impact of the global financial crisis on its economy, with around 4 trillion yuan of stimulus spending planned. But top leaders say they are also keen to stick to a roadmap for cleaner expansion.

In December the government cut fuel prices but finally unveiled an oil consumption tax that it had been touting for years as a way to make drivers more efficient, and it has tried to limit assistance to low-value energy intensive sectors.

However the real challenge may come in the second half of this year and 2010, when the economy is expected to start picking up but cuts to energy intensity will need to fall far more steeply if Beijing is to meet its goal.

China is set to dislodge the United States as the world's top energy consumer soon after 2010, the International Energy Agency forecast last year, as offices and factories mushroom, and its huge population buys more cars and electrical appliances. (Reporting by Emma Graham-Harrison; Editing by Jeremy Laurence)