ANALYSIS - Now China is growing slower, can it grow cleaner?

By Rujun Shen and Eadie Chen

SHANGHAI/BEIJING, Dec 19 (Reuters) - China's dramatic economic slowdown is paying an environmental dividend, slashing emissions levels from the world's biggest greenhouse gas emitter as its highest-carbon industries begin to contract.

The question Beijing will soon face is how it will manage to sustain those curbs once growth is restored. Some say it's moving in the right direction; others are far less certain, as the government, facing a threat to the economic miracle on which its credibility was built, rushes to pump growth up again.

"Safeguarding economic growth is the absolute No.1 priority of the authorities," said Wei Weixian, an energy professor at Beijing's University of International Business and Economics.

"The government might have to turn a blind eye to the rebound of some polluting heavy industries."

For the moment, Beijing can afford to make some systemic changes that will nicely serve both needs.

On Thursday evening, China passed along some oil price relief to motorists by cutting fuel prices by 14-18 percent, the first reduction since oil peaked in July. But at the same time it instituted a much heavier consumption tax in a pricing overhaul that should allow prices to cruise steadily higher should oil begin to rise again -- naturally tempering wasteful consumption.

Furthermore, Beijing has vowed that its 4 trillion yuan ($584 billion) economic stimulus package to aid the faltering economy will not invest directly in polluting and energy-intensive industries, and it has allocated 3.5 billion yuan to environmental projects.

It has also sped up plans to build nuclear power plants and doubled investment in the state power grid to 1.2 trillion yuan ($175.6 billion). That may also help renewable energy projects by allowing them quicker and more stable connections to the grid.