China's plan to save energy progresses

China is falling short of its goals in a campaign to boost energy efficiency in its fuel-guzzling economy -- the world's No. 2 oil consumer -- but is starting to make progress, the government said last week.

China launched a five-year effort in 2006 to cut energy use per unit of economic output by 20 percent amid mounting worries about pollution and dependence on imported oil, which communist leaders see as a strategic weakness.

But last year's reduction was only 1.33 percent, well below the 4 percent annual target, Xie Fuzhan, commissioner of the National Bureau of Statistics, said at a news conference.

"The pace of structural adjustment is just not fast enough," Xie said. "We still need to have the people united as one to deal with the reduction of energy consumption and pollution."

Chinese industries use 20 percent to 100 percent more energy per unit of output than their U.S., Japanese and other counterparts, according to the World Bank. China's government says the gap is even bigger, putting total energy use at 3.4 times the world average.

China's heavy energy use has led to criticism abroad as its demand for oil pushes up world prices and state-owned companies sign production deals with international pariahs such as Sudan. By some accounts, China has overtaken the United States to become the world's biggest producer of greenhouse gases.

Improving efficiency is a key part of government efforts to clean up environmental damage from China's 28-year-old economic boom, which has left its cities choking on some of the world's worst air pollution and millions of people without clean water.

"Cutting energy consumption and pollutant emissions and dealing with climate change are urgent, critically important tasks," Premier Wen Jiabao said at a government meeting last week, according to state press reports.

China's oil imports rose 11.2 percent in the first half of this year to 570 million barrels, the government reported.

Beijing has unveiled a series of initiatives to encourage energy efficiency. Last month, regulators eliminated rebates of value-added taxes on exports of cement, plastics and other goods deemed energy-intensive or polluting. Last week, the government said companies that exceed pollution limits will be barred from receiving bank loans. Construction companies have been ordered to make new buildings more energy-efficient.

But China will have trouble meeting its goals while energy-intensive manufacturing still accounts for more than half its economic output and it needs high growth to reduce poverty, said Ting Lu, a Merrill Lynch economist in Hong Kong.