Qingdao is a major city in the east part of the Shandong Province on China's Yellow Sea coast. With the highest GDP in its Province, it represents the economic center of Shandong. Qingdao is, at the same time, a coastal city for resort and tourism, an international port, and an important pilot zone for development of modern marine industry of China. Qingdao is striving to develop headquarters economy, R&D centers, brand economy, convention and exhibition centers, IT service industry, trading centers and multiple kinds of productive service industries to build a high-end platform for the economic development of the Shandong Province.
EC-Link Project Participates at the Climate Change Mitigation and Adaptation Forum
The Climate Change Mitigation and Adaptation Forum was held on 29Jun in Qingdao city. The EC-Link Project was invited to share the case of green project development in link with green financing. Qingdao is one the pilot cities under EC-Link assistance for green finance, two municipal green projects have been selected and prepared potentially for the Shandong Green Development Fund financing.
The Comprehensive Energy Efficiency Improvement Project for the Existing Buildings in Qingdao was introduced as the example. The Shandong Green Development fund is initiated by Asian Development Bank, also expected to leverage the blending investment from other International Financing Institutes, Private Capital and Commercial Banks. It provides creative Green Fund mechanism with international standard on the green criteria, which expected to achieve significant positive outcomes on environmental and climate impact, particular on GHG reduction, as well as, innovative modality to increase the bankability of green projects.
The Qingdao case done by EC-Link Project give a best practice example of how the green project can be developed in link to Green Finance resources. This has been attracted huge interest among the forum participants, who are the key people from Municipal Environmental & Ecology Bureau, climate change research institutes and other International Cooperation Agency. They have shown strong willingness to cooperation with EC-Link program on the Green Development aspect. There will be potential opportunities for demonstrating the Qingdao case to other pilot cities, to amplify the EC-Link intervention influence on Green development.
The Pilot Project Of Guarantee Insurance For Qingdao City’s Construction Industry Produces Initial Results
In order to effectively solve the problem that it takes too much deposits in the construction industry that results in shortage in working capital in construction companies, since October 2018, the Municipal Housing and Urban-Rural Development Bureau has taken the lead in launching the pilot guarantee insurance project for the industry in the city. It carried out 5 types of insurances including construction project quality defect warranty, construction project owner payment, construction project bid, construction project contract performance, and migrant workers’ wages to replace the various types of deposits. Up to now, the city has carried out 2,366 transactions of various types of guarantee insurances, and saved corporate funds by RMB 1.73 billion, effectively alleviating the financial pressure on construction enterprises.
Qingdao Municipal Housing And Urban-Rural Development Bureau Actively Made “The Pingdu-Laixi Breakthrough”.
In recent years, the Municipal Housing and Urban-Rural Development Bureau has greatly shifted the driving forces of construction industry. It vigorously promoted the development of prefabricated buildings and green buildings, and actively carried out investment promotion that builds a solid foundation for enterprises to invest and settle down in the prefecture. Through the early active visits and negotiations, on May 16, 2019, the Pingdu Municipal People’s Government and China Construction Science & Technology Co., Ltd. held the cooperation signing ceremony in Beijing.
Deputy mayor LIU Jianjun expressed his heartfelt congratulations on the cooperation between the two parties. He expressed that Qingdao Municipality will continue to increase policy support, improve the application scales and technology levels of fabricated building, and provide follow-up services to encourage enterprises to explore potential market space. The Municipal Housing and Urban-Rural Development Bureau and Pingdu Municipal People’s Government will strengthen the cooperation to promote the development of prefabricated buildings and green buildings in the city, which will increase both economic and social benefits.
EC-Link Project in Qingdao to Develop Technical Training on Municipal Green Finance
EC-Link held a technical training on Green Municipal Finance in Qingdao meant to support Qingdao HURD and technical stakeholders (Sino-German Eco Park, China State Construction Engineering Corporation, China Academy of Building Research, and China Energy Conservation and Environmental Protection Group) ECin developing municipal green finance projects.
In particular, the focus of the training was to assist Qingdao agencies in the financial planning of their projects so to link them to potential finance funds, banks and projects such as the Shandong Green Development Fund (SGDF), Felicity Project, KfW, ADB, AFD, etc.
Mr. Liu Yuyong, deputy director of the Housing and Rural-Urban Development Bureau, attended the meeting. He emphasized how, in recent years, the Bureau has comprehensively promoted green buildings by focusing on the concepts of green development and “transformation from old to new driving forces”. By leveraging on the opportunities of China-EU and Sino-German on-going cooperation, Qingdao established a green eco-zone index system and a low-carbon eco-city expert cooperation mechanism and adopted the international concept of green city to promote the construction of ecological urban areas such as in the Sino-German Eco Park.
EC Link Team, together with Qingdao HURD, conducted a set of site visits and worked with local project teams on data collection to have a better understanding of to the projects and effectively assess their potential for receiving future financing.
Indeed, EC Link Project plans to support the launching of one (or more) pilot project on municipal green financing in Qingdao. Through the introduction of capital coming from the Asian Development Bank, Kfw as well as Shandong Green Development Fund, it will be possible so to enhance and expand international cooperation in the municipal green finance sector.
Qingdao Launched the “Six Hard Marine Battles”
Just two months after the contract was signed, the Qingdao Oceanic Vitality Zone, which invested 100 billion yuan, has begun the planning to construct a “City of the Future” in the West Coast New District in Qingdao. The series of promotion activities of Qingdao Port, themed as “Ocean Planning & Managing and Bonding & Co-developing the Port and the City (Linyi City)”, continued to further extend to the interior hinterland, allowing “the Sea Gate to bond the Central Plains”.
The ocean is where Qingdao’s outstanding advantages and characteristics lie. At the beginning of the New Year, Qingdao has launched a “marine battles” that is aimed to replace old driving forces with new ones and promote high-quality development. It aims putting efforts to “six hard marine battles” in the areas of marine industry, marine ports, opening up, marine science and technology, marine ecology and marine culture. It is trying to turn its marine scientific research advantages and talent advantages into its industrial advantages, so to take the lead among the brother cities in the country in developing high-quality marine economy, and create a strong ocean economy with international appeal, competitiveness and influence.
Loan for Qingdao Business Start-ups Exceeded 2.5 Billion Yuan
In recent years, Qingdao Municipal Finance Department has fully exerted in fully supporting guaranteed loans for start-ups in accordance with the principles of high starting point, high architecture and wide inclusiveness. Up to now, the financial institutions in the city have issued 19,800 guaranteed loans for start-ups, worth 2.5 billion yuan. The loans have been used to promote entrepreneurship, and promote employment of more than 66,000 persons. With such practical actions, the Municipal Finance Department supports the development of the private economy, and promotes mass entrepreneurship.
Within such process, Qingdao Municipal Government is stickily focusing on three main elements: First is to increase policy support and help break the bottleneck in venture financing; Second is to improve the guarantee support system to reduce the cost of venture financing.; Third to innovate the credit guarantee model to lower the threshold for venture financing.
Qingdao to Promote High-quality Development of Regional Economy
In 2018, Jimo District in Qingdao accelerated the comprehensive finance and wealth management reform, by taking the spirit of “replacement of old driving forces with new ones” as its main thread. It established the country’s first fund incubation base controlled by the regional equity market operation institution to build a comprehensive service platform that covers the full fund industry chain of “fundraising, investment, management and exit”. By such efforts, it aims to promote a virtuous cycle and healthy development between the economy and finance, and inject new vitality into the economy for high-quality regional development.
At present, the Fund Workshop has attracted 71 private equity funds such as Morgan Stanley Securities, CITIC Securities, Taifu Excellence, Henglan Zelin, etc. The total scale of funds management is over 20 billion yuan. Moreover, the Fund can play the function of investment attraction; successfully introducing some emerging industries within Jimo District.
Qingdao Seeks to Increase Governmental Debt Limits to Support the City’s Key Project Construction
Since 2015 when the new budget law came into force, issuance of local government bonds has become the only way for the government’s debt financing. Under the correct leadership of the municipal party committee and municipal government, the Municipal Finance Department actively reported to China’s Ministry of Finance on the financial pressure faced by the city in the construction of major public welfare projects, and obtained an understanding and strong support from the Ministry.
According to the unified deployment of the Ministry of Finance and the principle of “Issue early, fund-use early, and see early effectiveness”, the city has launched this year’s government bond issuance in January. Up to now, it has successfully issued 10.2 billion yuan of local government bonds, including 5.7 billion yuan of general bonds, and 4.5 billion yuan of special bonds. The raised money will provide a strong financial support for the construction of public welfare projects such as traffic system, Yellow-river West-east Diversion Project, and shantytown renovation.
In the next step, the city will promptly and scientifically allocate the newly-increased debt limits in accordance with the requirements of the Ministry of Finance. It will further accelerate the bond issuance. And it will use the raised funds to increase financial support for key projects of national, provincial and municipal governments, so to make better play of government bonds to stabilize investments, expand domestic demand and strengthen the economy weak points.
Qingdao Explores A New Model Of “Smart Water Management” To Construct the Project Digital Dagu River That Has Been Completed And Put Into Operation
It was learned from the Municipal Water Conservancy Bureau that the Dagu River Digitalization, which is the project to enable digitalized management of the Dagu River Comprehensive Treatment, was recently completed and put into operation. The project collects various regulatory data, monitoring data and monitoring video, and relies on big data technology to realize digitalization of objects in the watershed management, visualization of management processes, and scientifically making decisions of management. It provides strong support for river managers at every level to “Manage the river well, manage the people well, and manage issues well” to realize the post-construction objectives that are “unobstructed flooding, sounding dyke, clear water, green shore, and beautiful scenery”, and it explores a new mode of Internet-based water management in the new era.
It is reported that the project has built new, and upgraded the existing, water and rain information collection equipment, and improved the hydrological intelligence network. It built 79 rainfall observation stations, and connected 164 ground and underground water-level automatic monitoring stations along the river course of 170+ kilometers, to realized the real-time forecast and measurement of rainfall and water level at the main streams and at the main water conservancy projects. It has newly put into use 92 water measurement devices for the main streams of the Dagu River, and connected to the 4 water measurement devices at the reservoirs of Chanzhi, Yinfu, Beishu and Huangtong, and built 15 automatic water quality monitoring stations, to realize real-time monitoring of the water and soil conservation and the environment in the whole river basin. It has newly set up 214, and connected to 129, video surveillance facilities to collect real-time video information of the Dagu River’s main stream dikes, river dams, main tributary estuaries, traffic bridges, large and medium-sized reservoirs, hydrological stations and management facilities in the basin. It observes 24 hours a day the backbone water conservancy projects and management facilities, and it becomes the “telescope” for the river’s daily management.
Qingdao Launched Its First Operation Method of Energy Conservation for Pure Electric Bus That Will Save Millions of Kwhs
With Qingdao’s constant updating of its public transport vehicles, the number of pure electric buses the island city owns is increasing. Compared with fuel vehicles, there are certain unique operational skills that can be deployed for better use of pure electric vehicles. “In order to save energy, we must first ensure the vehicle and every part of it to be in the best condition at all times and that is the basis for energy saving,” said Mr. Wang Qun, a bus driver, who pays great importance to tire maintenance, engine room dust removal and air pump dust removal. He elaborated: “In operation, we must pay attention to road condition and traffic controls. For example, 3 traffic signal lights at the Xianxialing Road, East Yinchuan Road and Tong’an Road are synchronized at same intervals, 30 seconds apart. After the green light at Xianxialing Road intersection turns on, we should drive through the intersection of the East Yinchuan Road with constant speed and reach at a stop of the East Yinchuan Road. And then, we drive through the East Yinchuan Road with constant speed and enter the Tongan Road Stop where at this point of time, the intersection ahead would show a red light. After getting on and off of the passengers, we may get the right time to pass the intersection. By this way, we can optimally save lots of energy.” Wang Qun is a bus driver along the 501st route. After years of exploration and repeated tests, he found that the motor rev designed for the vehicle is 1000 rpm to 2000 rpm. And according to the bus operation, if the rev is between 1300 rpm and 1800 rpm and the speed is between 30km/h to 40km/h, it is the most economic.
According to statistics, Mr. Wang uses a special operation method to run 2,600 kilometers per month that can save 900 KWHs and annually save about 10,800 KWHs. Wang Qun has been recognized as one of the most economical drivers of Qingdao pure electric buses.
“The 501st route is with 41.7 kilometers and it passes through 64 stops, 12 primary and secondary schools and kindergartens, 6 hospitals, 2 business districts, and 97 intersections of which 37 have no signal lights, as well as 142 zebra crossings. Of the 64 stops, 19 are connected to the subways Line 2 and Line 3.” Because of his well knowledge of the road conditions, he used the unique ability of electric vehicles to recover electricity by reducing the vehicle speed in advance on the downhill section and using the method of “continuous speed reduction” and “segment speed reduction” to extend the braking time and braking distance, so to maximally recover power energy.
EC-Link Project and Qingdao Stringent Cooperation To Develop Green Finance Projects
On November 3-5, 2018, EC-Link team was involved in a mission to Qingdao focused towards the possibility to start a city to city cooperation between Qingdao (represented from local HURD) and Dena (representing the German Federal Government and associated German cities).
The proposal from local HURD is to develop a “model” combining technical and financial elements so to create a framework activity that could be easily replicable in multiple different projects within the green building sector.
Within this City Network Unit (CNU), EC-link will cooperate in providing technical support for the financial part due to its connection with most relevant international financial institutions.
From a technical point of view, Qingdao HURD would welcome a cooperation with Dena (due to their domestic collaboration with KfW) in order to develop a model both for Green Assessment of the Project but also, if possible, for the post green assessment to be performed once the project is started.
Moreover, EC-Link will support local HURD in order to identify bankable pilot projects, with consequent technology selection and also actions needed to start collaboration with international financial institutions.
At the moment, Qingdao has been selecting the following line of activities: Retrofitting for existing private buildings, retrofitting for public buildings, district heating and clean heating.
Qingdao HURD asked EC-Link support as facilitator among different international projects (such as Felicity) and international institutions/funds (such as Shandong fund, ADB, KfW, AFD, etc.) so to identify the best model, with related procedures, to reach such important target.
EC-Link Pilot Cities Selected
Beijing, 9 March: The Ministry of Housing and Urban-Rural Development (MoHURD) announced a list of pilot cities of the EC-Link project today, including: Zhuhai, Luoyang, Changzhou, Hefei, Qingdao, Weihai, Zhuzhou, Liuzhou, Guilin and Xixian.
With the support of EC-Link, pilot cities will develop projects in the fields of compact urban development, clean energy, green building, green transport, solid waste management, water management, municipal financing, urban regeneration and green industry. Through learning urbanization experience from Europe, the pilot cities will serve as models for China’s low-carbon ecological development.
China is experiencing rapid urbanization. Over the past 30 years, Chinese cities have achieved extraordinary economic growth. In 2014, the urbanization rate reached 54.77%, which greatly improved people’s living standard. However, rapid urbanization also brought huge pressure to energy supply, natural resources and the environment. China hence faces huge challenges in environment protection, energy efficiency and industrial transformation. It is therefore of high importance to explore a green, low-carbon and ecological development path.
In that connection, the EC-Link project will make a significant contribution to promoting a Xiaokang society, China’s new urbanization planning, energy saving and climate adaptation, as well as EU-China urbanization partnership. Today, Europe’s urbanization rate has reached 75%. Over the past 150 years, European countries experienced similar challenges: the great smog of 1952 in London killed over 5000 lives in a short span of one week; the air pollution in Ruhr made blue sky a distant dream for citizens…However, the blue sky and fresh air in Europe make it hard to imagine the polluted days in the past, which was only made possible through generations’ remarkable efforts. In this process, Europe has accumulated valuable experience and developed advanced technologies in the fields of urban planning, green transportation, green building, renewable energy and water management. Many European cities have become eco-city models such as Freiburg in Germany, Copenhagen in Demark and Malmo in Sweden.
EC-Link will bring in European experience, implement best practices in pilot projects, build a knowledge and policy sharing platform, improve city financing and PPP mechanisms and provide more opportunities for practical cooperation between China and Europe and technology transfer.
The project platform will be service-oriented, with the aim to provide comprehensive consultancy for low-carbon eco-city development, solutions and technical guidance. The project encourages and assists pilot cities to explore innovative financing mechanisms. The aim is to provide innovative financing experience for China’s new urbanization process.
The project has received high-level government endorsement in both Europe and China as a part of the EU-China Partnership on Urbanization, a broad political initiative promoting the development of adequate solutions for sustainable urban development. The technical assistance provided by EC-Link assists the Ministry of Housing and Urban-Rural Development in shaping a national ecological and low-carbon framework, and helps Chinese municipalities with their own ecological, low-carbon urban development
Guidelines on Investment & Financing for Green Buildings
Green building investment and financing refers to the investment and financing behavior in the field of green building.
The green funding gap for green building construction in China is still large. To fill it, statistics predict that CNY 3 to 4 trillion worth of yearly investments are needed for the whole period of the 13th Five-Year Plan (2016-2020). According to prediction, of the total needed investment, only the 10% to 15% can come from the government, the rest is made of social capital. Therefore, it is necessary to effectively mobilize private capitals into the field of green building.
In the top-level design of green finance in China, there is a lack of docking schemes for green buildings, albeit efforts have been made in this regard. In August 2016, seven ministries and commissions, including the People's Bank of China, jointly issued the “Guidelines on Building a Green Financial System”, a blueprint for China's green financial development plan. However, they did not clearly point out the specific financing, financing methods and implementation methods of green finance for green buildings.
In summary, China's green building investment and financing sector urgently needs to set clear guidelines to ensure the green development of China's urban and rural construction to achieve the overall development goals of 2050.
The guideline aims to consider all the aspects of the green building financing, from the technical side (use of green technology and energy-saving effects) to the potential benefits and capital risks connected with the investments.
The objective is to embed ecological and environmental considerations (from financial to social externalizations) in the decision making process of the operators from the construction sectors.
Municipal Green Finance to Sustain Qingdao's Green Projects Development
The EC-Link project has received an increasing recognition by Chinese cities and there is increasing consensus that the project can provide useful support to their efforts towards sustainable development. Both city officials and local HURDs have demonstrated a strong and proactive engagement and willingness to receive specific knowledge in project financing and funding.
EC-Link’s intent is to spread practical knowledge on financial opportunities to support eco/low carbon projects for Sustainable Urbanization and prepare the ground for future specific activities in Green Municipal Financing.
Qingdao HURD has plans to develop 4 lines of activities around the topic of energy-saving with the strategic objective of making Qingdao reach the Carbon Emission Peak by 2030.
The activities are:
1) Retrofitting of existing resident housings;
2) Retrofitting of existing public buildings;
3) District energy (air/ocean/sewage-source heat pump);
4) Clean-energy heating (especially in rural area).
EC-Link is supporting Qingdao Municipality in order to investigate and recommend sustainable funding mechanisms, particularly in relation to their capacity to fund/catalyze green investments designed to implement planned green projects.
Urban Development and Growing International Trade Within the BRI
The growth in international trade and investments around the EU Trans European Network -Transport (TEN-T) policy and the Chinese Belt and Road Initiative (BRI) is leading to increasing transport volumes between China and the EU. Cities are the key nodes in these growing national, regional and intercontinental transport networks and should contribute to and benefit from the increased trade.
However, without proper planning and management, those urban nodes can become blockages in national and international transport flows. Local congestion around hubs and terminals can lead to reduced network efficiency and increased levels of local air pollution.
Chinese cities have an opportunity to plan the development of safe, clean and affordable transportation systems. The impact that such development can bring in terms of economic opportunities, human wellbeing, and climate change are determined by the choices city leaders make today: a sustainable urban/spatial hub development will be part of “resilient cities” with logistic hubs as part of the urban structures.
The proposed Project is designed to bring together Chinese and European Cities (such as Hamburg, Barcelona, Gothenburg) along key trade routes to work together to optimize their leading roles as national, regional and international hubs.
The EU and China together can define a model of rising trade and prosperity combined with healthy cities. To this aim, Europe and China need to work together to maximize the benefits of trade while minimizing potential negative impacts on cities.
Jinmao Smart Energy City
Jinmao Smart New City is a project with a total investment of 5 billion US dollars and a total above-the-ground construction area of 4 million square meters. The project plans to build a comprehensive software industrial park, which meets international standards and has a strong demonstration effect. The industrial park will contain high-end software industry, creative design, outsourcing of services, commercial services and living quarters.
It is expected that the software industrial park will generate an revenue of 15 billion RMB within 3 years after its completion, creating tax income of 4.2 billion RMB.
Currently China lacks technologies and experience in sewage source heat pump, clean energy integrated design and contract energy management. In that connection, this project will bring in advanced European technologies and experience so as to promote the development of Qingdao high-tech zone clean energy demonstration pilot project.
Lead Agency：Qingdao High-tech Zone Construction Bureau; Construction Units
Implementing Agency：Construction Units；Sewage Source Heat Pump Company
Implementing Partners：Design Units；Energy Saving Service Company
- Ecological city indicator system is still under development and renewable energy sources should account for over 5% of total energy sources used.
- Beneficiaries: people living or working in the Jinmao smart new city.
- Assets Involved: energy stations, machine rooms, public buildings and residential buildings within 3 square kilometres.