His Excellency, Vice-Minister of SEPA, Mr. Zhu Gongyao,
His Excellency, Governor of Jilin Province Mr. Wang Min,
His Excellency, Vice-Governor of Jilin Province Mr. Li Bin,
Dear Colleagues and friends,

    I am very happy to be here today in Changchun for the celebration of the International Ozone Day and wish to thank SEPA for inviting the Multilateral Fund Secretariat to this event.  I would also like to pass on the best wishes of the Chief Officer, Maria Nolan, who unfortunately due to pressing commitments is unable to attend these celebrations herself.

    I do not intend to speak long, firstly because I know that there is a long list of speakers and secondly, I know that there is going to be a seminar today or tomorrow at which we will discuss many of the challenges that China faces in 2007 and beyond.

    This is not the first time that China celebrates the International Ozone Day, however, this year’s celebration carries special significance.  This is the last complete year that China will be producing and consuming CFCs and from 1 July 2007, China will complete CFC phase-out and end its short history of being the largest CFC producing and consuming country in the world since 1996.

    By any standard, this will be a major achievement.

    In the 10 years between 1986 and 1995, CFC consumption in China grew from 29,000 tonnes to 75,000 tonnes, at an average annual rate of about 16 percent.  If this growth had not been controlled, the consumption could have reached 195,000 tonnes by 2005 assuming an annual growth of 10 percent, at the same level of the national GDP growth rate of China between 1996-2005.  That would have more than doubled the consumption level of 75,000 tonnes in 1995.

    However this did not happen.  Instead, the CFC consumption in China came down at an average rate of about 16% every year between 1996-2004 from 47,000 tonnes to 17,000 tonnes (the latest official data available is 2004).  As a result, a total of approximately 180,000 tonnes less CFCs were emitted to the stratosphere by China in the year 2005 alone (195,000-17,000).  To put 180,000 tonnes in perspective the total CFC baseline consumption of Article 5 countries without China is 106,000 tonnes.

    It is not an exaggeration to say that China holds the balance of the success of the Montreal Protocol.  With the movement of the China programme towards July 2007, the success of the Protocol is in sight.

    However in sight is not the same as in hand.  The years between 2007 and 2010 are going to be crucial for China.  The challenge is how to sustain the CFC phase-out.  Since this is the subject of the celebrations and many of the issues will be explored in the next two days, I am not going to expand here but will limit myself to raising a few issues for our discussion.

    As I quoted from the data officially reported by China, there was still about 17,000 tonnes of CFCs consumed in China in 2004, and the number is expected to decrease to about 10,000 tonnes in 2007.  If the CFC production is abruptly cut off in July 2007, how is this demand going to be met?  If an analogy could be made to weaning, is the child going to be starved, or is he going to be provided with substitutes?  How are the economics working in China between the prices of CFCs and their substitutes.

    Is any legislation to ban CFCs and halons being planned now that the phase-out is being completed?  If yes, what is the time frame for meeting such a ban?  Have any penalties and an enforcement regime been developed?  Without enforcement any bans could become meaningless.

Mr. Chairman,

    At the same time as giving up its title of the largest CFC producing and consuming country, China is assuming another title of being the largest HCFC producing and consuming country in the developing world.  In 2004, its HCFC consumption was over 10,000 ODP tonnes, or 52% of the total consumption of A5 countries while its production reached 15,447 ODP tonnes or 88% of the total of A5 countries.  The world is looking to China for leadership in the next campaign to take on the challenge for HCFC phase-out.  Is China ready?

    Finally, Mr. Chairman, let me wish success to the celebrations in the beautiful city of Changchun and thank you again for inviting the Multilateral Fund Secretariat to this important event.