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China's manufacturing industries play a dual role in the drive to improve energy intensity. First, they are improving the energy efficiency of the products that they supply to the Chinese market. And second, they are reducing their own energy intensity by increasing the value added of their products while improving the energy efficiency of their facilities. China's coastal manufacturing hubs, and especially the special economic zones within those areas, are the incubators for this process. Despite the increasing privatization of businesses in these areas, the government maintains close cooperation with industry. Local officials are responding to EE&C objectives by favouring low energy intensity businesses in their jurisdiction. At the same time, manufacturers are motivated to bring efficient products to the marketplace by the central government's promotion of those products. Continued efforts to deregulate energy prices will push manufacturers to further improve the efficiency of their operations. Success in the coastal development areas may subsequently be transferable to less-developed regions of China.

Though today the residential and commercial sectors are considerably less important than industry in China's total energy consumption, they are areas of rapid demand growth. There is a large potential for energy efficiency in these sectors and the government has sought to improve their efficiency for many years. Recent policies have introduced higher energy reduction targets, particularly in the building sector, and expanded coverage by including more products under performance standards and labelling programs. Supervision and enforcement of these policies and programs is essential to slow the pace of energy growth in these sectors.

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