China's Anti-Smog Campaign Takes Uneven Course

An analysis by Michael Lelyveld
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Tourists visit the Bund in Shanghai amid heavy smog on Dec. 5, 2013.
Tourists visit the Bund in Shanghai amid heavy smog on Dec. 5, 2013.

Three months after announcing a five-year plan to fight urban smog, China is pursuing a broad range of measures to clean up the air.

Faced with sooty skies in major cities, China's government has promised tighter pollution controls, cleaner fuels, and curbs on industries that waste coal-fired power.

In September, the State Council promised to cut concentrations of fine airborne particulates by 10 to 25 percent by 2017 compared with levels in 2012, imposing the toughest restrictions in areas around Beijing, Shanghai, and Guangzhou.

State media outlets have also acknowledged the gravity of the smog problem after years of reporting on Beijing's "blue sky days."

"The country has announced measures over the years to tackle pollution, but has made little apparent progress," the official Xinhua news agency said on Dec. 25.

In Shanghai, hospitals treated over 5,000 patients for respiratory ailments between Dec. 2 and Dec. 5, Xinhua reported.

"For many urban residents, the happiness brought by rising incomes is far from enough to make up for the happiness taken away by environmental pollution," said Zhang Xiaode, a professor at the Chinese Academy of Governance, according to the report.

Local resistance

Yet, despite pressure from pollution, some environmental measures are meeting resistance at the local level.

In the northern city of Tianjin, for example, a new limit on issuing car license plates to ease traffic "caught citizens unprepared," sparking public complaints.

The municipal government gave citizens only five hours' notice of the new quota system, prompting questions of fairness and panic-buying of new cars, state media said.

Like Beijing, Tianjin will also restrict traffic based on license plate numbers, but it has delayed implementation until March.

Residents have complained that the rules are being imposed too abruptly, although vehicles are estimated to cause 16 percent of smog-forming particulates, according to Xinhua.

"It is too simple to describe public feeling as 'anger' toward the government," said a commentary in the Global Times, a publication of the Communist Party paper People's Daily. "Most people realize government efforts can barely make a difference without solid action by the public, which is not even close."

Subsidies for shipbuilders

Key industries have also shown signs of resisting government efforts to eliminate overcapacity, seeking subsidies and other assistance to mitigate cuts.

On Dec. 9, the government said in a statement that it would set aside "special funds" for the shipbuilding industry to replace older vessels with more efficient models, Reuters reported.

The new subsidies are "confounding a government pledge to reduce support for sectors with overcapacity in order to reform the economy," the news agency said.

The website of the official English-language China Daily carried an edited version of the Reuters story, but omitted the reference to the government pledge and ascribed the report to "Agencies."

Shipbuilding was one of five major industrial sectors singled out by the State Council in October in a "guideline to tackle serious production overcapacity."

Capacity utilization in the shipbuilding industry may have fallen as low as 50 percent in the first three quarters of 2013, the China Securities Journal reported in November.

The State Council order, also covering cement, electrolytic aluminum, sheet glass, and steel, was supposed to ban new projects that expand capacity. In November, the central government warned local authorities and banks against obstructing the order by extending support and new loans.

But the shipbuilding subsidies announced in December suggest the government has come under pressure over the impact of industrial and environmental reforms.

Steel industry

Similar efforts to offset capacity cuts appear to be at work in the steel industry, as well.

In November, an official of the National Development and Reform Commission (NDRC) told an industry conference that the government would "relocate some factories and encourage more companies to invest in overseas projects," China Daily reported.

The country will "optimize the steel sector through industrial transfers and directing capacity to areas with comparative advantages," said an NDRC inspector of industrial planning, Li Zhongjuan.

The approach may raise doubts about how much capacity will be cut or simply moved somewhere else.

In a report on Dec. 30, the Ministry of Industry and Information Technology said China had already closed outdated production lines serving 1,569 companies in the past year, according to China Daily.

But overcapacity remains a "major challenge," the ministry said, with excess investment shifting from traditional to emerging industries, including wind and solar power, as well as carbon fiber production.


Philip Andrews-Speed, a China energy expert at the National University of Singapore, sees inconsistency in the implementation of the government's new anti-pollution policies so far.

"I think they are reverting to traditional administrative measures, like closing down large numbers of cement plants," he said.

But the government appears to be pushing the big state-owned enterprises (SOEs) toward reform with one hand while continuing to prop them up with the other.

"Even if energy prices do rise significantly, the large SOEs with soft budgetary constraints and low cost of capital need not face undue pressure to be more efficient," Andrews-Speed said.

Pricing reforms

The pace and extent of pricing reforms for energy to promote conservation are still unclear.

A Xinhua year-end review cited changes in state-controlled price formulas for motor fuels and natural gas for industrial use since the new government took office in March, but it also suggested a cautious approach.

"Meanwhile, China has adopted gradualism and multi-speed reforms in various fields in a bid to accumulate experiences and maintain stability," the review said.

The statement stood in contrast with Xinhua reporting in September, which referred to the government's anti-smog plan as "a call for immediate action."

Andrews-Speed also noted that the review made no mention of reforms in electricity pricing or predictions of when they might take place.

So far, the government has largely shielded the public from significant price hikes for power, although coal-fired generation is a major source of urban smog.





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