The Chinese government has announced a 1.7 trillion yuan overhaul of environmental regulation and industrial oversight as its next step in combating China’s severe smog problem. The details of the plan will be announced to the public in mid-August, but it is expected to include the usual elements of restricting smog-creating industries, clamping down on travel in personal automobiles, and encouraging a shift away from the still coal-heavy power grid to cleaner alternative energy sources. Having only just recently acknowledged the dangers posed by the atmospheric levels of so-called PM2.5 – microscopic particles fewer than 2.5 microns in diameter, which can bypass many types of artificial filters and lodge in lung tissue – the government is intent on reducing emission levels in the now famously filthy air. Frustration has grown among Chinese citizens, who have perceived the government as unwilling to combat the production of PM2.5. This anger is further exacerbated by the fact that the commonly available cotton breathing masks often seen in Chinese cities do very little to protect the wearers and foreign-made, high-quality industrial masks are difficult or impossible to get for most people. Earlier this year the government finally settled on a Chinese name for the pernicious particle (xi keli wu, or “fine particle”) so that the country could have its own constructive conversation about it in Chinese. Foreign entities such as the World Health Organization (WHO) and US Embassy have helped raise awareness of the severity of the PM2.5 problem in recent years by disseminating their own atmospheric readings that have contradicted artificially low official Chinese numbers. Chinese leaders may have taken this reporting as a slight or as trying to meddle in China’s internal affairs, causing the Chinese government to delay their own recognition of the particles – to proactively react to these numbers would have caused a loss of face. Now, however, the government is finally taking action.
It is unknown whether the government’s ambitious plan will include novel remedies, such as investing in innovative smog-eating sidewalks, but without radical new solutions, significant national change will be difficult. Perhaps the most significant obstacle facing would-be reformers is the pervasive corruption in businesses and local governments. The new party chief, Xi Jinping, said at his swearing-in this past November that the corruption problem was the highest priority for the new regime and pledged to “make every effort to solve this problem.” Even when Beijing actually wants to enforce policies, it is often unable to successfully compel geographically remote officials to comply with new regulations (or even regulations that already exist). In many cases, these officials are used to receiving bribes from polluters and they are leery of letting those extra revenue streams dry up, regardless of what Beijing says. When inspections are performed, the suspected company is often informed ahead of time by bribed officials so that it has ample opportunity to remove any evidence of corruption. When enforcement is a desirable option for local authorities, officials may choose to interpret the central government’s policy in order to protect their own interests or those of their associates, making it enforcement patchy when it occurs at all. A further complication is the common governmental bias that often allows Chinese firms to ignore regulations, whereas foreign joint ventures will often be singled out even if they are actually obeying the law. This nepotistic business environment is often an incentive for Chinese companies to continue to flout regulations because they know they won’t be punished. Stricter environmental regulations demanding that polluters cut emissions by 30% are set to go into effect in 2015, but as always it is unclear how thoroughly they will be enforced despite Beijing’s rhetoric.
Despite these barriers to addressing China’s smog problem through sound policy, there may be a silver lining to China’s recent economic downturn. Industrial production is at its lowest growth since last September and producer prices have declined year-on-year for fifteen months straight. If this trend continues over the long-term – as more economists are becoming convinced will be the case – the most serious smog offenders might not be able to avoid cutting back on production, potentially reducing smog emissions in spite of the government’s inability or unwillingness to enforce environmental regulations. For example, the steel industry, historically one of China’s production-driven economic mainstays, has flagged along with the overall struggling economy. The woes of the real estate sector – an industry which is intimately tied to the massive, pollution-heavy construction industry – have particularly affected demand for steel in China. China’s steel Purchasing Managers’ Index, which is a monthly record of sales, production, and inventories, lists the numbers for April, May, and June as 45.1, 46.8, and 44.24, respectively. Numbers below 50 indicate a contraction, meaning that the steel industry has been shrinking for some time, if at an inconsistent rate (June’s reading was up 3.89 year-on-year). Many of China’s steel producers are also curbing production by scheduling maintenance of plants in order to make time for the current glut in the market to be used up. If this decreased production of steel and other heavy industry materials continues over the relatively long term while China’s economy keeps sputtering, the decrease in smog production may end up being significant. The effects of the downturn might be enough to give the country time to catch its breath.