China’s nightmare scenario: By 2025, air quality could be much, much worse

China’s nightmare scenario: By 2025, air quality could be much, much worse

By Lily Kuo — March 12, 2013

china-air-pollution-db

China’s myriad plans to deal with pollution don’t look so promising. In a research note today, Deutsche Bank analysts gloomily conclude that, barring extreme reforms, Chinese coal consumption and increased car ownership will push pollution levels 70% higher by 2025. Even if China’s economy slowed to 5% growth each year, its annual coal consumption would still rise to 6 billion tons (5.4 tonnes) by 2022, from the current 3.8 billion tons. Car ownership is expected to increase over the years to 400 million in 2030 from the current 90 million. With those two figures, it will be very difficult for the government to reduce the national average of PM2.5, or air pollution that is small enough to enter the bloodstream. The current national average is 75 micrograms per cubic meter. In January, PM2.5 levels in Beijing reached 900 micrograms per cubic meter.

For China to meet its goal of reducing particulate matter to 35 micrograms per cubic meter by 2030, China will need to implement aggressive measures, the bank says, like reducing pollutants from coal-fired plants, cutting the number of cars on the road, and massively building up public transportation. Even then, the air pollution level would still above the level deemed safe by the World Health Organization (25 micrograms per cubic meter).

Still, it’s not impossible. Deutsche Bank points out that the United Kingdom rescued the country from under the ”Great Smog” of the 1950s, thick pollution that killed 4,000 people. A key difference between China and the UK during that time, the Financial Times points out, is that China is more reliant on manufacturing for growth. That’s one more incentive for China to move from a manufacturing-based economy to one more focused on a services industry.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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