China faces a long battle for blue skies

China faces a long battle for blue skies

(Xinhua)    20:02, November 07, 2013Smoggy weather has become a lingering problem in China and the country faces a toughbattle in its fight against serious air pollution, especially the northern parts, analysts argue.

On Wednesday, the 10 most-polluted cities included the municipalities of Beijing andTianjin, as well as six cities in adjacent Hebei Province, according to the Air Quality Indexreleased by the China National Environment Monitoring Center (CNEMC).
Tangshan, a city in Hebei that is 150 km east of Beijing, topped the list. The data is latestevidence of the poor air quality in Beijing, Tianjin and the surrounding areas.
Since the beginning of 2013, the center has monitored 74 cities around the country formajor pollutants including sulfur dioxide, nitrogen oxides, inhalable particles, ozone, carbonmonoxide and fine particles.
During the third quarter, in Beijing, Tianjin and 11 cities in Hebei, air quality for 62.5percent of total days was below the CNEMC’s standards, double the 31.1 percent for allother monitored cities around the country.
This is no coincidence.
The northern region, especially Hebei, has long been known for its steel industry, whichcontributes to a large proportion of GDP but also to air pollution.
Iron and steel production capacity in Hebei stood at 314 million tonnes in the first half,representing a third of the country’s total, said Xu Xiangchun, an analyst withMysteel.com, a leading steel information provider.
The capacity in Tangshan, a city rich with iron ore resources, exceeded 120 million tonnes,Xu said.
Wang Yuesi, a researcher with the Chinese Academy of Sciences, said more than 20percent of PM2.5 pollutants in Beijing came from outside the city, according to his ownresearch.
PM2.5, airborne particulate measuring less than 2.5 microns in diameter, can be inhaled bypeople and pose health hazards.
The proportion will be even higher during smoggy days when the air flow is relatively slow,Wang said.
His findings are backed by Guo Bin, a professor at Hebei University of Science andTechnology.
After comparing the PM2.5 data at 300 monitoring points in Beijing, Tianjin and Hebei,Guo found the monthly changes in PM2.5 figures of the three regions to be similar, showinga close connection of air pollution in the areas.
“This means Beijing, Tianjin and Hebei must collaborate with one another in combatingsmog, and no region can be immune from influences of other regions,” Wang said.
In September, the government released a plan for air pollution monitoring and earlywarning in Beijing, Tianjin, Hebei and some surrounding areas in a bid to intensifycooperation in the emergency response to heavily polluted air.
However, experts say coordinating efforts of local governments is not going to be easy, andthe fight for blue skies will be a protracted task for the country.
In Hebei, the provincial government plans to cut its steel production capacity by 60 milliontonnes by the end of 2017 to improve air quality.
Calculations by Mysteel.com showed that eliminating each tonne of steel capacity means aloss of more than 3,000 yuan (488 U.S. dollars).
Cutting 60 million tonnes of capacity will result in a loss of 200 billion yuan, in addition tothe loss of many jobs.
“Who is going to foot the bill for such enormous a loss and the burdens that may comealong?” Guo said.
The air pollution issue must be tackled along with the transformation of the region’sindustrial structure, Guo said, adding that more developed parts should help with thestructural upgrading to compensate the loss of economic growth and jobs in less-developedplaces.
Song Laizhou, a professor with Yanshan University in the city of Qinhuangdao of Hebei,said government efforts alone will not be enough in the fight against smog.
The country should establish a way for polluting companies to actively engage in pollutioncontrol, including offering bonuses for pollution reduction and allowing the trading ofemission rights, Song said.
Song also urged for better laws to specify a company’s obligations in order to force them totake initiatives in reducing pollution.

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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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