Insight: Smog war casualty: China coal city bears brunt of pollution crackdown
26/11/2018 23:00
* Jincheng under pressure after failing smog targets last
year
* Coal-based economy facing disruptions in new winter
campaign
* Dozens of mines, plants already closed after crackdowns
By David Stanway and Joseph Campbell
JINCHENG, China, Nov 27 (Reuters) - Residents in the rugged,
overmined city of Jincheng in northern China's coal heartland
have been breathing a little easier after campaigns to reduce
pollution forced dozens of collieries and chemical plants to
close.
"Everything was covered in dust, and it's cleaner now," said
Zhang Haibin, a 44-year-old farmer living in a largely abandoned
hamlet on the edge of a defunct coal deposit that once attracted
migrant workers from across the country.
But Jincheng has paid a heavy price, Zhang said.
Factories and coal mines have shut down, sending shockwaves
through the local economy. The migrants have drifted away, and
jobs are hard to find even for locals.
And the air is still not clean enough, falling short of the
government's pollution targets. That means that as another
punishing anti-pollution campaign gets underway this winter in
smog-choked north China, Jincheng will be under even more
pressure.
The city's experience illustrates the challenges facing the
Chinese government as it tries to rein in pollution without
further weighing on an economy that is showing signs of a
slowdown, exacerbated by the effects of a bruising trade war
with the United States.
Across north China, cities are struggling to strike a
balance between reversing the environmental damage done by
decades of breakneck growth and keeping their heavy industrial
economies afloat.
Jincheng has done particularly poorly, according to the
central government.
A sprawling, mountainous administrative region in the south
of Shanxi province, Jincheng is still dominated by coal. Though
many pits have been shut, the craggy landscape bears the scars
of decades of excessive mining.
Residents say air quality has improved, but whiffs of
sulphur pervade the city's industrial districts, and smoke can
be seen billowing from factory chimneys.
Jincheng was the worst performer among 28 northern cities
forced to impose special pollution measures last year, according
to data from the Ministry of Ecology and Environment.
It failed to meet its target of cutting concentrations of
lung-damaging PM2.5 particles by 10 percent last winter, and
recorded 1,819 pollution violations, the most of the 28 cities.
Summoned to Beijing in April to explain his city's poor
performance, mayor Liu Feng said the city's gross domestic
product plunged 9 percent and fixed asset investment 41 percent
in the first quarter as a result of production cuts.
Feng told officials, at a meeting attended by Reuters, that
he was "deeply embarrassed" and would seek to "learn painful
lessons" about improving compliance this year.
Feng said city inspectors had been too "passive" and had
failed to properly forecast smog build-ups or supervise
industries. But he also blamed unfavourable weather conditions,
as well as the city's "industrial structure", dominated by
polluting power plants, steel mills and cement factories.
The economy bounced back after the winter curbs were lifted,
with GDP growing 4.9 percent from a year earlier in the first
three quarters of 2018, according to the city's statistics
bureau, although fixed asset investment was still down 1.9
percent on the year.
But with the winter anti-pollution curbs that took effect on
Nov. 1, Jincheng - like many cities in Shanxi - will again
struggle to reconcile official pollution targets with their
industrial structures.
Shanxi "faces a very complex situation, it has few resources
and its supervision capabilities are quite weak - it has a lot
of different kinds of challenges," said Ma Jun, director of the
Institute of Public and Environmental Affairs (IPE), a
non-government group that monitors pollution.
"Many cities in Shanxi rank the lowest in the country when
it comes to environment law enforcement and information
disclosure," Ma said.
Shanxi produces nearly a billion tonnes of coal a year,
around a quarter of the national total, and despite promises to
promote cleaner energy, its production of the fossil fuel
actually increased in the first three quarters of 2018.
NO LENIENCY
Last year's winter smog crackdown was criticised for a "one
size fits all" approach that failed to take account of local
conditions, shuttering hundreds of factories whether they had
implemented pollution controls or not. urn:newsml:reuters.com:*:nL3N1SZ1Y1
Beijing has promised a more business-friendly campaign this
year, setting lower emissions-cutting targets and promising to
exempt environmentally compliant firms.
But after its failures last year, Jincheng is unlikely to be
treated leniently in the war on pollution, which is a signature
policy of President Xi Jinping.
On Monday, inspectors said 19 firms in Jincheng had failed
to follow rules to restrict output during a smog outbreak last
week, the latest in a series of problems uncovered this year.
The city's coal districts are now in a state of siege as
inspectors scour mines, coal processing facilities, chemical
plants and storage depots for violations.
This winter, Jincheng aims to cut coal chemical production
by 30 percent, and impose output curbs of as much as 50 percent
in certain districts. It will also establish a 95-square
kilometre "no-coal zone" banning household coal combustion and
convert more than 9,000 households to gas.
One manager with Shanxi Lanhua High-Tech 600123.SS , a
local conglomerate involved in coal, chemicals and real estate,
said the city was under far greater pressure.
The firm will completely shut down some of its subsidiaries
in winter, and expects to lose around 450 million yuan ($64.84
million) in earnings over the winter period.
"This year the intensity is going to be stronger," said the
manager, who requested anonymity because he wasn't authorised to
talk to the media.
DIVERSIFICATION
Ma of the IPE said polluting firms in cities like Jincheng
had long taken advantage of the system. Their failure to comply
with costly rules means they could outcompete compliant rivals,
and China needed to create a "level playing field" to make sure
lawbreakers were eliminated from the market.
But at a meeting of China's parliament in March, delegates
from Jincheng said the city needed more financial support from
Beijing to diversify and regenerate its economy.
Despite years of crackdowns, Jincheng continues to rely
heavily on coal, and while surviving mines have benefited from
the closure of smaller rivals, related businesses - including
local truckers - are struggling with higher compliance costs and
intensifying competition.
Gas has now emerged as the major bright spot for the city,
with its seams rich in coalbed methane, which has replaced coal
as a source of heating for many outlying villages, but
development will still take time.
"The GDP growth that Jincheng wishes to accomplish ... will
be driven from gas today, while historically it would have been
from coal," said Randeep Grewal, chairman of Greka, a unit of G3
Exploration G3EG.L , which has drilled more than 4,500 coalbed
methane wells in Jincheng.
"We are in that transition mode, and clearly in transition,
you have a bit of growing pains, but the transition is
irreversible."
In the meantime, the legacy of coal is still being felt by
residents of Jincheng like Zhang, the farmer.
His sparsely furnished home is riddled with dangerous cracks
- the result of subsidence caused by mining - but he said he has
not received enough compensation from the state to move out.
"They've even closed down livestock farms here because of
the environmental policies and lots of farmers are out of work,"
he said. "The government knows how to ask you for money but it
doesn't know how to resolve the problems of ordinary people."
(Additional reporting by Muyu Xu in Beijing and the Shanghai
newsroom
Editing by Philip McClellan)
((david.stanway@thomsonreuters.com; +86 21 6104 1799; Reuters
Messaging: david.stanway.thomsonreuters.com@reuters.net))