Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
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Image copyright GETTY IMAGESImage caption The Chinese city of Wuhan recently lifted its strict quarantine measures
The Chinese city of Wuhan, where the coronavirus originated last year, has raised its official Covid-19 death toll by 50%, adding 1,290 fatalities.
Wuhan officials attributed the new figure to updated reporting and deaths outside hospitals. China has insisted there was no cover-up.
It has been accused of downplaying the severity of its virus outbreak.
Wuhan’s 11 million residents spent months in strict lockdown conditions, which have only recently been eased.
The latest official figures bring the death toll in the city in China’s central Hubei province to 3,869, increasing the national total to more than 4,600.
China has confirmed nearly 84,000 coronavirus infections, the seventh-highest globally, according to Johns Hopkins University data.
What’s China’s explanation for the rise in deaths?
In a statement released on Friday, officials in Wuhan said the revised figures were the result of new data received from multiple sources, including records kept by funeral homes and prisons.
Deaths linked to the virus outside hospitals, such as people who died at home, had not previously been recorded.
Media caption Learn how Wuhan dealt with the lockdown
The “statistical verification” followed efforts by authorities to “ensure that information on the city’s Covid-19 epidemic is open, transparent and the data [is] accurate”, the statement said.
It added that health systems were initially overwhelmed and cases were “mistakenly reported” – in some instances counted more than once and in others missed entirely.
A shortage of testing capacity in the early stages meant that many infected patients were not accounted for, it said.
A spokesman for China’s National Health Commission, Mi Feng, said the new death count came from a “comprehensive review” of epidemic data.
In its daily news conference, the foreign ministry said accusations of a cover-up, which have been made most stridently on the world stage by US President Donald Trump, were unsubstantiated. “We’ll never allow any concealment,” a spokesman said.
Why are there concerns over China’s figures?
Friday’s revised figures come amid growing international concern that deaths in China have been under-reported. Questions have also been raised about Beijing’s handling of the epidemic, particularly in its early stages.
In December 2019, Chinese authorities launched an investigation into a mysterious viral pneumonia after cases began circulating in Wuhan.
China reported the cases to the World Health Organization (WHO), the UN’s global health agency, on 31 December.
But WHO experts were only allowed to visit China and investigate the outbreak on 10 February, by which time the country had more than 40,000 cases.
The mayor of Wuhan has previously admitted there was a lack of action between the start of January – when about 100 cases had been confirmed – and 23 January, when city-wide restrictions were enacted.
Around that time, a doctor who tried to warn his colleagues about an outbreak of a Sars-like virus was silenced by the authorities. Dr Li Wenliang later died from Covid-19.
Wuhan’s death toll increase of almost exactly 50% has left some analysts wondering if this is all a bit too neat.
For months questions have been asked about the veracity of China’s official coronavirus statistics.
The inference has been that some Chinese officials may have deliberately under-reported deaths and infections to give the impression that cities and towns were successfully managing the emergency.
If that was the case, Chinese officials were not to know just how bad this crisis would get in other countries, making its own figures now seem implausibly small.
The authorities in Wuhan, where the first cluster of this disease was reported, said there had been no deliberate misrepresentation of data, rather that a stabilisation in the emergency had allowed them time to revisit the reported cases and to add any previously missed.
That the new death toll was released at the same time as a press conference announcing a total collapse in China’s economic growth figures has led some to wonder whether this was a deliberate attempt to bury one or other of these stories.
Then again, it could also be a complete coincidence.
China has been pushing back against US suggestions that the coronavirus came from a laboratory studying infectious diseases in Wuhan, the BBC’s Barbara Plett Usher in Washington DC reports.
US President Donald Trump and some of his officials have been flirting with the outlier theory in the midst of a propaganda war with China over the origin and handling of the pandemic, our correspondent says.
Mr Trump this week halted funding for the World Health Organization (WHO), accusing it of making deadly mistakes and overly trusting China.
“Do you really believe those numbers in this vast country called China, and that they have a certain number of cases and a certain number of deaths; does anybody really believe that?” Mr Trump said at the White House on Wednesday.
On Thursday, UK Foreign Secretary Dominic Raab said: “We’ll have to ask the hard questions about how [coronavirus] came about and how it couldn’t have been stopped earlier.”
But China has also been praised for its handling of the crisis and the unprecedented restrictions that it instituted to slow the spread of the virus.
visited the industrial powerhouse of Zhejiang province on Sunday in a move state media described as a clear message the country was ready to get the economy back on track amid the “new normal” of dealing with the coronavirus.
The trip, to Ningbo – one of the world’s busiest ports and a trade hub for eastern China – was Xi’s first outside Beijing since he visited Wuhan, the initial epicentre of the Covid-19 outbreak, earlier in the month.
As well as a visiting the port, he spoke to workers at an industrial zone for car part manufacturers, where he learned about the latest efforts to restart production, Xinhua said in a brief report.
The visit came after two months of almost total lockdown in many parts of the country that disrupted businesses, transport and people’s daily lives, and ground the economy to a near standstill.
While local transmissions of the coronavirus in China appear to be under control, Beijing has implemented strict measures to prevent imported cases, including slashing international flights and banning most foreigners from entering the country.
In a separate report, Xinhua said Xi’s visit sent “a clear message” that China was resuming its industrial production and social activities, and described the fight against the coronavirus as the “new normal”.
Reviving the economy and battling a deadly disease were Xi’s “two tough battles”, it said.
Xi’s choice of destination was a clear message that restarting the economy is a top priority. Photo: Xinhua
Zhejiang is something of a power base for Xi, who spent nearly five years there during his climb through the ranks of the Communist Party.
One of the country’s biggest trading hubs, the province generated 3 trillion yuan (US$423.2 billion) in foreign trade last year, or more than 13 per cent of the national total, according to official figures.
“It’s a highly export-oriented economy … which has made it crucial not only to China’s development plan but also to safeguarding the stability of the global supply chain,” Xinhua said.
Observers said Xi’s visit was evidence of Beijing’s determination to get the economy back up and running as soon as possible.
Zhao Xijun, an economics professor at Renmin University, said Ningbo was a key part of the export economy and a base for many local and foreign entrepreneurs.
“It is a clear signal that China, after getting domestic infections under control, is now prioritising economic growth,” he said.
“It also shows the country will keep developing its economy and opening up its markets.”
But hopes of a quick recovery for the Chinese economy have been dashed by the spread of the coronavirus across Europe and the United States, causing a sharp decline in demand for Chinese goods.
Xi spent five years in Zhejiang while climbing the ranks of the Communist Party. Photo: Xinhua
In a meeting on Friday, the Communist Party’s Politburo said it would step up macroeconomic policy adjustments and pursue a more proactive fiscal policy while optimising measures to control the coronavirus to speed up the restoration of production, doing whatever it could to “minimise the losses caused by the epidemic”.
“China has successfully reopened much of its economy from the extremes of the coronavirus lockdown, but now faces a new problem: an impending collapse in demand for its exports as its customers go into lockdowns of their own,” Gavekal Dragnomics said in a research report.
“That shock to industry and manufacturing employment means that China will not enjoy the hoped-for V-shaped recovery in growth.”
BEIJING (Reuters) – China’s Hubei province where the coronavirus pandemic originated will lift travel restrictions on people leaving the region as the epidemic there eases, but other regions will tighten controls as new cases double due to imported infections.
The Hubei Health Commission announced it would lift curbs on outgoing travellers starting March 25, provided they had a health clearance code.
The provincial capital Wuhan, where the virus first appeared and which has been in total lockdown since since Jan. 23, will see its travel restrictions lifted on April 8.
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However, the risk from overseas infections appears to be on the rise, prompting tougher screening and quarantine measures in major cities such as the capital Beijing.
China had 78 new cases on Monday, the National Health Commission said, a two-fold increase from Sunday. Of the new cases, 74 were imported infections, up from 39 imported cases a day earlier.
The Chinese capital Beijing was the hardest-hit, with a record 31 new imported cases, followed by southern Guangdong province with 14 and the financial hub of Shanghai with nine. The total number of imported cases stood at 427 as of Monday.
Only four new cases were local transmissions. One was in Wuhan which had not reported a new infection in five days.
Wuhan residents will soon be allowed to leave with a health tracking code, a QR code, which will have an individual’s health status linked to it.
In other parts of the country, authorities have continued to impose tougher screening and quarantine and have diverted international flights from Beijing to other Chinese cities, but that has not stemmed the influx of Chinese nationals, many of whom are students returning home from virus-hit countries.
Beijing’s city government tightened quarantine rules for individuals arriving from overseas, saying on Tuesday that everyone entering the city will be subject to centralised quarantine and health checks.
The southern city of Shenzhen said on Tuesday it will test all arrivals and the Chinese territory of Macau will ban visitors from the mainland, Hong Kong and Taiwan.
The number of local infections from overseas arrivals – the first of which was reported in the southern travel hub of Guangzhou on Saturday – remains very small.
On Monday, Beijing saw its first case of a local person being infected by an international traveller arriving in China. Shanghai reported a similar case, bringing the total number of such infections to three so far.
CONCERNS ABOUT NEW WAVE OF INFECTIONS
The rise in imported cases and the lifting of restrictions in some cities to allow people to return to work and kickstart the battered Chinese economy has raised concerns of a second wave of infections.
A private survey on Tuesday suggested that a 10-11% contraction in first-quarter gross domestic product in the world’s second largest economy “is not unreasonable”.
The epidemic has hammered all sectors of the economy – from manufacturing to tourism. To persuade businesses to reopen, policymakers have promised loans, aids and subsidies.
In the impoverished province of Gansu, government officials are each required to spend at least 200 yuan (24.31 pounds) a week to spur the recovery of the local catering industry.
The official China Daily warned in an editorial on Tuesday that maintaining stringent restrictions on people’s movements would “now do more harm than good”.
BEIJING (Reuters) – China on Sunday reported 46 new cases of coronavirus, the fourth straight day with an increase, with all but one of those imported from overseas, and further stepped up measures to intercept cases from abroad as the outbreak worsens globally.
While China says it has drastically reduced the number of domestically transmitted cases – the one reported on Sunday was the first in four days – it is seeing a steady rise in imported cases, mostly from Chinese people returning from overseas.
In a sign of how seriously China is taking the threat of imported cases, all international flights due to arrive in Beijing starting Monday will first land at another airport, where passengers will undergo virus screening, government agencies said on Sunday, in an expansion of existing measures.
International flights that were scheduled to arrive in the capital will land instead at one of 12 airports. Passengers who clear screening will then be permitted to reboard the plane, which will then fly to Beijing, the regulator said.
Separately, Shanghai and Guangzhou both announced that all arriving international passengers will undergo an RNA test to screen for coronavirus, expanding a program that previously only applied to those coming from heavily-hit countries.
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Among the new cases from abroad reported on Sunday, a record 14 were in the financial hub of Shanghai and 13 were in Beijing, a decline from 21 the previous day.
The new locally transmitted case was in the southern metropolis of Guangzhou and was also the first known case where the infection of a local person was linked to the arrival of someone from overseas, according to Guangdong province.
Hu Xijin, the editor-in-chief of the Global Times newspaper, called for all cities in China to implement 14-day quarantines for people arriving from abroad.
He also called for quarantine policies to apply to people from Hong Kong and Macau as well, he said on his Weibo account on Sunday.
“I am worried that there are similar cases to the Guangzhou one existing in other parts of the country. There were reports previously that people coming back from abroad returned to their homes in Shanghai without any obstacles,” Hu said.
“It matters to the overall situation of China’s next prevention and control efforts if we can plug the leaks.”
The Global Times is a tabloid published by the Ruling Communist Party’s People’s Daily.
The latest figures from China’s National Health Commission bring total reported coronavirus cases in the country to 81,054, with 3,261 deaths, including six on Saturday. On Saturday, China reported 41 new coronavirus cases for the previous day, all of them imported.
Of all 97 imported cases as of end-Saturday, 92 of them are Chinese nationals and 51 are Chinese students returning from studying abroad, said Gao Xiaojun, spokesman for the Beijing Municipal Health Commission during a press conference on Sunday.
The Beijing health commission announced separately on its website it had two more imported cases on Sunday, bringing the city’s total number of imported cases to 99 as of Sunday noon.
BACK TO A KIND OF NORMAL
China is trying to revive an economy that is widely expected to contract deeply in the current quarter, with life slowly returning to normal in cities such as Beijing and Shanghai, albeit with everyone wearing masks in public.
Still, numerous shops and restaurants remain shut – many have gone out of business – and factories and other workplaces are still not operating at full capacity.
On Sunday, a central bank official called for stepped-up global policy coordination to manage the economic impact of the pandemic. He said China’s recent policy measures were gaining traction, and it has capacity for further action.
Chen Yulu, a deputy governor at the People’s Bank of China (PBOC), also said he expects significant improvement in the Chinese economy in the second quarter.
And while the virus will continue putting upward pressure on near-term consumer prices, there is no basis for long-term inflation or deflation, he told a news briefing.
Globally, roughly 275,000 people have been infected with the virus, and more than 11,000 have died, according to a Reuters tally, with the number of deaths in Italy recently surpassing those in China.
“Now I think the epidemic has been controlled. But this definitely doesn’t mean that it’s over,” said a 25-year-old woman surnamed He who works in the internet sector and was visiting the vast Summer Palace complex in Beijing on Saturday.
“I’m willing to come out today but of course I am still afraid,” she told Reuters.
The central province of Hubei, where the outbreak first emerged late last year in its capital Wuhan, reported its fourth straight day of no new cases.
China has used draconian measures to contain the spread of the virus, including locking down Hubei province.
LONDON/BEIJING (Reuters) – The world’s wealthiest nations poured unprecedented aid into the traumatized global economy on Thursday as coronavirus cases ballooned in the current epicentre Europe even as they waned at the pandemic’s point of origin, China.
With almost 219,000 infections and more than 8,900 deaths so far, the epidemic has stunned the world and drawn comparisons with painful periods such as World War Two, the 2008 financial crisis and the 1918 Spanish flu.
“This is like an Egyptian plague,” said Argentinian hotelier Patricia Duran, who has seen bookings dry up for her two establishments near the famous Iguazu Falls.
“The hotels are empty – tourist activity has died.”
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Tourism and airlines have been particularly battered, as the world’s citizens hunker down to minimize contact and curb the spread of the flu-like COVID-19. But few sectors have been spared by a crisis threatening lengthy global recession.
On markets, investors have dumped assets everywhere, many switching to U.S. dollars as a safe haven. Other currencies hit historic lows, with Britain’s pound near its weakest since 1985.
Policymakers in the United States, Europe and Asia have slashed interest rates and opened liquidity taps to try to stabilise economies hit by quarantined consumers, broken supply chains, disrupted transport and paralysed businesses.
The virus, thought to have originated from wildlife on mainland China late last year, has jumped to 172 other nations and territories with more than 20,000 new cases reported in the past 24 hours – a new daily record.
Cases in Germany, Iran and Spain rose to over 12,000 each. An official in Tehran tweeted that the coronavirus was killing one person every 10 minutes.
LONDON LOCKDOWN?
Britain, which had sought to take a gradual approach to containment, was closing dozens of underground stations in London and ordering schools shut from Friday.
Some 20,000 military personnel were on standby to help and Queen Elizabeth was due to leave Buckingham Palace in the capital for her ancient castle at Windsor. Britain has reported 104 deaths and 2,626 cases, but scientific advisers say the real number of infections may be more than 50,000.
Italian soldiers transported corpses overnight from an overwhelmed cemetery in Europe’s worst-hit nation where nearly 3,000 people have died. Germany’s military was also readying to help despite national sensitivities over its deployment dating back to the Nazi era.
Supermarkets in many countries were besieged with shoppers stocking up on food staples and hygiene products. Some rationed sales and fixed special hours for the elderly.
Solidarity projects were springing up in some of the world’s poorest corners. In Kenya’s Kibera slum, for example, volunteers with plastic drums and boxes of soap on motorbikes set up handwashing stations for people without clean water.
Russia reported its first coronavirus death on Thursday.
Amid the gloom, China provided a ray of hope, as it reported zero new local transmissions in a thumbs-up for its draconian containment policies since January. Imported cases, however, surged, accounting for all 34 new infections.
The United States, where President Donald Trump had initially played down the coronavirus threat, saw infections close in on 8,000 and deaths reach at least 151.
Trump has infuriated Beijing’s communist government by rebuking it for not acting faster and drawn accusations of racism by referring to the “Chinese virus”.
“EXTRAORDINARY TIMES”
In a bewildering raft of financial measures around the world, the European Central Bank launched new bond purchases worth 750 billion euros ($817 billion). That brought some relief to bond markets and also halted European shares’ slide, though equities remained shaky elsewhere.
“Extraordinary times require extraordinary action,” ECB President Christine Lagarde said, amid concerns that the strains could tear apart the euro zone as a single currency bloc.
The U.S. Federal Reserve rolled out its third emergency credit programme in two days, aimed at keeping the $3.8 trillion money market mutual fund industry functioning.
China was to unleash trillions of yuan of fiscal stimulus and South Korea pledged 50 trillion won ($39 billion).
The desperate state of industry was writ large in Detroit, where the big three automakers – Ford Motor Co (F.N), General Motors Co (GM.N) and Fiat Chrysler Automobiles NV (FCHA.MI) (FCAU.N) – were shutting U.S. plants, as well as factories in Canada and Mexico.
With some economists fearing prolonged pain akin to the 1930s Great Depression but others anticipating a post-virus bounceback, gloomy data and forecasts abounded.
In one of the most dire calls, J.P. Morgan economists forecast the Chinese economy to drop more than 40% this quarter and the U.S. economy to shrink 14% in the next.
There was a backlash against conspiracy theories and rumours circulating on social media, with Morocco arresting a woman who denied the disease existed.
And in Brazil, where President Jair Bolsonaro initially labelled the virus “a fantasy”, more members of the political elite fell ill. At night, housebound protesters banged pots and pans, shouting “Bolsonaro out!” from their windows.
Chinese State Councilor and Foreign Minister Wang Yi (R) meets with Japanese Foreign Minister Toshimitsu Motegi on the sidelines of the 56th Munich Security Conference in Munich, Germany, Feb. 15, 2020. (Xinhua/Shan Yuqi)
MUNICH, Germany, Feb. 16 (Xinhua) — Chinese State Councilor and Foreign Minister Wang Yi on Saturday met Japanese Foreign Minister Toshimitsu Motegi on the sidelines of the 56th Munich Security Conference, with both pledging mutual support in the fight against the novel coronavirus epidemic (COVID-19).
Wang thanked Japan for its understanding and support for China’s fight against COVID-19, noting that stories of many Japanese people extending a helping hand to China have been spreading on the Chinese Internet, from which the Chinese people have felt the friendship and warmth from Japan as a neighbor.
The mutual support between China and Japan in this fight against the epidemic fully reflects the tradition of mutual help among Eastern countries, Wang said, adding that he believes the friendship between the two peoples will be further deepened.
Wang said that with the joint efforts of China and all parties, he believes the epidemic will end soon. The Chinese economy has been affected by the epidemic, but efforts can be made to make up for the losses. China’s goals of building a moderately prosperous society in an all-round way and winning the battle against poverty this year will certainly be achieved.
China is willing to continue to strengthen mutually beneficial cooperation with Japan in economy, trade, personnel exchanges and other aspects to jointly push bilateral strategic relations of mutual benefit to a new level, and bring more benefits to the two countries and peoples, Wang said.
For his part, Motegi said that China has made great efforts to control the spread of the virus, which Japan highly appreciates, and that he believes China will be able to overcome the epidemic at an early date.
Japan is willing to continue to fully support and help China, work closely with China to further deepen cooperation in various fields, and jointly prepare for important high-level exchanges between the two countries this year, so as to score new developments in Japan-China relations, said Motegi.
China is set to release pork supplies from its central reserves as it moves to tackle soaring prices and shortages caused by an outbreak of swine fever.
A state-backed body will auction 10,000 tonnes of frozen pork from its strategic reserves on Thursday.
China, the world’s biggest producer and consumer of pork, has struggled to control the spread of the disease.
In a bid to stabilise prices, a state-backed group that manages the pork reserves will auction imported frozen pork from countries including Denmark, France, the US and UK.
Only 300 tonnes will be sold to each bidder at the auction.
Pork is used widely in Chinese festivals, and the auction comes as the country prepares to celebrate a week-long national holiday for the 70th anniversary of the People’s Republic of China.
Julian Evans-Pritchard, senior China economist at Capital Economics, said the auction would provide slight relief to the industry but would not do much to contain prices.
“In itself, I don’t think it will be able to prevent pork prices from rising further unless they manage to get the disease under control,” he said.
Beijing created its strategic pork reserve in 2007 but the size of the stockpile is not known.
Capital Economics estimates that at most, the stockpile would hold four days’ worth of pork supplies to feed China.
About 1.2 million pigs have been culled in China in an effort to halt the spread of swine fever since August 2018, according to data from the Food and Agriculture Organization, a UN agency.
In April, Rabobank estimated Chinese pork production would fall by up to 35% this year due to swine fever.
The supply shortage has sent pork prices soaring and has eaten into household incomes.
That poses a fresh challenge for the Chinese economy, which is already facing a slowdown and a trade war between Beijing and Washington.
The manufacturing purchasing managers’ index, released by the National Bureau of Statistics on Saturday, was 49.5 in August
Figure adds to a month of woe for policymakers in Beijing, even ahead of planned US tariff increases on September 1, October 1, and December 15
China’s manufacturing purchasing managers’ index fell by 0.2 points in August as the trade war continued to bite. Photo: Xinhua
As the trade war with the United States continues to gather pace, manufacturers in China remain gloomy about their prospects, with the sector activity contracting for the fourth successive month in August.
The manufacturing purchasing managers’ index (PMI), released by the National Bureau of Statistics (NBS) on Saturday, stood at 49.5 in August, down from a reading of
, and below analysts’ expectations. The median result of a survey of analysts by Bloomberg expected a reading of 49.6.
The PMI is a gauge of sentiment among factory operators, with 50 being the demarcation line between expansion and contraction in sector activity. In the survey, manufacturers are asked to give a view on business issues such as export orders, purchasing, production and logistics.
That the index has remained in contractionary territory for six of eight months this year shows that the effects of US tariffs are resonating through the Chinese economy. The manufacturing PMI only showed expansion in March and April of this year.
New and higher US tariffs scheduled to enter force on September 1, October 1 and December 15 could provide some very temporary boost to Chinese exports and therefore manufacturers, should they inspire American buyers to make early purchases to pay lower tariff rates. However the long term trajectory is negative, with many manufacturers scoping out or already relocating to production sites outside the world’s second largest economy.
Also released on Saturday was the official non-manufacturing PMI, a survey of the construction and services sectors. This stood at 53.8, up from 53.7 in July, showing that these sectors have remained more robust in the face of a general slowdown in China’s economy. The Bloomberg survey of analysts had expected non-manufacturing PMI in August to remain unchanged.
Composite PMI, a combined reading of both manufacturing and non-manufacturing, was 53, down from 53.1 in July.
The August PMI decline “indicates downward pressure on the economy,” said Zhang Liqun, an analyst with the China Federation of Logistics and Purchasing, which produces the index with the NBS.
“Corporations’ forecasts of the market outlook were quite poor while being cautious on their production operations,” Zhang said. The PMI indicated a drop in new orders, which also reflected a lack of domestic demand. Given that the US is escalating tensions with China, downward pressure on external demand is also apparent, Zhang said.
August was a month to forget for policymakers in Beijing, with a series of negative data highlighting the serious economic challenges facing the nation. With the trade war threatening to tip the global economy into a recession, China remains heavily exposed.
The trade war is having a significant impact on Chinese manufacturing. Photo: Xinhua
While exports grew by 3.3 per cent in July, a sign of front-loading, imports fell by 5.6 per cent, emphasising the issues with consumption in China. This problem was also clear in retail sales figure, which came in at a disappointing 7.6 per cent for July, down from 9.8 per cent growth in June.
ANYANG/SANGPO, China (Reuters) – For years, China’s industrial heartland has been cloaked in smog, its waterways choked with pollution pumped from enormous clusters of factories churning out the mountains of cement and steel needed to build the Chinese economy.
Aiming to tackle what has become a huge public health problem, the authorities have cracked down on polluting industries, targeting provinces like Henan, which has a population of 100 million people and hundreds of factory towns.
According to interviews with factory and business owners, and consumers and workers across Henan, that crackdown – conducted with often heavy-handed local enforcement – is crippling the economies of towns and cities that depend on polluting industries.
Manufacturers across Henan have been particularly hard hit by the new environmental regulations, compounding the pressures the province faces from China’s slowing economy and a grinding trade war with the United States.
It also highlights the trade-off China faces between providing a healthier environment for its citizens and maintaining economic growth in a province whose climb from poverty has lagged that of coastal regions.
China does not provide statistics on the costs of the environmental crackdown, but it has said that short-term pain will lead to long-term growth through an economic “upgrade”.
The information office of the State Council, China’s cabinet, did not respond to a faxed request for comment on the economic effects of the new restrictions.
It’s difficult to get a full picture of Henan’s economy from unreliable official figures, as it is for the whole country. Henan’s official growth rate was 7.6% in 2018, higher than the national rate and down 0.2 of a percentage point from 2017.
But the interviews conducted by Reuters across Henan suggest consumers are spending less, cities are struggling to retool their economies and the pollution crackdown is hurting businesses and employment.
STEEL TOWN PAIN
The steel-producing centre of Anyang, which has long had some of the worst air in China, is one place that has been hit hard by the anti-pollution campaign.
The city of more than 5 million people, dominated by the infrastructure and insignia of the state-owned Anyang Iron and Steel Group, has forced local industry to upgrade equipment and curb pollution, and shut down companies that were unwilling or unable to comply.
Li Huifeng, president of Baoshun High-Tech Corporation, a coking coal company founded by his parents in 1983, said the cost of compliance had been painful.
Baoshun’s huge plant, built in the hills in the west of Anyang, was forced to implement production cuts last winter even though it had installed low-emissions equipment that exceeded required standards.
“Last year, business was really good but this year it is full of uncertainties,” said Li. He added that new efficiency guidelines were likely to result in the closure of many producers of coking coal, which is used in steel production.
Li Xianzhong, the owner of the Xinyuan Steel Mill in Anyang’s western outskirts, said he was facing curbs on production as well as spiralling costs because of the new environmental regulations.
According to industry estimates, environmental costs per tonne of steel produced have risen to around 150 yuan per tonne, up from less than 50 yuan per tonne when the war on pollution was launched in 2014.
“All this equipment needs a lot of capital, and after you’ve invested, the operation costs are also higher,” said Li. “If you don’t meet the standards, you aren’t allowed to operate.”
Near the sprawling Anyang steel plant in the city centre, residents and workers complained that the new environmental inspection rules had made it harder to make a living.
Many small workshops, which often use small metalworking furnaces, have also been targeted.
“Before we would just give them a pack of cigarettes or treat them to a meal and you’d then be fine for a year, but now it’s no use,” said a bicycle repairman, identifying himself by his surname Zhang, whose workshop near the plant was shut by inspectors.
Over the past years, Anyang has tried encouraging new and cleaner forms of economic growth. It has shut hundreds of small polluters in sectors like ceramics and cement, and tried to attract industries like solar panels and electric vehicles by offering incentives and building sprawling new industrial parks.
However, it has struggled to compete with numerous Chinese cities making similar bets, especially as China’s economy slows.
And the results of the anti-pollution efforts have been mixed.
Steel still accounts for more than half of Anyang’s economy – unchanged from a decade ago – and the environment is still bad. The taste of brimstone hangs in the air, and the fairy lights festooned on hundreds of cranes on the city’s skyline could only be dimly seen during a recent visit.
Part of the problem, according to Liu Bingjiang, who heads the Ministry of Ecology and Environment’s air pollution office, is that smog is also blowing in from neighbouring industrial regions, undermining local cleanup efforts.
“All these measures, all these plans are in place, but it still can’t solve the smog,” said Li, the steel mill owner.
SHUTTING DOWN THE BOOTMAKERS
The anti-pollution campaign is also hitting much smaller industrial centres.
Sangpo, a dusty two-street village in northeast Henan, used to live off scores of sheepskin processing factories cranking out winter boots modelled on UGG, the American brand with Australian roots.
While the industry was the main employer in the village, that came with a heavy environmental cost: treating the raw sheepskin consumed copious amounts of water and contaminated the local water supply.
Last July, the government moved to close most of the factories, sending dozens of police cars into Sangpo with sirens wailing to enforce the shutdown.
Government inspectors were installed to keep watch at each factory to ensure compliance with the order. Three factory owners were arrested for violating environmental regulations.
During a visit to Sangpo by Reuters, most factories were idle during what should have been peak production season. Hundreds of workers had left town in search of work elsewhere, leaving behind shuttered shopfronts and deserted roads.
“The village is at a tipping point,” said a former factory owner who only wanted to be identified by his surname, Ding. Most businesses were mostly “more dead than alive,” he added.
Before the factories were shut, the village of 6,500 people, mainly from the Hui Muslim minority, had been punching well above its weight.
It achieved national recognition as a thriving model of e-commerce, winning glowing write-ups in national newspapers after it was named in 2015 by the tech giant Alibaba as central China’s very first “Taobao village” – a designation for top rural sellers on the company’s internet retailing platform.
But that all changed last year as China’s pollution crackdown intensified. The top county-level official, factory owners said, held a town hall meeting and threatened to shut everyone down permanently. A deal was made for 19 of the 135 factories to remain.
Those wanting to stay open agreed to upgrade their businesses and invest in equipment to ensure they met water treatment standards. Factories that opted out were shut, their boilers and processing equipment destroyed.
The government of Mengzhou, which oversees Sangpo, declined to comment when reached by phone. But Mengzhou’s mayor said last year that the crackdown was necessary and in accordance with the popular will, according to a statement on the Mengzhou government website.
Sangpo village’s party chief declined to comment when reached via the Chinese messaging app WeChat. Calls to his cellphone went unanswered.
The county government’s plan is to corral remaining factories into a new industrial zone by the end of the year. But remaining business owners are worried about the slow pace of construction and fear they will be forced to shut.
Ding, the former factory owner, said business owners didn’t expect the crackdown – which has also discouraged lending from banks – to be so harsh.
“Everyone in the village was moaning and sighing but no one thought it would be this extreme,” Ding said. “We are at our wits’ end.”
Workers process components at a construction industrial research and production base in Lianjiang County, southeast China’s Fujian Province, May 17, 2019. Chinese economy is transitioning from high-speed growth to high-quality development. (Xinhua/Song Weiwei)
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