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Sat Oct 01 14:10:08 SAST 2016

Blue skies over Beijing? decaying suburbs bear cost as China cuts pollution

REUTERS | 26 January, 2016 09:35

On the outskirts of Beijing, the disused factories of Chaomidian show the impact of China's drive to shut down thousands of small firms causing big pollution. Amid scrapheaps and idle machinery, the community has clean air these days - and no jobs.

After a three-year campaign, China's push to cut smog appears to be paying off, whatever the localised cost, just as economic growth weakens to its slowest pace in 25 years. Chinese cities saw an average 10 percent drop in key pollutants last year, according to Greenpeace.

While a World Health Organisation report in 2014 found 13 of the world's 20 dirtiest cities were in India, a still smog-bound Beijing issued its first pollution "red alerts" last month. Soon after, the capital said it would shut down 2,500 more small firms this year, leaving communities like Chaomidian, in the southwest suburb of Fangshan, in the firing line.

Beijing doesn't issue comprehensive lists of the firms it has shut down to combat pollution, but Reuters research shows those already closed include Ding Kai Yuan Co among others in Chaomidian, home to about 2,000 people. The coal-burning brick works was shut in late 2014, 170 workers were laid off, and the manager left behind to watch over the ghost factory says she is still waiting for nearly half a million dollars in compensation.

"I'm 53 years old, I grew up in this village," said Han Fengge. "Right now, I don't have the ability to re-start such a big investment from scratch, so all I can do is wait," said Han.

The city has promised compensation to firms closed on pollution grounds. Nationwide, China has earmarked 17 trillion yuan ($2.6 trillion) for investment in overall environmental protection between 2016 and 2020, Xinhua, the state news agency, reported in December.

Asked why Han might not have received compensation yet, an official at the Beijing Municipal Commission of Economy and Information Technology, who wasn't aware of Ding Kai Yuan's case, said, "There could have been a problem at a certain link in the process. It's possible the firm didn't meet requirements in a certain area," said the official, who gave only her surname, Gao.

Better air, worse economy

Around Beijing, company closures are just one of many tactics adopted to make the city's air less noxious. Others include closing or relocating coal-fired power plants, many of which are operated by large state-owned businesses, forcing old cars off roads and limiting outdoor construction.

Critics say Beijing will have to move beyond small factory shutdowns and rely more on coordination with its neighbours, along with fair enforcement of the environmental law, to truly tackle the pollution problem.

"No matter what measures Beijing takes inside its own city, it cannot effectively eliminate its own pollution, as a huge source of it comes from coal-fuel and industrial emissions outside of Beijing," said Ma Jun, director of the Institute of Public and Environmental Affairs.

Most of the companies that have been, and will be closed, are comparatively small, and metropolitan Beijing's economy as a whole won't be seriously squeezed. Yet small and medium-sized enterprises account for about 60 percent of China's GDP, leaving questions over how closures will affect future growth potential.

At Ding Kai Yuan, the clean air drive has meant a total shutdown, with the company suffering losses of more than 17 million yuan ($2.58 million), said manager Han. Since 2013, most of Chaomidian's brick and plastics factories have been shut down, and with them the jobs that fuelled the local economy.

Yang Jun, the Communist Party leader of Chaomidian, said the community has virtually no manufacturing businesses left. "We now rent out the land of the factories to car dealerships and rely on that income," he said.

Aggressive target

While Ding Kai Yuan's Han says she has yet to see any compensation, others have been beneficiaries, but say it is insufficient.

Away from Chaomidian, managers at two other Beijing small factories forced to close - Beijing Haiming Casting and Beijing Hui Shang Wood Furniture - told Reuters the compensation has not been enough to make up for their losses.

In Tongzhou district, Haiming Casting shifted into the construction materials industry, but profits are not as good as the original business, a company manager surnamed Li said.

Meanwhile, Hui Shang Wood Furniture simply packed up and moved from Beijing's Changping district to the inland province of Anhui, cleaning up its production process as it went, said manager Hong Guosheng.

For Beijing and the surrounding area - including the steelmaking heartland of Hebei province and Tianjin's port and manufacturing hub - the government has set an aggressive target for 2020 of reducing pollution by 40 percent from 2013 levels.

That means more closures are inevitable.

For Ding Kai Yuan's Han, burdened by debt and with no way to start anew, the options are limited.

"All I can do is hope the government keeps its word," Han said. "The sooner it gives us a subsidy, the better." ($1 = 6.5782 yuan)

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