Drawing up a New Blueprint
- By Li Li
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E-mail Beijing Review, March 3, 2014
Choking smog lingered, covering an area of 1.43 million square km in central and east China, an area more than twice the size of France, for a whole week starting from February 20.
Beijing and part of the neighboring Hebei Province suffered most. On February 25, readings of PM 2.5, fine particulate matter 2.5 microns or less in diameter, in different parts of Beijing exceeded 300 micrograms per cubic meter, 12 times the level deemed safe by the World Health Organization.
In the country's capital city, break time exercise for students was moved from playgrounds into classrooms, and hospitals battled a surge of patients experiencing respiratory problems, including some with emphysema and asthma.
In response, Beijing and several other severely affected cities activated their emergency anti-smog action plans, which led to the shutdown or suspension of operations by polluting enterprises, halt of construction work, and limits of the number of vehicles on the roads.
According to a study jointly conducted by the Chinese Academy of Social Sciences and the China Meteorological Administration, during the first 10 months of 2013, China as a whole experienced an average of 29.9 days of hazy weather, the longest since national meteorological records began. The report, which was issued in November 2013, also identified a considerable increase of smoggy days in eastern areas of the country, particularly the Yangtze River Delta and the Pearl River Delta.
Under these circumstances, it is no wonder that "fighting pollution" has topped the agenda in most provincial-level governments' work plans for 2014, which were adopted by local people's congresses at their annual sessions in January and early February.
Fighting the smog
Pressured by a torrent of public complaints about the health hazards brought by air pollution, many local governments have prioritized measures to reduce smog in their work reports to local people's congress sessions this year. Out of the 31 provinces, municipalities and autonomous regions on the Chinese mainland, a total of 29 mentioned curbing air population and 15 mentioned reducing hazy weather and monitoring PM2.5. In 2013, only eight provinces and municipalities mentioned hazy weather and PM2.5 in their government work reports.
Beijing has vowed to cut coal consumption by 2.6 million tons and close down 300 polluting companies throughout 2014. Shanghai proposed the setting up of a joint mechanism for fighting air pollution together with other provinces on the Yangtze River Delta. The approach of combined regional efforts against air pollution also appeared in the work reports of the provincial governments of Guangdong, Hebei, Shanxi and Sichuan.
In the monthly air-quality ranking of over 74 major cities in China compiled by the Ministry of Environmental Protection, cities from Hebei stubbornly occupied at least half of the top 10 positions for the worst air throughout 2013. Hebei produces more than a quarter of the steel made in China. In October 2013, the State Council announced that it would cut out 80 million tons of the national steel production capacity within five years so as to curb pollution, and 60 million tons are put out by Hebei.
In order to cope with air pollution, the Hebei Provincial Government has imposed a strict ban on the production of steel, concrete and glass. "An increase of even 1 ton of production capacity in these industries necessitates the immediate removal of local government and Party chiefs from their positions," reads one government work report.
Efforts by local governments to tackle smoggy weather are expected to have a positive economic effect. Sun Junwei, an HSBC macro-economic analyst based in Beijing, told Economic Information Daily that hazy weather is deeply rooted in the extensive growth mode, while cleaning up the environment equals more input in technological upgrading and new manufacturing equipment that boasts energy conservation and low emissions.
Zheng Xinli, Executive Vice Chairman of the China Center for International Economic Exchanges, believes the investment in the environmental protection industry could also create new job opportunities and become a new engine of economic growth.
Fine-tuning growth engines
As revealed by their annual development goals, of all the 31 provincial-level regions, Guangdong stands out as the only one to increase its projected GDP growth rate for 2014. The province, known as China's export-oriented manufacturing hub, bumped up its projected growth rate to 8.5 percent from its goal of 8 percent for 2013. However, the coastal province had lowered the growth forecast in its government work report for both 2012 and 2013.
Other provincial governments either favor maintaining their current rate of growth or have made projections for an economic slowdown. The most pessimistic is the province of Jilin in northeast China, whose provincial government is aiming for a GDP growth rate of 8 percent in 2014, a sharp drop compared to its12-percent goal for 2013.
During a visit to central China's Hunan Province in November 2013, Chinese President Xi Jinping said that the practice of using GDP growth as the major gauge of local officials' performance should be abandoned. "Transforming the economic growth mode is a historic task in front of us. To fulfill this task, economic growth must maintain a proper speed, otherwise the relationships between resources, capital and market will be strained, dooming the transformation to failure," Xi commented.
Xi's call has been reflected in the more prudent economic forecasts of provincial-level governments.
Chen Xikang, a senior research fellow with the Center for Forecasting Science under the Chinese Academy of Sciences (CAS), told Shanghai Securities News that it was common for a local government to set an economic growth goal between 12 and 13 percent, or even 15 percent, in the past. He said that to maintain such high-speed growth, many policies were devoted to increasing investment, which hindered the task of transforming the growth model.
According to Chen, many localities failed to meet their preset growth targets in 2013, which forced them to be more realistic.
Wang Shouyang, another forecasting expert with the CAS, said that the lack of optimism could be linked to the sluggish growth in local industrial revenue and taxation.
Despite this, many local governments have increased their investment in programs to improve local residents' living standards while promising to reduce spending on official hospitality, overseas trips for official purposes and purchases of official vehicles.
In southwest China's Sichuan, the provincial government budgeted a total of 16.6 billion yuan ($2.73 billion) for educational appropriation this year, up by 11 percent year on year.
The Tianjin Municipal Government announced it would increase the per-capita subsidy to participants of the government-run medical insurance scheme from 420 yuan ($69) to 520 yuan ($86) this year. As a result, participants will pay a smaller proportion of their hospitalization bills and their insurance cap for hospitalization expenses will be raised.
In the southernmost island province of Hainan, Governor Jiang Dingzhi vowed to implement 10 programs to improve local people's living standards in 2014, including launching development-oriented poverty-reduction projects in 60 impoverished villages and beginning the construction of 35,000 government-subsidized apartments for the urban poor.
Beijing initiated a new program at the beginning of this year under which the government shares in the ownership of apartments with individual citizens, in an effort to help middle-income families afford buying houses. For example, if a person has 1 million yuan ($165,000) or 2 million yuan ($330,000) in savings, but the house price is 3 million yuan ($495,000), the difference can be made up for through shared property.
Xinjiang Uygur Autonomous Regions has promised to complete the construction of government-subsidized housing for 300,000 rural families and government-subsidized settlements for 30,000 herding families in 2014.
Speeding up reform
According to People's Daily reports, in the government work reports of all 31 provincial-level regions, "reform" is mentioned 1,438 times, averaging out at 46 times per report.
Last November, a decision on comprehensively deepening reforms was adopted at the Third Plenary Session of the 18th Central Committee of the Communist Party of China. The central leading group for overall reform, which has sub-groups covering reforms in six areas—economic structure and ecological progress, democracy and rule of law, cultural system, social system, system of Party building, and the discipline inspection system—convened for its first meeting on January 22. Speaking at the meeting, President Xi called for adequate understanding of the difficulty, complexity and urgency of reforms, as more and more interest groups will be affected as reforms go further.
By February 21, at least 28 provincial-level governments had officially formed corresponding leading groups for overall reform with similar sub-groups.
In Zhejiang, the provincial government has been focusing its efforts on reducing administrative examination and approval procedures since the second half of 2013. Throughout 2013, it reduced the number of administrative licensing procedures by nearly 40 percent and slashed other examination and approval procedures by 83 percent. The provincial government report promised to further reforms in this area for the rest of 2014.
In its work report, the Hebei Provincial Government promised to improve the market environment for the private sector by tearing down investment barriers that they face and by facilitating investment in infrastructure construction, basic industries and utilities. "Their investment will be welcome in any sector where there are no regulations against private investment," the report stated.
Tianjin's reform measures include encouraging private enterprises to participate in the restructuring of state-owned enterprises, giving private enterprises financial and tax incentives, and reforming the enterprise registration system. Similar steps have also been taken in other regions across China.
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