In 2016, Chinese Premier Li Keqiang announced the country’s new pollution targets, aiming to reduce urban smog as part of China’s 13th Five Year Plan (Climate Home News). The Plan is the first to include specific PM2.5 pollution targets and greenhouse gases, aiming to cut emissions by 25% through the winter period (chinadialogue.net).

The Plan

The Air Pollution Prevention and Control Law, or the New Air Law as its more commonly known, came into effect in China on 1st January 2016. The law focussed on holding local governments accountable for meeting air quality targets, with Environmental Impact Assessments on new projects in offending regions put on hold if targets are not met (chinadialogue.net). However, in February this year, a damning Greenpeace report revealed that despite the legislation, Chinese steel production had actually increased in 2016, thus increasing the overall levels of greenhouse gas emissions, contrary to key targets in the New Air Law (NY Times).

In response, it was reported that China would speed up the introduction of speed output cuts in order to cut steel overcapacity by up to 150 million tonnes by October 2017, with 26 cities in north east China to be targeted. Steel production in the Chinese province of Hebei, near Beijing, was also set to halve in the winter season, in an effort to reduce pollution during the winter months (Reuters). Within this region, the city of Tangshan, which accounts for 15% of China’s total output of steel production, is halving its total output this winter, the equivalent of 20 million metric tonnes (SupChina)

The Cost of Clean Air

The question facing manufacturers around the world is How has this affected the price of steel? Well, although in theory the idea of restricting output would expect to see a rise in prices, this may not necessarily last for the duration of the restriction period, set to end on 15th March 2018. Earlier this month however, it was reported that enforcement of the output restrictions was being tightly enforced, which would reinforce the start of the price increase in recent weeks. Though with production not affected in other regions of China, there is also the chance that overproduction elsewhere in the country could see an overall stabilization of prices (Argus Media).

A Breath of Fresh Air?

Effectiveness of the measures have also had contradicting views. Last month the country’s environmental protection minister Li Ganjie admitted the targets would be difficult to meet by the end of the year. After visiting four heavily polluted regions in northern China he stated `

The current air pollution control work challenging and grim. In this year, air quality has fluctuated, with some areas seeing a significant slowdown in improvement, and even a worsening. The completion of the annual targets for air quality control faces huge difficulties.” (The Diplomat)

Time to Clear the Air?

This winter will provide the benchmark for whether China’s ambitious plans to target air pollution have worked. Although unlikely that the initial emission reduction targets will be met,  the experience will prove to be a valuable starting point for the Chinese government to refine their environmental policies, as well as assess the economic impact on the country’s key industries. Until then though, citizen’s may need to keep hold of their face masks a little while longer.

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