Change Alley

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Choking On Growth

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Photo: Chang W. Lee/The New York Times

The New York Times has been running a series of in-depth articles ‘Choking For Growth’, exploring the extent of the pollution crisis in China. In the latest instalment, ‘Far From Beijing’s Reach, Officials Bend Energy Rules’, Howard W. French shows how China’s campaign to cut energy use is having little effect outside the capital.

When the Beijing government announced a nationwide energy reduction campaign two years ago, officials in the western Ningxia Hui Autonomous Region started work on creative schemes to evade the requirements.

Local officials were required to raise electricity prices to discourage the growth of large energy-consuming industries and to force the least efficient to close down Instead, fearing local economic impacts, the regional government brokered a special deal for the Qingtongxia Aluminum Group, which accounts roughly 10% of the region’s GDP. The company was removed from the national grid and supplied directly by the local company, exempting it from expensive fees and allowing it to continue to get its power at the lowest price.

Before the national energy consumption campaign began, Ningxia officials worked to get around environmental regulations that could hinder growth. In 2002 Beijing issued rules limiting the number of new coal-burning power plants, but Ningxia has built at least three that either did not have the required permission, or failed to meet new environmental standards.

Even after Beijing cancelled company exemptions to special consumption fees in 2004, the local government extended them for another year, obtaining huge savings for its metal industries. As recently as 2005, regional officials continued to argue that the exemptions should remain. Many of the region’s strategic metal working industries had been spared Beijing’s mandated price rises until as recently as this May, nearly two years after they were announced. “That favourable price wasn’t approved by the state. It was a regional policy”, said a company official. As French says in his article:

“The tug of war between localities and the central government also shows the limits of China’s ability to impose change on a vast, unruly country by edict, while exposing the weaknesses of a one-size-fits-all approach to reform in a country where regional economic disparities are rapidly growing.”

One could say much the same about the United States, where individual states are increasingly ploughing their own furrow at a local or regional level. The big difference is that US states are acting on their own initiative to exceed inadequate Washington environmental directives. In China, they’re busting a gut to avoid compliance with regulations that stand in the way of the drive for growth.


Written by Pete Smith

November 26, 2007 at 10:49 am

3 Responses

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  1. Yes, saw this in the IHT. It’s true, one size does not fit all. China is a train running way, way out of control. Not even the Fat Controller can rein it in. Still, it was the rest of the world that encouraged this phenomenal growth in China and it is the world that pays, as well as the Chinese.


    November 26, 2007 at 12:24 pm

  2. Well I know the IHT’s been owned by the NYT for a while. How does that work I wonder? Is the IHT just a secondary channel for articles from the NYT and local affiliates, or does it do original journalism too?

    Pete Smith

    November 26, 2007 at 1:04 pm

  3. Both.


    November 26, 2007 at 4:58 pm

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