News / Asia

China to Impose 'Special Restrictions' on Steel Mills

A statue of former Chinese leader Mao Zedong is seen in front of smoking chimneys at Wuhan Iron And Steel Corp in Wuhan, Hubei province, Mar. 6, 2013.A statue of former Chinese leader Mao Zedong is seen in front of smoking chimneys at Wuhan Iron And Steel Corp in Wuhan, Hubei province, Mar. 6, 2013.
x
A statue of former Chinese leader Mao Zedong is seen in front of smoking chimneys at Wuhan Iron And Steel Corp in Wuhan, Hubei province, Mar. 6, 2013.
A statue of former Chinese leader Mao Zedong is seen in front of smoking chimneys at Wuhan Iron And Steel Corp in Wuhan, Hubei province, Mar. 6, 2013.
Reuters
New rules aimed at making China's sprawling steel sector greener will do little to tackle rampant overcapacity or help Beijing protect its big state-owned mills from smaller, nimbler rivals.
 
China's environment ministry has said it will impose "special emissions restrictions" from next month on major industries from steel and petrochemicals to cement, non-ferrous metals and coal-fired power. Environmental inspections have already started in big steel producing regions.
 
But when it comes to steel, it's more than just pollution.
 
Many in the industry hope the curbs will help tackle overproduction, slash the number of privately-owned mills and boost the market share of state-owned giants such as Baoshan Iron and Steel (Baosteel), Wuhan Iron and Steel and Angang Steel.
 
"If we are to solve the emissions problem more effectively, reducing capacity is a part of it," said He Wenbo, Baosteel's chairman, on the sidelines of China's parliament session last week. "We approve of any effort to strengthen the laws, and no enterprise in the steel sector that has reached a certain standard will oppose it," he said, noting the implementation of environmental standards would help create a level playing field.
 
Wang Yifang, head of China's biggest steel firm, the Hebei Iron and Steel Group, also said China needs to use environmental controls to rein in overcapacity.
 
Big mills have seen their profits eaten into by smaller rivals, and the government has sought to boost the giants' competitive position by raising industry standards and thresholds. It wants its top 10 mills to control 60 percent of total capacity by 2015, up from around half now, and is likely to use "administrative measures" like pollution and resource-use standards to meet that goal.
 
"I think the government is sincere in its efforts to curb pollution but at the same time, it is of course trying to increase its control over the steel sector. Cleaner air and a more orderly steel industry is a win-win for China," said a government policy researcher who didn't want to be named.
 
Wishful Thinking
 
Still, many analysts suggest the government is again guilty of wishful thinking. While the costs of the industry minnows could increase as a result of the new pollution guidelines, the big mills could suffer just as much.
 
"Currently, many of the big steel mills also fail to meet environmental standards," said Cheng Xubao, an analyst at Custeel, an industry consultancy.
 
The new measures are part of China's response to the hazardous smog that choked Beijing in late January. While much of the smog came from vehicles and coal burning, around a fifth drifted into Beijing from surrounding regions, especially the steel producing province of Hebei, according to a study by the China Academy of Sciences.
 
Steel is one of the biggest polluters, largely due to the use of coking coal in the production process. China's total crude steel output of 716 million tons last year would have required the combustion of some 430 million tons of coke.
 
But industry officials insist most steel firms already have the necessary equipment, including dust extractors, desulphurizing “scrubbers” and protective screens. CISA Secretary General Zhang Changfu said earlier this year steel had been branded an "arch-criminal" even though it was now essentially a "green industry".
 
"The environmental requirements for Hebei steel enterprises ... are already basically in place. Currently, the operating conditions of the whole steel sector are very tough," said Jiang Feitao, a steel policy researcher with the China Academy of Social Sciences.
 
The problem is often one of oversight. Many mills turn off their equipment when inspectors aren't looking in order to cut costs, and officials tend to turn a blind eye.
 
"The issue is whether the machinery is running, and whether the local government has the determination to enforce it," said Henry Liu, an analyst at Mirae Asset Securities in Hong Kong, noting the problem is still fundamentally an economic one: that the local government is reluctant to strike too hard against a sector that provides thousands of jobs and millions of yuan in tax revenues. Beijing would also be reluctant to damage Hebei's economic lifeline and risk a wave of migration into the capital.
 
State vs. Private
 
The governor of Hebei, Zhang Qingwei, said last week that while the province was committed to restructuring its massive steel sector and improving its green credentials, it was not focusing its attention on private players. "We will support those companies that do well, whether they are state or privately-owned," he said.
 
On a purely economic basis, the small and private firms have performed best under tough conditions over the last two years. It's likely they are also better placed to survive any hike in environmental costs.
 
The CISA complained in January that profits at its member mills - mostly large-scale and state-owned - slumped 98 percent last year on weak demand and chronic overcapacity, exacerbated by the small "rampantly expanding" mills. But the CISA has always been reluctant to acknowledge that those private mills have remained more profitable than their lumbering state counterparts.
 
"2012 was not as bad as the media said for the steel industry, because private firms' profitability was generally better than the state-owned enterprises (SOEs)," said a steel industry official who asked not to be named.
 
"They are able to react faster to the market. That's because private firms control their own production; they can stop producing if they are operating at a loss, but SOEs still sell, even if they lose money on every sale."

You May Like

DRC Tries Mega-Farms to Feed Population

Park at Boukanga Lonzo currently has 5,000 hectares under cultivation, crops stretching as far as eye can see, and is start of ambitious large-scale agriculture plan More

Video Survivor Video Testimonies Recount Horrors of Guatemalan Genocide

During a conflict that spanned more than three decades, tens of thousands of indigenous Mayans were killed More

Video War, Drought Threaten Iraq's Marshlands

Areas are spawning ground for Gulf fisheries, a resting place for migrating wildfowl, source of livelihood for fishermen and herders who have called the marshes home for generations More

This forum has been closed.
Comment Sorting
Comments
     
by: Sun from: Taipei
March 10, 2013 11:45 PM
PRC leaders! Please stop air pollution that is now making not only Chinese people but also other countries' people suffer from asthma, bronchitis, and even lung cancer. China is allegedly the second world-largest economy. So, please take responsibility for the environment of Asia.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs