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China pollution

Chinese steelmakers still under-reporting output despite pollution crackdown, study finds

Production in top steelmaking province of Hebei has been higher than claimed, despite government’s war on smog

PUBLISHED : Saturday, 30 September, 2017, 11:24am
UPDATED : Saturday, 30 September, 2017, 11:24pm

Factories in China’s top steelmaking province are still under-reporting their output despite tightened scrutiny by environmental authorities, new research has found.

Hebei, an industrial heartland on the front line of the country’s war against smog, has churned out more steel in recent years than it claimed, according to the study by the Chinese Academy for Social Sciences.

The research, released on Friday by the think tank, suggested coal consumption from power stations, steelmakers and household heaters contributes to most of northern China’s notorious smog.

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The output of steel and thermal power in the region showed a strong correlation with the concentration of hazardous PM2.5 particulates, the study said.

But in Hebei, monthly production numbers failed to match smog levels, suggesting the production figures were distorted.

The study, carried out by the academy’s Rural Development Institute, was based on air quality and industrial production numbers from December 2013 to April of this year.

The central government has embarked on an aggressive campaign against air pollution in northern China, ordering outdated facilities to shut down and imposing production limits, but the effort has faced resistance in areas where local income and employment depend heavily on polluting industries.

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Authorities have repeatedly warned against false reporting on the capacity and production cuts, but many factories have refused to comply, especially as steel prices rose to a six-year high this summer.

Even with under-reported data, Hebei saw its steel production increase in 2016. China’s total steel output also hit its monthly record in August.

Christopher Balding, an economist at Peking University HSBC Business School, said the government had been supporting commodity prices to boost the country’s growth numbers.

Eager to profit from high prices, steel mills that were subject to production limits might have chosen to step up their operations and cover up the extra production in their output reports, he said.

“It is a simple trade-off,” Balding said. “They can incur financial problems by following the environmental regulation, or they can avoid the regulation and make additional money.”

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Lauri Myllyvirta, a Beijing-based campaigner at environmental group Greenpeace, suggested real-time monitoring systems be installed at more factories, so regulators would know how much the plants were producing every day.

“If factories are inspected once a year, there is not much incentive to comply,” Myllyvirta said. “It will be different if they are sending the data to regulators every hour.”

A number of big factories have already been equipped with emission monitors that send data to the Ministry of Environmental Protection, but fake figures pose a challenge. Some companies have been found to be fabricating emission numbers, and the ministry said in April it was technically difficult to spot all the cheaters.

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The pollution crackdown also has faced resistance from local authorities obsessed with economic growth.

A separate study by the academy, also released on Friday, said many local governments still believed in the philosophy of “first pollute, then deal with it”, placing economic development above environmental protection.

Some bureaucrats, worried that the anti-smog campaign will hurt the economy, have been interfering with emission monitoring and environmental law enforcement, it said.