China’s goal for blue sky Beijing Winter Olympics set to cause ‘supply-side shock’ as factories close

Name: Beijing air quality reaches 'very unhealthy' levels as China ramps up coal output
Uploaded: 2021-12-14T07:02:06.000Z
Duration: 1 min 45 s
Description: Beijing air quality reaches 'very unhealthy' levels as China ramps up coal output

Efforts to reduce smog have been extended to 64 cities this winter, plus Beijing, which hosts next year’s Winter Olympics

Restrictions on production will heap pressure on economic growth and domestic supply chains, analysts say

3-MIN READ3-MIN

Efforts to reduce smog during next year’s Beijing Winter Olympics could hurt industrial production. Photo: AFP

Ji SiqiandLuna Sun

Published: 3:02pm, 14 Dec 2021Updated: 6:25pm, 14 Dec 2021

The Beijing Winter Olympics may weigh on China’s economy as authorities close scores of factories in northern production hubs to cut pollution and ensure blue skies, economists say.

“Although the Yangtze River Delta and the Pearl River Delta are not involved, the area that is affected is also a relatively important part of China’s economy, especially in terms of raw material productions,” Lu Ting, chief China economist at Nomura, said at a webinar on Monday.

Efforts to reduce smog have been extended from 28 to 64 cities this winter and cover five provinces, in addition to Beijing and Tianjin, the Ministry of Ecology and Environment (MEE) said in October.

The area encompasses some of the country’s most important heavy industrial hubs, such as Tangshan, the world’s biggest steel-producing city in Hebei Province; Shanxi, the country’s largest coal mining province; and major aluminium producing provinces Shandong and Henan.

01:45

Beijing air quality reaches 'very unhealthy' levels as China ramps up coal output

Restrictions on production will heap pressure on the economy and domestic supply chains, analysts said.

China often orders factory shutdowns to cut air pollution, including notably during the Asia-Pacific Economic Cooperation (Apec) forum in 2014, which resulted in rare clear sky days dubbed “Apec blue”.

Though the MEE document did not mention the Winter Olympics, all 64 cities have specific air quality targets for high concentrations of harmful microscopic particles known as PM2.5, and an upper limit for the number of severe pollution days between October to March next year.

It is too early to quantify the impact of production curbs, but its broad coverage will be significant, Lu said.