The China Sustainable Energy Program 中��国��可��持��续��能��源��项��目 CHINA CLIPPINGS Issue 13 June 2002

Topping the news in the buildings and appliance sector, CSEP grantee China certifi cation Center for Energy Conservation Products has completed a color TV energy effi ciency endorsement label for “standby” power. This milestone label for China refl ects international standards (p.2). In the power sector, China plans to halve the value-added tax it levies on wind electricity generation equipment to make it cheaper (p.4). China’s power sector reform will include a new price mechanism that encourages bidding by competing power suppliers and the development of clean energy. A State Power Regulatory Commission will be set up to serve as the industry regulator (p.5). In the transportation sector, the government plans to invest US$106 million over the next few years to speed up the development of electric vehicles in time for the 2008 Olympics (p.6). Beijing is planning to tighten its auto emission standards to Euro II levels one year ahead of schedule to early next year (p.7). Several major magazines and newspapers, including Newsweek, the Far Eastern Economic Review, and the Washington Post, have featured articles on China’s growing auto industry and the rush of middle-class Chinese to purchase cars (pp. 8, 9, 12). A recent study in southern China found that rapid industrialization over the past two decades has resulted in concentrations of lead that exceed WHO limits in 65% of youngsters (p.15). Countries, such as the U.S., Japan, and Korea, are taking note as China’s air pollution transcends political borders and affects their quality of life (pp.16, 18, 19). The world is watching China as its demand for oil accelerates far beyond domestic supply. China will soon be competing with other major energy importers in the region (p.20).

Buildings News in Brief...... 11 Hot Market Expected for Cool Home Appliances...... 2 Car Industry: Time for a Tune-Up ...... 12 Energy Effi ciency Endorsement Labels for Color TVs ...... 2 China, U.S. Cooperate in Energy-Saving Building ...... 3 Air Quality Urban Air Pollution: A Great Leap Forward ...... 14 Industry China is Passing Pollution to a New Generation ...... 15 China to Relocate 40 Polluting Enterprises out of Beijing...... 3 Asia’s Wind-Borne pollution a Hazardous Export to U.S...... 16 Cogeneration Market Study ...... 3 Green Groups Want Bolder Plans to Clear China’s Air ...... 17 Beijing Aims to Breathe Easier...... 18 Electric Power Japanese-U.S. Team Studying Air Pollution ...... 18 China Promotes Wind Power by Halving its VAT...... 4 China’s Growing Deserts are Suffocating Korea...... 19 BP to Build Shenzhen Solar Power System...... 4 China: The Quest for Energy to Grow ...... 20 Desulfurisation Projects for Coal Power Plants...... 4 China’s Big Bet on Gas ...... 22 china approves Plan to Break up Electricity Giant ...... 5 China Fears Flood Toll Tops 500, More Rain to Come...... 23 ADB Looks West ...... 23 Transportation Government to Push Electric Car Development...... 6 General Metro to Link 3 Cities ...... 6 WB Advises China to Clean Up Its Economic Growth ...... 24 Delphi earns Contract for EMS Motorcycle Business ...... 7 Energy Challenges to China’s Sustainable Development ...... 25 Beijing Tightens Automobile Emissions ...... 7 Beijing to Improve Environment, Traffi c for Olympics ...... 26 In China, a Rush to Get Behind the Wheel ...... 8 Blue Skies for the Beijing Olympics ...... 27 Road Warriors ...... 9 Beijing Olympics to Get Green Aid...... 31 China’s Auto Market to Become World’s 4th Largest ...... 11 China to Build Plant to Turn Coal into Oil Products...... 31

大卫与露茜•�派克德基金会 合盟 能������源������基������金������会 The David and Lucile Packard Foundation in partnership with The Energy Foundation

旧金山总部�San Francisco Offi ce: 1012 Torney Avenue #1 • San Francisco, CA 94129, U.S.A. 电话Tel: (415) 561-6700 • 传真Fax: (415) 561-6709 • 电子邮件Email: [email protected] • 网站Web: www.efchina.org

北京办事处��Beijing Offi ce: 中国北京市建国们外大街�19 号�国际大厦2403 室�•��邮编： 100004 CITIC Building, Room 2403, No. 19, Jianguomenwai Dajie • Beijing 100004, P.R. China 电话Tel: (86-10) 8526-2422 • 传真Fax: (86-10) 6525-3764 • 电子邮件Email: [email protected] • 网站Web: www.efchina.org B U I L D I N G S & APPLIANCES INDUSTRY

Hot Market Expected for Cool Home Appliances Energy Effi ciency Endorsement Labels for 16 April 2002 Shenyang and Harbin, likely in response Color TVs Established to the locally cold weather. Although almost every urban house- The demand for refrigerators was in China hold in China has a refrigerator, future the greatest in the Shanghai and Beijing market demand will be far from cool. markets, with Shanghai taking the lead. May 31, 2002 Statistics from the China National Closely following the two cities were Wu- Translated from “Beijing Evening News” Readership Survey (CNRS) revealed that han, Tianjin and Guangzhou. These cities almost 91 percent of urban Chinese fami- are expected to be the main markets for A reporter learnt recently that the lies have refrigerators. However, analysts competition among refrigerator manufac- China Certifi cation Center for Energy predict that many Chinese households will turers in the future. Conservation Products (CECP) has com- soon be upgrading their major home appli- pleted the preparation for color TV energy ances including color televisions, washing Brand new effi ciency endorsement labels. Haier color machines and refrigerators. The top fi ve brands of refrigerators, TV was the fi rst to obtain the endorsement The refrigerator industry, in particular, among families with refrigerators, were label. will experience a substantial demand. The all domestic brands. These fi ve brands to- CECP’s technical specifi cations for statistics indicate that the market demand gether currently hold a third of the market the color TV’s endorsement label is 3-watt for refrigerators during the next three share. energy consumption in standby or “off” months would exceed 3.5 million units, Families without refrigerators, but modes. This is a common TV standard in according to the April 5 Zhongguo Jingji planning to purchase them in the next six many developed countries. The national Shibao (China Economic Times). months, also classifi ed domestic brands endorsement label, which is in line with Although a huge number of Chinese ahead of the foreign competitors. The top international standards, is a milestone for families already have refrigerators and fi ve brands ranked by this group account China’s standards and labels. Developed the proportion of potential new purchases for more than 80 percent of the market. countries, who are extremely strict on during the next six months is relatively The Haier brand of refrigerator was energy effi ciency standards for color TVs low, almost 3 million families indicated ranked fi rst by both groups. (including standby power), will refuse to that they plan to buy new products during According to the survey, 48 percent of import TVs that are not energy effi cient in this time. the people planning to buy refrigerators in standby mode. the next six months are between the ages A cooling trend of 25 and 45. This age group will undoubt- The majority of the households in edly account for the majority of future Chinaís large and medium-sized cities purchases. have refrigerators, with the top three cities Based on the situation in China as a being Hangzhou, Beijing and Shenzhen. whole, 60 percent of the potential buy- Almost all families living in these three ers have a monthly income of less than have this appliance. 1,000 yuan (US$120.82). The group that Approximately 10 percent of the have monthly incomes over 1,500 yuan families currently without refrigerators (US$181.22) and those that make between indicated that they intend to purchase one 1,000 yuan (US$120.82) and 1,499 yuan in the next six months. Additionally, 5 (US$181.10) each account for 20 percent percent of the families that already have of the potential buyers. refrigerators intend to purchase new ones The China National Readership during the same period. Survey (CNRS), a unit under CVSC-TNS Consumers’ demands generally vary Research Co., conducted its survey during according to city. In small and medium- the second half of 2001 in 36 major cities, sized cities such as Kunming and Nan- provincial capitals and municipalities ning, the consumers expressed stronger across China. There were 38,662 partici- desires to purchase new refrigerators than pants in the survey. in the developed cities of Beijing and CVSC-TNS Research Co. is a joint Guangzhou. venture between the China International According to the survey, there is a Television Corporation (CITV) and the relatively weak demand for refrigerators Taylor Nelson Sofres Group, one of the in Chinaís northeast cities of Changchun, world’s leading market research groups. Haier Color TV

2 June 2002 | CChinahina CClippingslippings B U I L D I N G S & APPLIANCES INDUSTRY

China to Relocate 40 Polluting Enterprises out of Beijing Sourced from Xinhua News Agency 24 April 2002

Beijing, 24 April: The Chinese capital soon. Experts predict that by 2005, Beijing Cogeneration Market plans to move another 40 polluting in- will consume 3bn cu.m. annually. dustrial enterprises out of the city proper Artifi cially-made coal gas will cease Study this year as part of its drive to improve to be used in Beijing three years after that. environment quality in the downtown Beijing has always dreamed of build- China Energy Effi ciency area, a municipal government offi cial said ing itself into a green metropolis and it Information Bulletin Tuesday [23 April]. vowed to host a “green Olympics” in March/April 2002, Vol. 8, No. 2 The move will release some two 2008. million square meters of land and reduce According to plan, Beijing will have With the support of the Energy pollutants by 5,000 tons a year, said Yang over 30 nature reserves, with the forest Foundation, the China Energy Conserva- Anjiang, a member of the Standing Com- cover rate in mountainous areas reaching tion Investment Corporation (CECIC) and mittee of the Beijing Municipal Commit- 70 per cent and exceeding 25 per cent in Energy Resources International, Inc. (ERI) tee of the Chinese Communist Party, at a plain areas by 2005. completed a market study for cogeneration workshop on relocating industrial enter- It is predicted that by 2007, more than in China. The study provides background prises. 90 per cent of local waste water will be information and statistics on cogeneration The 40 enterprises to be relocated are treated. use and government policies governing mainly engaged in the chemical industry Beijing spent nearly 30bn yuan (3.6bn cogeneration. It then outlines the key bar- and the production of machine tools. US dollars) on environmental protection riers being faced by cogeneration. Finally, The relocation of polluting enterprises from 1998 to 2001, according to statistics. it analyzes each of the major market op- dates back to 1985. As of January this Authoritative sources said that pol- portunities for cogeneration (i.e., petro- year, Beijing had approved 189 transfer lutants discharged by more than 5,000 leum, chemicals, non-ferrous, and light in- contracts involving relocation of industrial industrial enterprises in downtown Beijing dustries, as well as for centralized heating enterprises, according to Yang. had met the standards set by the govern- in the 3 northern regions and non-heating As a result of the relocation, the ratio ment by the end of May 2000. regions of the south) and summarizes the of land space occupied by industrial en- The ratio of land space occupied by market potential of each. Finally, it dis- terprises in the downtown area within the industrial enterprises is expected to be cusses the potential for natural gas-based Fourth Ring Road dropped to 7.26 per cent below 6.6 per cent in downtown Beijing, cogeneration. Copies of the report are from 8.74 per cent before the relocation with a total of 9m sq.m. of land freed up at available upon request by contacting Jack project started more than 10 years ago. the realization of all set targets regarding Siegel at [email protected]. Beijing Municipal government at- the relocation of enterprises. taches great importance to the improve- ment of the local environment and in recent years, it has intensifi ed its efforts in tackling environmental pollution. China, U.S. Cooperate in In 1999, the city government put into Constructing Energy-saving effect measures on relocating polluting en- terprises and speeding up the readjustment Building of the local industrial structure. According to plan, the city will move Xinhua another 150-plus enterprises out of the 28 February 2002 urban area by the end of 2005, releasing 4.2m sq.m. of land. China and the United States held a ground-breaking ceremony for construction of an With a population of over 12 million, energy-saving building in which the most advanced technologies will be employed. Lo- Beijing encourages the use of natural gas cated in western downtown Beijing, the eight-story offi ce building, which will be owned to replace traditional fuels like coal, for by the Ministry of Science and Technology, contains more than 2,000 square meters of the purpose of reducing air pollution. fl oor space and costs 62 million yuan (US$7.47 million). The building will also display a The fi rst pipeline carrying gas from showcase of state-of-the-art energy effi ciency technologies. The building’s overall level the northwestern province of Shaanxi to of energy effi ciency will be three times that of common buildings in China. The U.S. Beijing was completed in 1997 and con- Department of Energy has encouraged U.S.-based manufacturers to provide energy-sav- struction on the second gas pipeline, from ing products including new kinds of external wall material, window glass and lighting northwestern China to Beijing, will begin systems. (More info at http://www.accord21.org/workshops/building_description.htm)

China Clippings | June 2002 3 ELECTRIC POWER ELECTRIC POWER

China Says to Promote BP to Build Shenzhen Wind Power by Halving Solar Power System its VAT 10 June 2002

Reuters BP China, along with its partner generate 1MW of electric power once 30 April 2002 Beijing Kenuo Weiye Technology Co., has operational. won the bid to provide a solar photovoltaic This project is BP’s fi rst new develop- BEIJING - Energy-hungry China (PV) on-grid power system for the new ment in Shenzhen since being selected the plans to halve the value-added tax it levies Citizen Center in Shenzhen. foreign partner for the feasibility study for on wind-generated electricity to make it The new building includes a museum, China’s fi rst liquefi ed natural gas terminal cheaper to develop the alternative power a library, an exhibition center, and confer- and pipeline. source, state-run Xinhua said yesterday. ence facilities, according to Zhongguo Gary Dirks, CEO of BP China, said: The planned move by one of the Shiyou Bao (China Petroleum News). “We are very glad to be able to participate world’s fastest growing economies, which BP will supply the on-grid solar in the second energy project for Shen- is looking for a less polluting alternative to power generating system and other com- zhen.” coal-fi red electricity, would cut the aver- ponents as well as designing an integrated This is one of the biggest solar power age price for wind power by 0.05 to 0.06 system. projects BP has ever participated in, the yuan per kilowatt, the news agency said. The whole project, which will cost company said. China, which based its successful bid about US$7.5 million, is expected to for the 2008 Olympics in Beijing on re- ducing urban pollution, is seeking ways to cut down reliance on coal, which accounts for about 70 percent of the vast country’s electricity generation. Hydropower makes up about 17 percent and thermal power account for much of the remainder. The proposal had been approved by the State Council, China’s cabinet, Xinhua said. China had the world’s largest wind energy resources but had not fully ex- ploited them because coal and hydropower were cheaper to tap, it quoted the State BP service stations (left) can be fi ttedtted withwith solarsolar systemssystems capablecapable ofof Economic and Trade Commission as say- providing power for pumps and canopy lighting. ing. Analysts also expect liquefi ed natural gas (LNG) to gain ground in the world’s most most populous country once state gi- ant China National Offshore Oil Corp Ltd State Power: Desulfurisation Projects (CNOOC) has carried out plans to build the country’s fi rst LNG terminal. for Coal Burning Power Plants CNOOC has shortlisted three bidders EHS Review for the terminal set to be built in China’s May 2002 industry, including 4.3 million tonnes from southern province of Guangdong. State Power’s power plants. Some analysts foresee wind power During the Tenth-fi ve Year Plan By end of 2005, SO2 emissions will taking a big global market share over the Period (2001-2005), the State Power be reduced by 10~20% from 2000 levels. coming decade as new countries adopt its Company (State Power) has announced To achieve this, State Power is focusing use. it will develop and implement desulphu- pollution prevention on SO2 concentra- So far, the global wind power market risation projects at 37 coal-fuelled power tions and mass loading controls. has been driven by Germany, Spain and plants located in China’s ‘Acid Rain and It was also noted that one of the key Denmark - accounting for more than 60 SO2 Control Areas’. It is hoped that this reasons for the low utilisation of desulphu- percent of all installed wind turbines in the will reduce SO2 emissions by 1.05 million risation technologies are the high capital world last year - while North America has tonnes per year. and operational costs. For this reason, 15 percent. It is reported that current annual SO2 Chinese experts are calling for fi nancial emissions are 19.95 million tonnes, half support, and favourable polices for desul- of which is produced by China’s power phurisation projects.

4 June 2002 | CChinahina CClippingslippings ELECTRIC POWER ELECTRIC POWER

China Approves Plan to Break Up Electricity Giant

16 April 2002

China has announced a plan largest proportion of net assets will be to break up the State Power Corp., the majority shareholder of Southern which holds 50 percent of China’s Grid. power-generating assets, separating In the new pricing mechanism, electricity generation and transmis- electricity price will be determined sion and setting prices through open through bidding by competing power bidding by 2005. suppliers and end-users, and power Sources from the State Develop- plants that pollute less will be favored ment Planning Commission (SDPC) in the mechanism to encourage the told Xinhuashe (Xinhua News development of clean energy, said Agency) that under the plan approved SDPC. by the State Council, the generating Some power producers will sell assets of State Power, except for those electricity directly to major customers under the control of one unit Huaneng PicturedPictured is a power plant for generating electricity instead of via grids, currently the only Group Power Co., will be split into situated in the outskirts of Beijing. direct buyers of electricity. three or four independent companies A State Power Regulatory Com- similar in size. or shareholding companies in northern, mission will be set up as the industry Huaneng will also become an inde- northeast, northwest, eastern and central regulator. pendent power producer. China, and oversee power assets in Tibet, Sources from State Power said the Two grid operators will be estab- said the April 11 report. company expects to complete major lished, the National Grid Co. and the Southern Grid will be formed on restructuring tasks within the year, but the Southern Grid Co, according to the plan. the provincial grids in Guangdong and report didn’t specify what the tasks would Wholly state-owned National Grid will Hainan and State Power’s grids in Yunnan, be. control fi ve regional limited-liability Guizhou and Guangxi. The party with the

China Briefi ng: Power Loan

Far Eastern Economic Review 4 July 2002

The World Bank approved a $105 million loan to expand electric power generation in China. The project aims to improve economic growth and reduce poverty in Hubei province, the bank said.

China Clippings | June 2002 5 TRANSPORTATION TRANSPORTATION

Government to Push Electric Car Development power sources. 2 April 2002 Specifi c projects will be opened to of High-Tech Development and Industri- bids, and those who win the bids will The government will invest 880 mil- alization. receive governmental funding. lion yuan (US$106 million) over the next Also, patented technology will be He added that a new system for few years to speed up the development of developed to produce fuel cell-powered granting awards to companies that under- electric vehicles as a new springboard to vehicles by that time, he added. take such projects will be introduced to profi tability for China’s auto industry. Electric vehicles, that produce much stimulate research, for example, rewarding The move refl ects the government’s less or even zero pollution compared with technicians who come up with new ideas drive to help ease the country’s oil energy conventional petrol- or diesel-powered with options such as shareholding rights. bottleneck and maintain a sustainable, vehicles, will be put into special transport According to the ministry’s informa- environmentally friendly growth of the service for the 2008 Olympic Games in tion department, China has conducted economy, said sources from the Ministry Beijing, said Li. technological exchanges involving electric of Science and Technology. China fi rst attached importance to vehicles with the United States, Germany, Air pollution in major cities has electric vehicles in 1996 when the coun- Japan, France and Italy, to help push do- become a serious problem with tail gases try staged an international seminar and mestic development of such vehicles. from cars being a major contributor. The exhibition on electric and clean-fueled China, which has to import oil to ministry has listed the commercialization vehicles. satisfy its growing demands for energy, of pollution-free electric vehicles as an The country has made a technology relies on coal to provide 75 per cent of its important part of its scientifi c plan for the breakthrough in developing high-perfor- energy requirements. Coal will continue next few years. mance batteries. The Leitian Company in to make up a large part of the country’s Commercialization of electric Shenzhen, for example, has developed a energy supply for the foreseeable future, vehicles, which are powered by both high- kind of lithium battery which can power a experts predict. performance, low-cost batteries and a mix vehicle for a distance of 300 kilometres. “Developing electric vehicles is of cleaner burning fuels, is likely to be Li said the government encourages all signifi cant in the effort to save oil energy, realized by the end of the 10th Five-Year domestic companies, regardless of their minimize air pollution, and to give an im- Plan period (2001-05), according to Li ownership, to take part in the production petus to the development of the country’s Jian, director of the ministry’s Department of electric vehicles or other low-pollution auto industry,” said Li.

Metro to Link 3 Cities More than 90 billion yuan (US$10.84 billion) will be needed for its construction. Zheng Caixiong The subway line will begin at the The huge construction funds needed 1 April 2002 Fangchun District of Guangzhou, via Nan- for the subway network in Guangdong hai, and end in Foshan. will be raised mainly from the market, GUANGZHOU: A new metro project It will connect with the current Huang said. linking Guangzhou, capital of South Guangzhou Metro Line One, and a Various government offi cials and China’s Guangdong Province, to Foshan subway station will be located every two departments are also negotiating with their and Nanhai will offi cially begin before the kilometres. counterparts in Hong Kong and Macao end of the year. The project is expected to help further to connect Guangdong’s metro network The 22-kilometre subway, slated to improve economic ties among the cities in with the transportation systems in the two be in operation in 2005, will be the fi rst to the Pearl River Delta that border the Hong special administrative regions. connect three cities in the country. Kong and Macao Special Administrative In Guangzhou, which already has one Huang Weihong, director-general of regions. subway line in operation, several others the Guangdong Provincial Development The Guangzhou-Nanhai-Foshan met- are under construction or being planned. Planning Commission, yesterday revealed ro project is just one part of Guangdong’s The city’s Metro Line 2, which started that feasibility studies for the project had subway network that will be constructed construction in 1999, will be in operation been completed. during the 10th Five-Year-Plan period next year. Addressing a work conference, Huang (2001-05). Construction of the 23.27-kilometre said the Guangdong provincial capital, Huang said that the government is Metro Line 2 consists of 16 stops and will along with Foshan and Nanhai, two planning to build a metro network that cost a total of 10.67 billion yuan (US$1.3 prosperous cities in the Pearl River Delta, consists of more than 900 kilometers of billion). will share equally in the construction fund subway track to link major cities in the And construction on the Metro Line 3 of more than 10 billion yuan (US$1.2 Pearl River Delta and further improve the began late last year. billion). province’s environment. Continued next page

6 June 2002 | CChinahina CClippingslippings TRANSPORTATION TRANSPORTATION

Delphi Earns U.S. $60 Million Contract for EMS Motorcycle Business in China PRNewswire High pollution levels in China and injector and an ignition coil connected to 9 May 2002 India have been an issue of concern for the spark plug. Fuel injection and ignition the governments, manufacturers, environ- is timed precisely to provide an optimal SHANGHAI, China -- Delphi Corp. mentalists and consumers alike who are combustion situation for a wide variety has been awarded a U.S. $60 million committed to bringing in more fuel-ef- of external variants like the load on the contract over fi ve years for Engine fi cient vehicles that also help protect the engine, air temperature and barometric Management Systems (EMS) motorcycle environment. pressure. Data on these variants is then technology with Chongqing Zongsheng Worldwide in 2001, Delphi booked coupled with additional input from sen- Motorcycle Group, one of the leading new orders for EMS worth more than sors which measure the position of the motorcycle manufacturers in China. This U.S. $500 million. The Asia Pacifi c region crankshaft, engine temperature and throttle is Delphi’s fi rst production motorcycle generated much of this new business position to determine and create optimal business win in China. driven by evolving concern for improved combustion. Approximately 50 million motorcy- emissions in high density, developing The EMS replaces the existing carbu- cles are manufactured annually in the Asia economies. retor and the ignition electronics. Multi- Pacifi c region, 10 million of which are The technology essentially entails the dimensional control of the fuel infl ow manufactured in China, and 4.5 million control of the engine air and fuel infl ow for every conceivable driving condition are manufactured in India. and ignition by an onboard microcomputer results in lower emissions, better drivabil- “It is a natural evolution to provide also known as an engine control module ity, and improved acceleration, cold start Delphi’s EMS technology for non- auto- (ECM). The ECM in turn controls a fuel performance and fuel consumption. motive applications,” said Herman Chang, regional director, Dynamics & Propulsion Sector, Delphi. “We are leveraging our Beijing: Tighten Automobile Emission extensive EMS expertise and tailoring our systems to design them specifi cally for the gases such as carbon monoxide, hydrocar- motorcycle market. These solutions, which ERM China/EHS Review bons and nitrogen oxide. address both regulatory and consumer June 2002 Euro II standards demand a 60 per requirements, help reduce emissions and cent reduction of such harmful emissions improve fuel economy.” Beijing may tighten its automobile- on average compared with Euro I stan- Engine management is the science emission standards to the Euro II level dards. For instance, Euro II standards of equipping and calibrating an engine from the beginning of next year, one year stipulate that hydrocarbon discharges to achieve clean exhaust emissions while ahead of schedule, according to sources should not exceed 0.5 grams per kilometre providing the best possible performance, with the Beijing Environmental Protection for a petrol-powered vehicle, 0.63 grams fuel economy and drivability. EMS is gen- Bureau. However cars registered before lower than Euro I standards. erally used on all modern cars that meet that time will not be forced to meet the Carbon monoxide emissions should Euro II emission norms or equivalent. standard. not exceed 2.2 grams per kilometre under Beijing started to implement Euro I Euro II standards. This is 0.96 grams emission standards in January 1999. The lower than Euro I standards demand. ‘Metro’ continued standards are based on the regulations for Beijing authorities hope to improve The 32.4-kilometre Metro Line 3, new heavy-duty diesel engines that were the environment for the 2008 Summer which has 23 stations, will run from the fi rst introduced in 1992 by the European Olympics and the city is looking at the city’s Tianhe Railway Station and cross Parliament and the Council of Environ- introduction of Euro III standards by 2005. the Pearl River, ending at Guangzhou’s ment Ministers. Panyu District located at the mouth of the Vehicle emissions Pearl River. are currently one of the The Metro Line 3 that is expected major sources of pol- to be in operation before 2005, and will lution in the capital’s benefi t more than 100,000 residents living atmosphere. About 60 along the line. per cent of the city’s Another metro project is also well nitrogen dioxide and 70 under way in the Shenzhen Special Eco- per cent of hydrocar- nomic Zone. bons in air come from The 18-station subway line, which automobile emissions, began construction last year, will ulti- according to environ- mately cost 10.6 billion yuan (US$1.28 mental experts. Tougher billion) and is expected to be completed in standards help limit four years. emissions of harmful Polluting diesel truck in Beijing

China Clippings | June 2002 7 TRANSPORTATION TRANSPORTATION

In China, a Rush to Get Behind the Wheel 7 June 2002

SHANGHAI -- The line of bid- est-priced new passenger car still exceeds New cultural revolution ders begins to form just after sunrise. a decade’s pay for a typical worker. The zeal for wheels is behind a new By midafternoon, when security police But industry experts see vast poten- kind of cultural revolution. For centuries, throw open the glass doors to the cavern- tial. inhabitants of this vast land of 3.6 million ous auction hall, the line snakes down the China’s admission into the World square miles have remained largely rooted entrance ramp, loops around the parking Trade Organization in November has to their native village or town. Under lot and spills into the street. helped to fuel the auto craze. Membership Mao’s communism, individual mobility “One at a time! One at a time!” barks terms oblige Beijing to slash tariffs on was limited by poverty, bad roads and a a guard inspecting registration papers at auto imports to less than 51 percent from rigid household registration system. the entrance. “Don’t shove! You’ll all get 80 percent over the next fi ve years. Now, prosperous young professionals in.” New-vehicle sales in China, which in Beijing form four-wheeling clubs to tra- But not all will leave with what grew at double-digit rates for much of the verse the hinterlands of Yunan and Tibet, they’ve come for: license plates for their past decade, topped 2.3 million last year. and Chinese of even ordinary means can cars. Passenger cars accounted for just under a contemplate the freedom of the open road. The municipal government instituted third of that total. Many analysts put the Not surprisingly, giant conglomerates monthly plate auctions in 1999 to stem proportion of vehicles sold now for private from the United States, Japan and Europe the tide of private vehicles fl ooding city use at 50 percent, up from less than 10 are vying for a piece of the action. U.S. streets. As demand races far ahead of the percent a decade ago. automakers GM and Ford Motor Co. along monthly quota, a Shanghai tag has become And the boom is just beginning. with their Japanese rivals of Honda Motor akin to precious metals. As China’s economy balloons, annual Co., Toyota Motor Corp. and Nissan Mo- At the May auction, the minimum bid household incomes in the major cities are tor Co. have formed joint ventures with for one of 2,350 new plates soared to a passing the $4,000 milestone regarded Chinese partners. They are scrambling to record 17,800 yuan, about $2,150, making by manufacturers as a takeoff point for catch up with Volkswagen AG of Germa- the tin squares worth far more, ounce for private car purchases. ny, which has built cars in China for more ounce, than gold. Automotive Resources Asia Ltd., than a decade and claimed about half of all Shanghai’s would-be drivers decry the a consulting company with offi ces in passenger-car sales in 2001. auctions as tantamount to highway rob- Beijing, predicts total sales will reach But once the car is purchased, the bery. And yet they pay. 3.7 million by 2006, with passenger-car task of obtaining a license plate can be “Of course I think it’s too expensive, sales exceeding 1.2 million units. China is formidable. The scene at the Shanghai but what am I going to do?” commercial widely expected to emerge as the world’s auction resembled the crowded start of sculptor Ding Xiaofeng, 28, said as he largest car market in the next two decades. an auto race as residents dashed inside jostled fellow car owners outside the auc- Chinese banks are plunging into to two dozen old computer terminals to tion hall. “If I bid too low, I don’t get on the auto-loan business, and competi- enter their registration number, password the road.” tion among the global auto giants--not to and bidding price. When the bidding stops mention 120 domestic manufacturers-- a few hours later, dealers and customers Car craze spreading has sparked a series of price wars. It has shuffl ed out into the lobby to smoke and Ding’s eagerness to start driving is moved car ownership within the reach of await the announcement of the minimum shared by a growing number of Chinese. this country’s prospering middle class. bid: “17,800 yuan.” With incomes rising and new-car prices In major cities, car ownership has There was a chorus of cheers but falling, more and more of the country’s 1.3 spawned a new breed of commuters who many groans as well. Ding, the sculptor, billion people are sliding off their bicycles motor proudly to downtown offi ce towers went home glad with his last-minute deci- and behind steering wheels -- transforming from luxury housing developments in the sion to bid 18,000 yuan--1,000 more than established rhythms of life at home and suburbs. Among them: Shanghai accoun- he had planned. creating new business opportunities for tant Sun Linlan, who recently purchased But another bidder, Li Kun, stuck by trading partners overseas. a second car: a compact model built by his decision to bid no more than 12,800 Private car ownership remains a nov- General Motors Corp. and its state-owned yuan. elty in this burgeoning economy: One in Chinese partner. “I have to try again next month,” he every 100 Chinese owns a car, compared “I just got tired of standing in taxi said with dejection. with 1 in 2 Americans. And even the low- lines on rainy days,” she explained.

8 June 2002 | CChinahina CClippingslippings TRANSPORTATION TRANSPORTATION

Road Warriors Middle-class Chinese are going car crazy, buying autos and hitting the road as never before Melinda Liu Newsweek International gest automobile makers. Just like 1950s TV, and “having wheels” meant own- 29 April 2002 America, says Stratford, the debut of the ing a bicycle. No longer. After 25 years private car is “infl uencing everything of economic liberalization, the Chinese His love affair with the car began from popular culture to urban planning to middle class has arrived. More and more when Wang Qishun was just a toddler. In commuter activity. China is truly the most Chinese have breached the magic income 1966 he caught a glimpse of fl ag-waving interesting car country in the world.” threshold at which private-vehicle owner- Red Guards crammed into green Army Dating back to Imperial times, ship becomes a possibility—about $4,000 trucks. Even at the uncomprehending transportation was always a measure of a year. Most of these strivers live along age of 4, he thought the spectacle was the Middle Kingdom’s technological (and the bustling coast, where the car craze has “grand.” Now 39 and living in Beijing, territorial) ambitions. China’s ancient sparked a construction boom in country Wang’s been driving his own cars since Great Wall, for example, was not solely a homes. 1985. Just two months ago he bundled defensive structure; it was also a sort of Photographer and designer Gao Bo his wife and son into his Cherokee Jeep elevated roadway of its time for foot sol- bought his fi rst car in 1996 because he for a family vacation, which wound wanted to move to the countryside. up becoming a hair-raising 17-hour “My car was a substitute for my feet,” journey to Shanghai in a blinding snow- he says. Now Gao Bo, 38, and several storm. Never mind, Wang loves his dozen Beijingers—most of them in- wheels. He happens to be the founder volved in art and culture—live in a rural of China’s fi rst—and only—drive-in village 40 kilometers north of Beijing. theater, located not far from Beijing’s Their arrival in the village has helped posh embassy district. “We’re entering spawn eight new stores and several taxi the automobile age,” he told NEWS- services—yet more wheels—run by WEEK one evening in the drive-in’s villagers. “clubhouse,” where young Chinese In the ’90s, joint ventures between sought refuge from their chilly cars to Chinese automakers and foreign part- sip sodas and nibble popcorn. “Cars are ners such as Volkswagen and General bringing a new culture to China, and I Motors focused on making sleek luxury want to explore it.” cars for ministers and commissars, who were chauffered around. But now—just CHINESE ARE GOING crazy as in post-WWII America—family cars for cars. They’re buying more private are the rage. “Our market surveys show vehicles, driving farther in them and that buyers want to drive to work and shaping their lives around them as go for leisure outings with the family,” never before. Sparked by China’s entry says Kevin Guan, 24, a senior specialist into the World Trade Organization at Shanghai-General Motors. (WTO) last December, car prices are Guan himself is eager to buy a gray falling, and middle-income consumers Buick SRV—a small recreational are scrambling to snatch up the global, vehicle launched last November—so he diers, horses and carts. Chinese cities were four-wheeled symbol of personal freedom. can “go to the movies with my girlfriend.” clogged with foreign-made automobiles in As recently as nine years ago, less than 10 Because car ownership is a new the 1930s, but after the communists swept percent of Chinese vehicle buyers were phenomenon, China’s long-distance road to power in 1949, they nationalized the car private individuals; by 2000 the fi gure system is a patchwork quilt. So-called industry. Under Mao Zedong’s stultify- had jumped to 50 percent (representing a national highways, or guodao , remain ing regime, the masses had little freedom total of about 7 million cars and trucks). the most well traveled, but they can be or mobility; they were required to stick Popular models cost less than $12,000, but treacherous. Some of the hazards: perma- close to home under a stringent house- even at that price, cars remain far out of frost potholes, killer blind curves, end- hold registration system and were barred economic reach for most Chinese. (Rough- less stretches of Gobi Desert. Adventure from owning private cars. The industry ly one of every 100 Chinese people owns drivers love the hairy Shanghai-to-Tibet withered. While the Great Helmsman was an auto, compared with one in two in the Highway 318—a twisting, landslide-prone collectivizing farms—and conducting state United States.) Nevertheless, the mood snake of a road slithering through some business in trains (box)—the West was among a rising number of car purchasers of the country’s loneliest and most exotic rapidly building automobile plants and jet these days is “giddy,” says Tim Stratford, scenery. “It’s like China’s Route 66,” says airplanes. vice chairman and general counsel of a member of Beijing’s Off Roader 4WD years ago, the most prestigious General Motors-China, one of China’s big- Club, a group of Beijing four-wheel-drive Chinese consumer item was a color

China Clippings | June 2002 9 TRANSPORTATION TRANSPORTATION

‘Road Warriors’ continued year. Keve Guan of Shanghai-GM calls China substandard fuel, poor maintenance the sales surge “earth shattering.” Inside and dicey spare parts are common.) enthusiasts who organize yearly trips from Shanghai-GM’s gleaming showroom, Despite great expectations about the Beijing to the Tibetan capital of Lhasa, a American images resonate. Shanghai Chinese market, foreign carmakers have grueling three-week expedition. “We all GM is best known for its luxurious black traveled a bumpy road. Peugeot sank $450 used to want to be rich and successful,” Buicks. (The company’s reps are quick to million into China, helped produce a poor- says off-roader Pan Li, who works for a remind visitors that in the 1930s, one of selling gas-guzzler, then pulled out. (Fuel, venture-capital fi rm. “But after two jour- every six autos on Chinese roads was a about 28 cents a liter, is more expensive neys to Tibet, I’ve found a new lifestyle.” Buick. There is a vintage 1913 Buick on than in the United States.) True, Chinese Thanks to the construction of modern the showroom fl oor.) labor is cheap and abundant. But automo- expressways, even comfort-loving yuppies In Mao’s time, local governments lob- biles are a capital-intensive industry, and will soon be driving to funky corners of bied to get car factories, and nearly all did. in China auto parts and other materials China. Over the past six years, China’s As a result, China today has a mind-bog- are expensive. So, surprisingly, making a highway network has jumped from 3,000 gling 120 auto plants nationwide, though car in China costs more than in the United kilometers in total length to 20,000 kilo- most are losing money and only a handful States. While China is arguably the fast- meters. In December the country’s longest produce more than 100,000 vehicles a est-growing car market in the world, the expressway—six or more lanes wide, year. Just as the crowded U.S. car indus- country is still working off a very low con- stretching 1,262 kilometers from Beijing try faced consolidation in the early part sumer base. By 2010, total vehicle sales to Shanghai—opened for business. It’s of the 20th century, so will the Chinese are expected to approach 5 million a year; cut the travel time between the two cities industry undergo a Darwinian culling in by comparison, this year about 17 million from more than 20 hours to roughly 12 the early part of the 21st. China’s already cars will be sold in America. (if the weather if decent). Yale Zhang of got its version of the Big Three: Shanghai Chinese leaders recognize that car Automotive Resources Asia, a marketing Automotive Industry Corporation (SAIC) sales can be a powerful economic catalyst, and communications company, claims that and its joint ventures with General Motors but they don’t welcome uncontrolled auto “China’s expressway [network] has just and Volkswagen control nearly half the buying. Pollution levels (already up to 10 surpassed Japan’s and is now the second market. The Jilin-based First Automo- times the Western norm in some places) biggest in the world, after the United bile Group (also partners with VW), and and traffi c jams are a growing urban States.” Dongfeng-Citroen (in Hubei province) headache. That’s one reason Shanghai and China’s current car-buying frenzy is are also strong. The Chinese depend on other cities charge onerous auto-registra- part and parcel of the country’s commit- their foreign joint-venture partners for tion fees. When U.S. President George ment to fair trade. China joined the WTO high technology and R&D. Foreign fi rms W. Bush visited Beijing in February, U.S. last December, and one of the prices of have had mixed success: the Shanghai- and Chinese offi cials trumpeted the city’s new membership is a requirement to cut Volkswagen Santana is omnipresent, but purchase of 2,000 U.S.-built bus engines its automobile-import tariffs from more Beijing Jeep, a lagging venture between that burn clean compressed natural gas. than 80 percent to 25 percent or less by American Motors Corp. and Beijing Beijing, which already owns one of the 2006. The fi rst tariff reductions came into Automotive, is a symbol of how not to do largest natural-gas bus fl eets in the world, force on Jan. 1, when the cost of a top-of- business in China. is also poised to adopt tough European the-line imported BMW dropped $13,000 Over the next several years, most of standards to limit vehicle emissions. to a still-hefty $127,582. In January and the laggards are expected to merge, switch But most new car buyers don’t think February, vehicle sales of all types jumped production to more profi table products about pollution. They’re too busy revel- 13.5 percent. or go out of business. Already Chinese ing in the latest form of self-expression. “Sticker delight” has also helped offi cials are jittery about fast-rising urban That’s especially true in Beijing, where trigger a cutthroat price war among unemployment and labor unrest. Last many cars are decked out with decals, top Chinese car-makers. In January an month hundreds of laid-off employees of curtains or window-hugging suction- inexpensive mini-sedan called the Alto, Beijing Automobile Works, a foundering cupped plush toys. One proud car owner made by Changan-Suzuki, dropped nearly manufacturer, held a protest in front of the wears black-and-white cowskin jumpsuits 25 percent in price (to 30,000 RMB , or company. “This is some of the toughest to complement her leopard-skin-print seat about $3,650). Its year-on-year sales in competition in the world,” says Stratford. covers. Nightly, more than 30 vehicles February soared 70 percent. The China For foreign automakers, the booming pull into Wang Qishun’s drive-in the- First Automobile Group, one of China’s market offers new opportunities—but also ater, which shows movies until dawn on biggest carmakers, dropped the price of all the specter of a nationalistic backlash. Last weekends. Wang says that while a third four of its prestigious Hongqi (Red Flag) December, in a blaze of publicity, dissatis- of his customers come to “court their models by $3,600 per vehicle—a savings fi ed Chinese consumers in Wuhan took up sweethearts,” they’re much more discreet of between 9 percent and 14 percent. In sledgehammers and demolished a Mer- than in the United States, “where I’m told January alone, Chinese buyers snapped up cedes-Benz S-230. They claimed the car many Americans have been conceived in more than 4,000 discounted Shangai-GM suffered from frequent oil leaks and other the back seat of a car.” Wang’s dream is to Sails (a sedan priced at about $11,000)— defects. (Mercedes-Benz believes the launch a nationwide drive-in-theater fran- one-seventh of the total number sold last use of poor-quality fuel was to blame. In chise, replete with auxiliary services

10 June 2002 | CChinahina CClippingslippings TRANSPORTATION TRANSPORTATION

China’sChina’s Auto Market to News in Brief Become World’sWorld’s 4th Largest CBU-AutoEnews 16 May 2002 9 May 2002 The number of registered motor While global auto sales will decline of North America in 2001, but within the vehicles in Beijing has been soaring after this year, China’s will grow by 15 per- region, Japan and South Korea are seeing the country joined the WTO. Currently, cent to reach more than 2.7 million units, declining production and limited room for each 100 families in Beijing own 12 units making it the fourth-largest auto market in growth. of cars, which indicates that the city of the world, according to the International China will become the major driving Beijing is into the threshold of motoriza- Organization of Motor Vehicle Manufac- force for the growth of the region’s auto tion by international standard. In the fi rst turers (OICA). industry, according to the OICA. quarter of the year, more than 50,000 units Close to 2.4 million of new motor vehicles were registered, motor vehicles were sold up 36 percent over the same period of last in China in 2001, Jiefang year. By now the motor vehicle parc in the Ribao (Liberation Daily) city has reached 1.73 million units, up 241 reported Wednesday. percent from the 507,000 units in 1990. Traditional auto- Of the total, 1.04 million units belong to mobile markets such as individuals and 545,000 units are passen- North America, Japan and ger vehicles with less than nine seats. It is Germany have seen falling estimated that Beijing’s total vehicle parc production and sales, while may exceed three million by 2008 if the China’s auto output grew city continues with the current growth rate 13 percent and its output TraffiTraffi c cpr proceedsoceeds along along Beijing’ Beijing’ss Second Second Ring Ring Road. Road. of 10-15 percent. of heavy trucks soared 92 The city’s roads are becoming increasingly congested percent last year. due to the reduction in car prices and the govern- Beijing and Shanghai Promote Auto output in the Asia- ment’s ecouragement of its citizens to buy cars to Natural Gas-Powered Vehicles Pacifi c region surpassed that stimulate the conomy. China Environmental Review April 2002 Vol: 4 Issue: 13 As part of Beijing`s Environmental Strategy for the 2008 Olympics, Beijing is ‘Road Warriors’ continued for a while I feel something’s missing.” planning to promote the use of natural gas- Pan Shiyi of Redstone International, powered vehicles. Over the last few years, such as car washes, parts and repair shops, one of Beijing’s top real-estate develop- Beijing reportedly has retrofi tted roughly and even fast food. ers, believes China’s car craze will help 30,000 public transportation vehicles and Beijing residents love the open road. prompt many affl uent city residents to taxies to accommodate natural gas fuel. The Chinese capital has no fewer than 30 move to China’s version of the suburbs. According to a plan developed by the Bei- automobile clubs. Feng Yan, a 28-year- Pan claims to dislike cities, so he and his jing municipal government, by 2008, all old marketing manager, had to buy a new wife built a weekend home. Around the public transportation vehicles and taxies Cherokee after joining the Off Roader same time, Redstone invited 11 of Asia’s operating in Beijing will use natural gas 4WD Club. His old one wasn’t up to hottest young architects to each build as fuel. This plan has already infl uenced the twice monthly rough rides. (Chinese “dream homes” in the Beijing countryside, similar programs elsewhere in China. For buyers sometimes spend half a year doing near the Great Wall. It’s the fi rst stage of a example, cities in Sichuan, Shandong, and research before purchasing their fi rst car.) planned 48-home rural enclave. “After 10 Guangdong provinces and the Shanghai Last year he bought his own four-wheel- years as a developer,” says Pan, “I found municipality have launched programs to drive vehicle. Zheng Jianjun, a 31-year-old that building in the city involves many expand the use of natural gas vehicles. ad-agency employee, is leading a group rules and regulations. But here in the of women on an off-road adventure—a mountains, we can fi nally build houses we CBU-AutoEnews 23-province, 30,000-kilometer pilgrimage like. I’m liberated!” Pan, 38, couldn’t have June 20, 2002 around China’s far-fl ung borders, from the done it all without his trusty Beijing-made Shanghai will put 500 units of CNG coast all the way to Central Asia. She says Cherokee. It gets him out of the city and buses into service in the city by the end the trip will take six months. “My whole into a more harmonious frame of mind. of next year and the number of natural life changed after I got my own car,” she And if his new development proves a hit, gas stations will be increased to 8 for this told NEWSWEEK at her send-off ceremo- say Pan, he’s got even bigger dreams. He purpose, according to a recent report in ny in early March, “Now if I don’t drive may splurge and buy a Jaguar. Xinmin Evening News.

China Clippings | June 2002 11 TRANSPORTATION TRANSPORTATION

Foreign car giants have long dreamed of ruling CAR INDUSTRY the potentially massive China market. But as sales Time for A Tune-Up fi nally take off a new brood of small, local makers is grabbing market share

David Murphy and David Lague suggest that upwardly mobile and newly Maxton. The money has been fl owing 4 July 2002 prosperous Chinese have the same power- in since the fi rst half of the 1980s when ful urge to own a car as consumers in the Volkswagen, Chrysler and Peugeot set up THE PREDICTION is fi nally coming United States, Japan and Western Europe. manufacturing joint ventures in China. true: After years of dashing the expecta- Car makers are betting the market will Since then the rest of the world’s heavy- tions of the world’s big car makers, the grow in volume and maturity and are sali- weights have paraded into the market, China market is booming. Passenger-car vating at the prospect of China’s economic with General Motors making the largest sales jumped 18% last year and are up boom continuing apace until 70% of all single investment of $750 million for its 37% in the fi rst fi ve months of this year. In sales are passenger cars, as in developed share of a 50-50 joint venture in Shanghai. a depressed and highly competitive global Western markets. In all, 10 foreign car makers have car market, that’s welcome news for the Short-term estimates of market entered joint ventures and are now com- world’s leading car makers, all of which growth are alluring. Analysts expect pas- peting for market share. And they continue have invested heavily to build a manufac- senger-car sales to reach 2 million units by to lay investment plans. “GM is intent on turing presence in China since they fi rst the end of the decade. In a new variation continually introducing new products and started arriving in the 1980s. of an old dream, industry executives now quality services that meet the growing But the long-awaited upswing in gush about the prospect that some day one needs of the China market,” said Philip market fortunes isn’t panning out exactly in two of China’s 1.3 billion people could Murtaugh, chairman and CEO of the GM as planned. New Chinese companies are own a car, just like Americans or Ger- China Group, in a recent statement. Mei emerging in key growth areas and are mans. For now, only one in 100 Chinese Wei Cheng, chairman and chief executive carving out market share in the economy- has a car. of Ford Motor (China), expects Chinese to car segment. Instead of dominating “the For foreign car executives China buy 5 million cars annually by 2010. world’s largest potential market,” foreign has always been a strategic investment. But even the most optimistic predic- car executives face intense competition It is the market potential, not the market tions of market growth hardly warrant on three fronts in China. As demand rises, reality,that is used to justify the big bets. the attention car makers are lavishing on they are battling for market share with “Making a Commitment Today for a China, says Maxton. Even if sales reach their international peers, their large state- Better Tomorrow” was the theme of the 2 million units a year by 2010--the best owned partners and a rash of small but General Motors exhibition at this month’s guess of most companies including Gener- aggressive new car makers, some of which Beijing motor show. After all, the China al Motors--China would still only account are keen to partner with foreign players market is still signifi cantly smaller than, for 2% of today’s global new-car market. while others are determined to make it on say, Spain, where 1.4 million cars were “That makes it the fastest growing market their own. sold last year. in the world but the extent of the opportu- But that hasn’t dampened foreign nity is really pretty small in global terms. “The number of entrants is so great executives’ spirits. “China today is our No. It is going to be a very tough market,” he that it’s diffi cult to see where the profi ts 1 geographic priority in terms of market says. In the U.S. more than 17 million new could accrue,” says Joe Studwell, author development,” Nissan Chief Executive cars are sold each year. Given the large of China Dream, an analysis of foreign Offi cer Carlos Ghosn said in a keynote number of domestic and foreign makers investment in China. address at the Beijing motor show on June competing in China the potential rewards Still, the market is growing. Passen- 5. Nissan is part of a wave of Japanese car are quite small, contrary to manufacturers’ ger-vehicle sales topped 720,000 units in investment in China that began with the public statements. 2001 and are expected to reach 900,000 launch of Honda production in Guangzhou Foreign car makers built their China this year, according to Automotive in 1999 and has been gathering pace. Nis- investments on two strategic pillars: joint- Resources Asia, a consultancy. Much of san is currently negotiating with Dongfeng venture partnerships with state-owned car that healthy growth was spurred by deep Motor Co., one of China’s big-three car makers and products aimed at fl eet sales to price cuts introduced in the wake of tariff makers, to begin production of passenger state companies and government affi liates. reductions related to China’s entry into the cars in Hubei province. Honda and Toyota Now those pillars are starting to World Trade Organization and increased are aggressively expanding their existing crumble. Private buyers are playing an consumer pressure for lower prices. capacity. increasingly important role in the market. Adding to the excitement among Major foreign car makers have Estimates suggest that between 25% and industry analysts is the fact that sales of pumped well over $5 billion into joint 30% of all cars sold in China now go to passenger cars account for only a quarter ventures and are eagerly transferring private buyers, up from almost none a of total vehicle sales in China, way short technology, design know-how and market- decade ago. But Yale Zhang of Automo- of the proportion sold in Western mar- ing skills to their Chinese partners, says tive ‘Resources Asia says a true fi gure is kets. This is at a time when all indications Singapore-based industry analyst Graeme almost impossible to calculate because

12 June 2002 | CChinahina CClippingslippings TRANSPORTATION TRANSPORTATION

Tune-Up’ continued to a handful of large companies, most another generation, it is certainly conceiv- many privately purchased vehicles are also of which were already in joint ventures able that one of the big manufacturers used for commercial purposes. with foreigners. But the rise of Geely could be Chinese,” says Maxton. What is clear is that many private and Chery is instructive. Both companies Unfortunately, China lacked the tech- buyers are opting for lower-end cars. That ignored Beijing’s restrictions on new car nology and know-how to build a competi- is a real challenge for big foreign makers ventures and with protection from their tive industry from scratch. That’s where that remain wedded to their state-owned provincial governments went into produc- the foreigners came in. Now sceptics point partners and the production of mainly tion without an offi cial licence. Once they out that rather than foreign companies high-end vehicles. The central government were employing people and selling cars establishing a foothold, it is their domestic has control over the kind of assembly the central government had no option but joint-venture partners that are growing in platforms car makers use and has for years to formally approve them, though Chery power. blocked foreign makers’ efforts to enter was forced to let domestic giant Shanghai When pointing out success stories in the small-car market. It is only recently, Industrial Automotive Corporation take a China’s car industry, most analysts tend to through some complicated tie-ups, that 20% stake in the company. concentrate on the strides Volkswagen has foreign players have been able to take a Maxton and other analysts say foreign made to grab about 50% of the passenger- stake in the low end of the market. car makers, blinded by steep sales-projec- vehicle market since it began local manu- Entering that new market means tak- tion graphs, have failed to make a proper facturing in 1985 while carefully guarding ing on a growing band of small, Chinese strategic analysis of the market and the its technology. “It’s the one clear winner in car makers that are posting strong sales intentions of China’s economic planners. this business,” says Studwell. with less-expensive vehicles. These new But General Motors believes that China However, its joint-venture partner, companies cannot match the global play- will be the third-biggest car market in the Shanghai Automotive Industry Group, has ers in terms of experience, capital or tech- world by 2025 and is betting on a corpo- since added a big joint venture with Gen- nical resources and many may be forced to rate bloodbath in the meantime that will eral Motors to its portfolio. That puts it seek alliances with foreign multinationals result in domination by two or three com- in an extremely powerful position to play eventually. They can produce cars cheaply panies. Then, says Daphne Zhang, director the two giants off against each other. New because they spend virtually nothing on of communications for GM China, “we models and the latest technology are now research and design. One of the most want to be one of the top players.” fl owing into the joint ventures. popular of the new brands, the Chery, Recent manufacturing history in Ja- Geely, Chery and other upstart makers looks remarkably like the best selling pan and South Korea demonstrates that car show that fast-moving new players are brand in the country, the VW Jetta. “They industries are vital for developing econo- also able to take advantage of technol- defi nitely mean more competition in the mies with ambition. ogy transfers. “The Chinese are playing a market,” says Kenneth Hsu, a spokesman In advanced economies, car produc- very clever game and they will win every for Ford Motor (China). tion, sales, fi nancing, maintenance and hand,” says Maxton. “The plan is all laid The Chery, which is produced in ancillary transport services can account out. They will leach technology from their Anhui province, is the top seller among for up to 10% of total economic activity. A partners and then they will compete with the new brands so far this year. Chery sold healthy car industry also assures plenty of them.” 18,500 cars in the fi rst fi ve months of the orders for other pillars of a strong devel- Indeed, some analysts express sur- year, up 220% on the same period last oped economy including steel, plastics, prise at the apparent belief among foreign year. Geely, a Zhejiang-based company glass and rubber industries. That is why players that the Chinese would allow them that was founded in 1998, is also rising a world-class car industry is a key plank to become major players in such a key in- fast. It sold 30,000 cars last year. Ding of China’s economic plans. In June 2000 dustry when Japan and South Korea made Shaohua, a company spokesman, says the State Economic and Trade Commis- it a national priority to ensure domestic car Geely aims to sell 50,000 cars this year, an sion unveiled a plan to fundamentally makers became dominant. ambition that’s fed by the company’s abil- restructure 13 industries including the car In recognition of the problems loom- ity to attract qualifi ed engineers and line industry. In a new version of an old plan, ing for foreign companies, Paul Gao, a workers from the big established players. the government now wants to push most Shanghai-based associate principal at He says the company needs to work on of China’s 120-odd car companies towards McKinsey & Co., advises foreign car mak- improving its network of service and sales mergers with the three big domestic car ers to contract out component making and outlets but reckons that companies like his companies. assembly of vehicles to local fi rms. “could hold 30% of the domestic market China, along with India, is one of the That way, foreigners could concen- fi ve years from now,” up from just under few developing nations with a realistic trate on developing products and brands. 10% currently. prospect of developing a car industry to Gao notes that Volkswagen, Honda and In the 1990s Beijing said it wanted to rival the established international players GM report that their car making has been merge or shut down almost all of China’s because of the economies of scale aris- profi table to date. “How long can that small domestic makers, leaving the market ing from such a big domestic market. “In profi t continue is the question,” he says.

China Clippings | June 2002 13 AIR QUALITY AIR QUALITY

Urban Air Pollution: A Great Leap Forward Poor cities can afford clean air, and cannot afford dirty air 9 May 2002 fore, that the city government of Taiyuan, therefore something real to trade. which is located in what is, offi cially at “WE WANT to turn Taiyuan into a The rewards of virtue least, still a communist country, should be civilised place!” So proclaims Yuan Gao- Until recently, conventional thinking looking to the market to solve its pollution suo, deputy mayor of this grimy industrial has held that poor cities such as Taiyuan problem. But that is exactly what it is do- city in the north-east of China. At fi rst cannot afford rich-world environmental ing: it proposes to use emissions trading in blush, this seems an odd aspiration. After standards: greenery, according to this an attempt to achieve a 50% reduction in all, Taiyuan and the neighbouring bits of theory, is a luxury good that comes only sulphur-dioxide output within fi ve years. Shanxi province are one of the earliest with wealth. Over the past few years, In April, local and provincial offi cials centres of Chinese civilisation. Archi- though, economists have realised that, be- struck a deal with the Asian Development tectural treasures, such as the Shuanglin sides being bad for individuals, pollution Bank (ADB) to develop such an emis- Si monastery and the Jinci Si temple, is bad for the economy. In a report that sions-trading system. Permits to pollute abound. Wutai Shan, one of Buddhism’s proved infl uential in converting China’s will be issued to the worst offenders. most sacred sites, draws visitors from all leaders to the virtues of pollution control, Those permits will be tradable, so that a over the world. the World Bank has estimated that in the polluter will be able either to retain the Whatever its other defi ciencies, civili- late 1990s China lost between 3.5% and right to release his own sulphur dioxide, or sation ought thus to be the one thing that 7.7% of its potential economic output as restrain his own pollution and sell the right Taiyuan does not lack. Mr Yuan disagrees. a result of the health effects of pollution to somebody else. By reducing the total When air pollution levels in China’s 47 on the country’s workforce. Similarly, biggest cities were measured in 1999 Louisa and Mario Molina, who work at and 2000, Taiyuan came last. “Without the Massachusetts Institute of Technol- clean air, we simply cannot consider ogy, argue that Mexico city could see our city civilised,” he says. In fact, with benefi ts of perhaps $2 billion a year, if pollution at nearly nine times the level offi cials reduced the concentrations of deemed safe, Taiyuan probably had the particulate matter in the air by just 10%. fi lthiest air in the world. Uncivilised, Once the true costs of air pollution indeed. are recognised, argues Piya Abeygu- That embarrassing report (which nawardena of the ADB, the case for merely confi rmed what local people action becomes clear. He accepts that knew all along) has at least wrought today’s new megacities have a more some good. It has spurred the city’s of- challenging task in tackling pollution fi cials to start tackling the soot, smoke A couple walks toward the haze of a polluted, than London or Los Angeles did, since and sulphur dioxide spewing from gray Beijing. Indoor chemical, physical and bio- they are both bigger and poorer. But Taiyuan’s many coal-fi red hearths and logical pollution has been increasing in China in he points to several factors that make industrial boilers. Their motive is the the past few years. the task easier, too. One is better sci- same as the one driving clean-air legisla- ence. Another is hindsight: studies of tion in other industrialising cities, such permitted tonnage of gas each year, overall past policies elsewhere can point to what as London and Los Angeles, in the past. pollution levels can be reduced in the most works and what does not. And there is also Their methods, though, are intriguingly economically effi cient manner. more institutional support and money from different. Taiyuan will not be the fi rst Chinese outfi ts such as his bank. city to experiment with sulphur-dioxide Such outside support may not, Let the market decide trading. Nantong has already carried however, be needed forever, for there are Both London and Los Angeles out a preliminary trial with the help of growing environmental movements—such adopted classic command-and-control Environmental Defence, an American as the Grupo de Cien in Mexico city and measures to deal with their problems. In lobby group. But Richard Morgenstern, Friends of Nature in Beijing—in many Britain, burning coal was banned in cities. of Resources for the Future (RFF), a developing countries. In Delhi, noisy California did not go so far as to ban cars. think-tank (also American) that is advis- activism by an organisation called the That would probably have caused riots ing Taiyuan’s government, thinks that Centre for Science and Environment led to on the streets (assuming Angelenos could such trading is particularly suitable for the a recent Supreme Court ruling that forced remember how to walk on them). But the city. First, its problem is concentrated: a recalcitrant government offi cials to scrap regulations imposed on car design were small number of large polluters (about two dirty old diesel buses in favour of cleaner every bit as intrusive and prescriptive dozen) emit half the gas. Second, those ones that run on compressed natural gas. as anything dreamed up by a Comecon fi rms face hugely divergent clean-up costs. Effective pollution control certainly needs government. According to RFF, these range from $60 to grand plans. But civilisation also needs a It is something of an irony, there- $1,200 per tonne of gas emitted. There is myriad nitty-gritty decisions.

14 June 2002 | CChinahina CClippingslippings AIR QUALITY AIR QUALITY

China Is Passing Pollution to a New Generation

Henry Chu suggests that such problems are on the rise poor nations. In the late 1970s, nearly 90% 19 June 2002 among Chinese youth, although there are of American children had elevated lead no hard data yet. Extremely severe cases levels in their blood. That has dropped to SHENZHEN, China -- Paying for the of lead poisoning can result in convul- less than 5% in the last decade, accord- environmental sins of their parents’ gen- sions, coma or death. ing to the Centers for Disease Control and eration, nearly two-thirds of the children Children are particularly susceptible Prevention. The dramatic reduction in the in this southern Chinese boomtown suffer to lead poisoning because of their height: U.S. was attributed in large part to the from lead poisoning, a recent study has Lead is more heavily concentrated in the switch to unleaded gasoline. shown. air near the ground. They also breathe in In China’s rapidly developing cities, The survey of more than 11,000 local high amounts of car exhaust. And they are exhaust fumes remain one of the biggest schoolchildren--one of the largest of its more likely to put objects tainted with lead sources of lead in the air. The country has kind in China--adds to the mounting evi- in their mouths. been phasing in unleaded gas over the dence of the toll that pollution is taking on “It’s easy for it to accumulate and de- past fi ve years, but in spotty fashion: In the world’s most populous country, even velop into lead poisoning,” said Wu Yulin, Beijing, 30% of the gas used is estimated as offi cials in Shenzhen spend millions of one of the directors of the Shenzhen study. to fall short of the government’s environ- dollars promoting the city as an environ- “And because it’s a slow process, it’s hard mental standards. mental model. for people to detect right away.” Shenzhen is home to more than half a After 20 years of breakneck develop- The cumulative effect was apparent in million automobiles, up from practically ment, China has become a land of major Wu’s study, which showed that the older zero two decades ago. Anointed by the late ecological damage, a nation where mil- the children, who ranged in age from 3 to leader Deng Xiaoping as one of China’s lions of residents gasp for breath, where 15, the more lead in their bodies. “special economic zones,” Shenzhen has rivers fl ow with harmful chemicals and The results of his survey follow simi- exploded from a sleepy fi shing village of where green spaces are shrinking at an larly grim fi ndings in recent years in cities 30,000 people into a bustling metropolis alarming rate. Rapid industrialization and around China. of 3 million. market reforms have pulled hundreds of In Beijing, experts found excessive Its environment has suffered in the millions of Chinese out of abject poverty. lead levels in about 20% of the city’s process. But they have also given rise to one of the youngsters last year. An earlier study in Power plants and textile factories in most polluted nations in the history of the Taiyuan, the gritty, industrial capital of some parts of the city sully the air, belch- planet. central Shanxi province, uncovered a lead- ing out toxic fumes from their smoke- The long-term effects of such pol- poisoning rate of 64%. stacks. Sewage, dyes and other chemicals lution are now coming into focus. The And in Guangzhou, one of Shenzhen’s get dumped directly into the Pearl River study in Shenzhen demonstrates how the fellow cities in Guangdong province-- estuary. nation’s children are often most at risk and China’s richest, most developed region--a Yet at the same time, China nomi- how the negative consequences of dirty survey two years ago indicated that up to nated Shenzhen this year to the U.N. air and water extend beyond the present 83% of youngsters were suffering from Environmental Program’s Global 500 Roll generation to the next. excessive lead. of Honor, a showcase of the world’s 500 From October to December last year, Extrapolating from various studies, most environmentally progressive cities. researchers with the Shenzhen branch of experts estimate that lead poisoning could It was accepted. The UNEP said that the Chinese Medical Assn. conducted lead affl ict half of all urban Chinese youth, the Shenzhen had made great strides in clean- tests on 11,348 local children. offi cial Life Times newspaper reported ing up its act; it congratulated the city They discovered that 65% of the Friday. government on vetoing 3,619 projects that youngsters had concentrations of lead Alarmed by the gathering weight of failed to meet environmental requirements in their systems that exceeded the level evidence, the Chinese government is em- and on investing $461 million in protec- considered safe by the World Health Orga- barking on an investigation of 8 million to tion measures. nization. 10 million children nationwide to deter- Zhang Xiaobin, publicity director of Left unchecked, lead poisoning can mine the extent of the problem. the Shenzhen Environmental Protection damage a person’s nervous and reproduc- “The government needs to stress ... Bureau, acknowledged that his city is not tive systems, and cause anemia and high prevention of lead poisoning as soon as perfect. But he insisted that Shenzhen had blood pressure. possible,” Wu said. distinguished itself as a model for others. In children, the effects can be worse, The World Bank has identifi ed lead “When you judge the environment of including irreversible brain damage, poisoning as the No. 1 environmental a place,” he said, “you should look at the mental retardation, behavioral problems disease among children in the developing overall situation.” and stunted growth. Anecdotal evidence world. But the problem isn’t confi ned to

China Clippings | June 2002 15 AIR QUALITY AIR QUALITY

Asia’s Wind-Borne Pollution a Hazardous Export to U.S. Dust, Chemicals Travel a Long Way ‘We’re a small world,’ one scientist says.

Gary Polkavic is Asian, far more than we ever dreamed,” What they do know is that deserts in 26 April 2002 said Tom Cahill, professor of atmospheric China and Mongolia are a major source of science and physics at UC Davis. “We’re pollution. Wind storms rake the Taklimak- Wind-borne pollution from China a small world. We’re all breathing each an and Gobi deserts, where soil erosion is and neighboring countries is spreading to other’s effl uent.” increasing, whipping towering clouds of California and other parts of the nation The amount of pollution reaching dust miles into the air. High-speed winds and Canada as a result of surging eco- North America from Asia does not equal whisk them along at up to 1,500 miles per nomic activity and destructive farming that produced by the United States. But day. practices half a world away, according to the impact of foreign- born pollution is “Once the pollution gets on that con- new scientifi c studies. becoming more widely visible. veyor belt, it often doesn’t run into clouds The research shows that a mix of pol- The imported haze has recently been or weather systems and doesn’t mix or fall lutants, from dust to ozone to toxic chemi- spotted at ski resorts from Lake Tahoe out of the air, so you have largely undilut- cals, travels farther than once realized. to Aspen, Colo., and above Los Angeles ed pollution arriving in North America,” Federal air quality offi cials fear that and Vancouver, Canada. At its worst, said Rudolf Husar, director of the Center the foreign-born pollution will complicate it can cast a faint, yellow hue across a for Air Pollution Impact and Trend Analy- efforts to cut smog and haze, and make it 1,200- mile front from Arizona to Calgary, sis at Washington University in St. Louis. more diffi cult to meet federal air quality Canada, and beyond before it peters out A process called desertifi cation has standards in California and other parts of somewhere over Greenland, studies show. intensifi ed in China, home to about 100 the West. “We may need to be more engaged million peasant farms. As a result of Although most of the pollutants are in countries in Asia in helping them clean drought, forest- clearing, overgrazing and similar to ones already found in North up their industries and reduce pollution intensive cultivation, huge tracts have America, they do add to health concerns to protect the health of Americans,” said been stripped of the vegetation that held by slightly increasing year-round concen- John Beale, deputy assistant administra- the soil in place. trations of gases and tiny particles in the tor for air programs at the Environmental Desertifi cation affects one of every air, according to the U.S. Environmental Protection Agency. four acres in China today, Cahill said. Protection Agency. This week, scientists are launching a Numerous studies have linked mi- During peak winds, however, dust major new research project to better un- croscopic airborne particles with a host of and smoke levels can approach or exceed derstand the problem. Based in Monterey, health problems, including heart attacks, health-based standards. Federal scientists, dozens of scientists plan to track pollut- respiratory failure, asthma and premature too, are beginning to probe the dust for ants reaching the West Coast. They have death. The smallest particles are too tiny to bacteria and viruses that may be attached. installed wind and pollution sensors at be fi ltered by the body and penetrate deep The made-in-China label on haze over coastal outposts from Goleta and Trinidad into the lungs. North America is partly due to increased in California to the Olympic Peninsula in Mixed with all the dust is another productivity of consumer goods ranging Washington. menace: Toxic and industrial pollutants from patio furniture to CDs to toys. But it They will compare data with research- from farms, factories and power plants. also is a result of deforestation, over-graz- ers in Japan, and study satellite images China’s coal- burning power plants and ing and intensive cultivation of fragile from space and data from lasers aboard an factories emit roughly 40 million tons soils. airplane fl ying between Seattle and Los per year of sulfur oxides, the most in the Researchers at universities on both Angeles. world and double the U.S. emissions of sides of the Pacifi c have been tracking Called the Intercontinental Trans- that pollutant. “We’re not breathing just the haze for a number of years along its port and Chemical Transformation 2002 dust, but dust and whatever else has been 6,000-mile journey, using satellites and Project, the research effort will collect and deposited on it, like hundreds of com- aircraft, land-based sensors and computer analyze air pollution samples through late pounds from man-made pollution,” said models. May. David Parrish, atmospheric chemist for In one severe dust storm in spring What researchers don’t fully under- the National Oceanic and Atmospheric 1998, particle pollution levels in Oregon, stand yet is just how much pollution drifts Administration. Washington and British Columbia soared. across the Pacifi c, its exact chemical com- About one-third of all the mercury--a In Seattle, air quality offi cials could not position, how it changes once it reaches toxic metal--released in the United States identify a local source of the pollution, but North America and how it affects the comes from fossil-fuel burning in Asia, measurements showed that 75% of it came environment. They also want to know how said Daniel Jacob, professor of atmospher- from China, researchers at the University much air pollution comes from thousands ic chemistry at Harvard University. of Washington found. of cargo ships plying the Pacifi c to service Mercury is found in some coal deposits “A larger fraction of the haze we see the global economy. and is released into the air primarily by

16 June 2002 | CChinahina CClippingslippings AIR QUALITY AIR QUALITY

Green Groups Want Bolder Plans to Clear China’s Air

Tan Ee Lyn Reuters NOT GOOD ENOUGH ‘Hazardous Export’ continued 1 May 2002 But the agreed limits are too vague and would not work unless governments power plants. HONG KONG - Environmentalists on both sides enforced them, said Alex Also, pesticides that have been yesterday criticised plans by Hong Kong Chung, research coordinator for Friends of banned in the United States are part of the and the Chinese province of Guangdong to the Earth. fallout from dust blowing off farmland reduce worsening cross-border smog, say- “We want the government to ac- in China, said Dan Jaffe, atmospheric ing they were not bold nor radical enough tively order various industries to set strict chemist at the University of Washington. to clear the air. emission limits, so there would be better Among the pesticides detected are DDT, “If we do not have emission caps that monitoring and control,” Chung said. toxaphene and dieldrin, he said. are binding on both sides, we will end up “What we want to see is how good “In the United States, many of these with nothing,” said Mei Ng of Friends of our air quality will be and what will be pollutants are decreasing, yet in these the Earth, which wants the governments to permissible by 2010, but not how much countries, the pollution is increasing,” commit to more renewable energy sources (each pollutant) will be reduced by,” Ng Jaffe said. like wind and solar power. added. Spring is when most of the pollution Hong Kong and Guangdong, China’s “A change of energy mix (by just blows across the Pacifi c. For example, af- fastest growing province, unveiled aggres- swapping) fossil fuel is simply not ter the 1998 dust storm, particle pollution sive targets on Monday to cut growing air enough. It simply is not a genuine solution levels across much of the interior West pollution by 2010. to our air pollution problem.” tripled. An additional 20 to 50 micrograms But they gave few concrete details on Annie Ho, spokeswoman for green of particles were detected in valleys along what action they will take, or when. Some group Clear The Air, said governments the West Coast--equivalent to one-third to critics questioned whether the govern- on both sides of the border needed to pass three-quarters of the allowable particulate ments have the political will to take on tougher laws punishing polluters. matter under EPA pollution standards. entrenched business interests. Up to 40 million people live in the Ozone also has been tracked moving Vast areas of southern China are Pearl River Delta, including about seven across the North Pacifi c. In one instance, now shrouded in smog many days of the million in Hong Kong, the former British concentrations at Cheeka Peak on the year after decades of booming economic colony which returned to Chinese rule in Olympic Peninsula in Washington reached growth, choking cities and spooking 1997. 70 parts per billion, 60% of the U.S. one- foreign investors. Hong Kong’s famous The Asian Development Bank warned hour ozone standard, Jaffe said. Victoria Harbour and skyline is often ob- in 2000 that worsening air pollution Ozone, a gaseous pollutant formed scured by haze and respiratory complaints in Hong Kong posed health risks and chemically in the air as emissions from are common. hampered the territory’s efforts to become smokestacks, tailpipes and cleaning sol- In a joint study, the governments a regional high-tech hub able to attract vents react with sunlight, is the common blamed the pollution on the ever-ris- foreign talent. ingredient in smog, and highly destructive ing numbers of cars, power stations and In Hong Kong, visibility is sometimes to lung tissue. factories. as low as two km (1.3 miles) and authori- Most of the year, however, pollution It recommended Hong Kong and ties regularly issue advisories for those from Asia is less severe. Winds wane in Guangdong switch to less-polluting fuels with health problems to stay indoors. summer and the smog-conveyor belt slows for power generation, while Guangdong In 1999, US$462 million was spent down. Still, a steady trickle of pollutants should study the use of alternative energy in Hong Kong on treatment of respiratory reaches North America throughout the sources such as hydroelectricity, wind, ailments, most of which were aggravated year, adding 5 to 15 parts per billion of solar and geothermal. by air pollution, according to medical ozone, Jacob said. It also said Guangdong should tighten sources. Scientists are unsure how the pollu- the quality of gasoline and diesel fuel and Hong Kong fell to a distant sixth tion affects the marine environment. Dust vehicle inspections. place - its lowest in recent years - in a re- can benefi t marine ecosystems as minerals Both governments agreed to cut emis- cent business survey on the cities offering falling on water enhance plankton. But sions of sulphur dioxide by 40 percent the best quality of life in Asia, while rival dust blowing over the North Pacifi c some- from current levels by 2010, nitrogen Singapore topped the list for the second times blocks about one-third of the sun- oxides by 20 percent, respirable suspended year running. light reaching the ocean, reducing energy particulates by 55 percent and volatile Respondents to the survey, by the available for biological productivity.”We organic compounds by 55 percent. Political and Economic Risk Consultancy, know it [haze] can affect the weather in Without additional control measures, criticised the territory for its pollution the North Pacifi c by cooling the air, but we emissions of those pollutants will grow by problems and expensive housing. are trying to fi gure out what it means for 36 to 75 percent in the region by 2015, the climate and plankton,” Cahill said. study said.

China Clippings | June 2002 17 AIR QUALITY AIR QUALITY

Beijing Aims to Breathe Easier: Japanese-U.S. Team Studying Air Pollution Campaign Aims to Reduce Suspended Particles, contaminants’ discharge The Yomiuri Shimbun/Daily Yomiuri 22 April 2002 Liu Li and Xin Dingding With four sewage treatment plants 2 April 2002 currently in operation, the capital is able to By comparing the data from Japan-lo- treat 1.28 million cubic metres of sewage cated on the windward side of. Beijing on Monday launched a nine- per day, or 42 per cent of waste water. The National Space Development month campaign to rid the city of air In addition to this progress, the Agency of Japan, Tokyo University and pollution. municipal government plans to invest the U.S. National Oceanic and Atmospher- The main tasks include bringing 793 million yuan (US$95.5 million) this ic Administration embarked Sunday on a suspended particles under control and year to carry out seven sewage treatment joint investigation to learn how air con- reducing discharge of contaminants by projects. taminants, including nitrogen oxide from a big margin, according to sources from According to sources from Beijing China-which is believed to be the cause of the Municipal Bureau of Environmental Drainage Group Co Ltd, these projects of acid rain in Japan-are spreading. Protection. include building four sewage treatment NASDA and Tokyo University sent It is expected that 55 per cent of days plants and three sewage conveyance proj- up a plane Sunday from Nagoya airport to this year will reach Grade-2 on the air ects that guide sewage to treatment plants. obtain pollutants and analyze them. The pollution index or better than the standard, “By the end of this year, the city will plane will conduct aerial surveys for about fi ve percentage points higher than last be able to treat at least 45 per cent of the a month. year. total waste water, an increase of 3 per The amount of air contaminants com- By the end of October, Beijing should cent,” said Xuan Yongli, spokesman for ing from factories in China and other East have fi nished renovations on 1,500 coal the company. Asian nations have been increasing in pace fi red boilers to reduce an estimated 24,000 Qinghe sewage treatment plant, with with their rapid economic development. tons of pollutants. a designed capacity of treating 200,000 Such pollutants are said to be diffused Meanwhile, natural gas and electricity cubic metres of waste water per day, is by temperate westerlies, to the detriment is to be installed on a greater level. expected to be completed in October and of the environment and peoples of Japan Regarding the problem of exhaust will be put into trial operation then, he and the United States. But to date, no con- emissions from cars, various measures are said. crete data have been collected to support to be adopted, offi cials with the bureau As a supplement to the Qinghe plant, this assumption. said. 25-kilometre-long pipelines will also be In the joint investigation, both Motor vehicles used for over 10 years completed to collect waste water from the countries will use equipment mounted on and taxis of more than fi ve years old are to Qinghe River and nearby areas for treat- planes to detect the presence of gases such be examined by the environmental protec- ment, he said. as nitrogen oxides and ozone, which are tion and communications management This year, there are three other sew- greenhouse-effect gases. temperate wester- departments. age treatment plants listed in the construc- lies-and that from the United States-which Vehicles not able to reach the waste tion plan. release standard even after repair are for- is located on the downwind side-the team bidden to be used again. hopes to chart how airborne pollutants Around 40 factories from downtown migrate across the Pacifi c Ocean. areas that pollute the environment will The Japanese team is using a four- be removed this year, including coking, seater plane chartered from a private com- sintering, cement and lime plants of the pany to collect data. The plane will make Capital Iron Steel (Shougang). 10 reconnaissance fl ights over the Pacifi c By the end of June, around 4 million Ocean, covering an area from 1,200 ki- square metres of unused land in Beijing lometers off Tokyo to waters off Miyako will be transformed into a pollution-free Island, Okinawa Prefecture. zone, especially along the Chang’an Av- enue, the airport road and the second, third and fourth ring roads. A telephone line has also been set up for residents who want to voice opinions Two Chinese women, standing on a on areas that are not environmentally main street to promote a shopping friendly. centre, cover their faces with scarves to In addition, Beijing’s rivers are get- protect themselves from a sand storm in ting cleaner as the capital’s sewage treat- Beijing April 16, 2002. ment is improving. Reuters

18 June 2002 | CChinahina CClippingslippings AIR QUALITY AIR QUALITY

China’s Growing Deserts Are Suffocating Korea

Howard W. French predictions of the intensity of the dust to dusty spring in Tokyo, for example, and 14 April 2002 our weather reports.’’ fi ngerlike plumes of the airborne sand now In Seoul, a measurement of 70 mi- travel 7,000 miles aboard the jet stream SEOUL, South Korea, April 12 -- crograms of dust per cubic meter of air is reaching Portland, Ore., and San Francisco, School was called off throughout much of considered normal during most of the year. where the main effect so far has been to cre- this sprawling city last Monday because of At 1,000 micrograms, experts say, serious ate breathtaking sunsets. inclement weather. health warnings are indicated. Earlier this ‘’There is no smoking gun yet that It was not a freak spring snow storm, week, in the fourth storm of the season, a proves that man is causing this,’’ said a heat wave or torrential rains. record measurement of 2,070 micrograms Charles S. Zender, a professor of earth Rather, it was an immense cloud of was reached in this city. Mr. Kim said two system science at the University of Califor- dust that blew in from China’s fast-spread- or three more storms could hit Korea this nia at Irvine, ‘’but rather lots of anecdotal ing deserts, about 750 miles away. month. evidence.’’ It hid Seoul from view throughout Scientists say the dust storms, which ‘’The puzzle of Asian dust is a huge the morning, obscuring the sunrise just are distinctly visible on regional satellite question in weather science right now,’’ he as surely as the heaviest of fogs. Clinics weather maps as gigantic yellow blobs, said, ‘’and if human activity is proven to be overfl owed with patients complaining are the result of the rapid desertifi cation in the cause, it stands to reason that this prob- of breathing problems, drugstores expe- China and a prolonged drought affecting lem is going to keep getting worse.’’ rienced a run on cough medicines and that country and other parts of Northeast As a mood of resignation has set in face masks that supposedly fi lter the air, Asia. over the persistence of this phenomenon, and parks and outdoor malls were nearly The term yellow dust refers to the Koreans have already begun to focus on the empty of pedestrians. color of the sand when it coats parked economic costs. What was only recently re- With the arrival of the huge dust cars and windows rather than the color of garded here as a minor nuisance is now seen storms for the third consecutive year, Ko- the skies, which all this last week were a as posing a serious threat in areas as diverse reans have begun to grimly resign them- thick, acrid gray. as public health, travel, retail shopping and selves to the addition of an unwelcome According to China’s Environmen- even high-tech manufacturing. fi fth season -- already dubbed the season tal Protection Agency, the Gobi grew by This last week, for example, in addition of yellow dust -- to the usual four seasons 20,000 square miles from 1994 to 1999, to the school closures, scores of domestic that any temperate country knows. and its steadily advancing edge now sits fl ights have been canceled because of poor Like the harmattan in West Africa, a mere 150 miles north of Beijing. As in visibility. Workplace absenteeism has risen, when skies throughout that region turn a West Africa, which weather experts say is too, and retail sales have dipped, as a result soupy gray for weeks at a time because of the world’s leading source of dust, China’s of people staying indoors. seasonal wind patterns that bring airborne environmental changes are accelerating ‘’I’ve had a little bit of a cough,’’ said dust southward from the Sahara, Korea’s because of overfarming, overgrazing and Choi Byoung Su, 30, a businessman who new season is a disturbing reminder for the widespread destruction of forests. was at a downtown pharmacy stocking up Asians of global interconnectedness and But unlike West Africa’s dust, which on medicine for a sore throat, which he said the perils of environmental degradation. is carried to the southern United States was caused by the dust storms. ‘’I’m not too ‘’There is no way for us to deter this,’’ by winds known as the tropical easter- concerned about my health for now, but it is said Kim Seung Bae, deputy director of lies, dust from the Gobi and Taklimakan really a hassle for my car,’’ he said, explain- South Korea’s national weather service. deserts in rapidly industrializing China is ing that he needed to have it washed at least ‘’All we can do is try to forecast the yel- binding with toxic industrial pollutants, once a day now. low dust storms as early as possible, but including arsenic, cadmium and lead, Even South Korea’s major industries with the current technology we can only increasing the health threat. are suddenly complaining about the worsen- detect it one day ahead of time at best. For Changes like these have long made ing effects of the storms. Semiconductor now, our main innovation will be to add springtime synonymous with respiratory manufacturers, for example, which are high- distress in Beijing. ly sensitive to contaminants, have reportedly But as the dust storms have had to change their sophisticated air fi lters grown, their impact has been spread- much more frequently and require workers ing rapidly eastward, blighting the to take longer showers before beginning air over the Korean peninsula and assembly work. Workers are also being beyond. discouraged from entering and exiting the This has been an unusually factories any more than is strictly necessary. Hyundai Motor, meanwhile, a major A Chinese Mongolian woman automobile manufacturer, has reportedly carries water to her home during begun to wax its cars differently and shrink a sand storm at the village of Li- wrap them in plastic sheeting before export ang Mianjing in Inner Mongolia, to protect them from the dust. April 13, 2002. Reuters China Clippings | June 2002 19 GENERAL GENERAL

CHINA: China is mounting a determined effort to The Quest for safeguard the energy supplies that are vital to its Energy to Grow development. It won’t be easy, with demand for oil now outstripping stagnant domestic output

David Lague 20 June 2002

IT WAS NEVER MEANT to be ing Japan and Taiwan, particularly if the lion tonnes of oil China imported last year, this way. More than two decades into United States decides at some time in the according to Chinese trade fi gures, about China’s dizzying economic boom and a future to wind back its security presence. 60% followed this route. steady stream of giant oil tankers riding They point out that it was insecurity over Apart from the political uncertainty of low in the water sails thousands of miles energy and rubber that drove Japan to relying on the troubled Middle East, what from terminals in the Middle East to the invade energy-rich Southeast Asia in 1941, China most fears is the might of the U.S. mainland’s booming coastal ports. triggering a disastrous confl ict with Britain Navy. Mindful that Washington has been Despite a long-standing determination and the U.S. prepared to enforce economic sanctions to be energy self-suffi cient, demand for oil Kent Calder, a Japan specialist at against defi ant states, Beijing knows that in China is accelerating far beyond domes- Princeton University in the U.S., is prob- without a blue-water navy it would be tic output, and increasingly it is Middle ably the leading voice warning of the unable to counter a U.S. move to interrupt East suppliers, including Iran, Oman, potential dangers of energy competition its energy supplies in the event of a serious Yemen and Saudi Arabia, that make up the among increasingly heavily armed East dispute or confl ict. difference. Asian states. “The United States is currently the For industry analysts, this is one To others, it is more likely that most powerful country in the world and is key reason why Beijing, in preparing to China’s emergence as a major economic perceived by many in China as uncomfort- negotiate its fi rst big offshore energy deal, and trading power will lead to greater inte- able with China’s rising power,” says a on April 21 invited bids from Indonesia gration and cooperation. In the same way recent study by the U.S.-based Rand think- and Australia, in competition with Middle that joining the World Trade Organization tank. “As a result, the Chinese government East producer Qatar, to supply liquefi ed is supposed to force China to observe in- views the United States as the primary natural gas (LNG) worth $13 billion over ternational rules and norms, the argument threat to China’s energy security.” two decades for power plants in southern goes that Beijing will fi nd it must cooper- The challenge for China’s security China’s Guangdong province. ate with energy suppliers and other major planners is that domestic demand is out- “This sends a message to the world importers including the U.S and Japan if it stripping their efforts to diversify energy that China wants to diversify its energy wants to maintain economic growth. sources and the gap is likely to widen, as- supplies away from the Middle East,” says This vulnerability is one reason why suming that Beijing can ensure continued HSBC oil-and-gas analyst Gordon Kwan some students of international relations economic growth through reforms of its from his Hong Kong offi ce. “They have believe Beijing would be reluctant to at- debt-laden banking system and ineffi cient identifi ed targets in Asia than can be stable tack Taiwan. state-owned enterprises. sources, including Australia and Indone- Some oil industry analysts also be- The U.S. Energy Information Admin- sia.” lieve that burgeoning demand from China istration, or EIA, predicts that China’s oil Cleaner-burning, if more expensive, will have the effect of increasing interna- consumption is likely to increase from LNG also has clear environmental benefi ts tional exploration and recovery of oil and 4.78 million barrels a day in 2000 to 10.5 in a country that still relies on coal for gas, therefore reducing the potential for million barrels a day by 2020. On the way, 70% of its energy needs. China’s major friction. The country currently produces China will overtake Japan as the world’s cities are choking under dense clouds of only 70% of its oil needs and is searching second-largest oil consumer behind the pollution from coal-fi red power plants. for more of the fuel and other sources of U.S. Some analysts believe that on current However, boosting energy security is now power. trends, China will need to import about a top foreign and economic priority for the Whatever the eventual outcome, in the 60% of this projected demand. That will Beijing leadership. short term it’s clear that Beijing is deeply make China a dominant player on world To pessimists, this is the early phase concerned about depending on tankers that energy markets but also vulnerable to sup- of emerging competition for energy in must cross the Indian Ocean and navigate ply disruptions or political manipulation. East Asia that has the potential to bring narrow and easily-blockaded straits around Beijing has employed a multifaceted China into confl ict with other major the Indonesian archipelago before entering strategy to minimize this exposure. The energy importers in the region, includ- East Asia’s shipping lanes. Of the 65 mil- authorities have launched a drive to boost

20 June 2002 | CChinahina CClippingslippings GENERAL GENERAL

‘Quest for Energy’ continued Asia. Beijing’s current leadership would in the oil industry press that the size of the well remember the severe energy short- order will be increased. Industry analysts domestic exploration and recovery in the ages after the 1960 Sino-Soviet split when report that in negotiations with the bid- most promising geological structures, Moscow withdrew its experts and support ders, China has been able to drive a hard particularly the Ordos Basin in northwest from China’s oil industry. bargain on price because international China. Offshore exploration is also a pri- There are also plans to build a stra- LNG capacity currently exceeds demand. ority, with most activity now concentrated tegic petroleum reserve, like other major “There is just so much gas out there in the Bohai Sea east of the northern port energy importers including Japan and the that needs to fi nd a home, so these compa- city of Tianjin. U.S., in a bid to buffer its economy against nies are highly motivated to do this deal,” “If no effective measures are taken to supply disruptions. says Hong Kong-based Salomon Smith strengthen petroleum exploration, China Shifting energy demand toward gas is Barney oil-and-gas analyst Tom Hilboldt. will become more dependent on import- another strategy to boost energy security, With bidders now awaiting a decision ing petroleum and the risks to oil supply with demand for this fuel expected to rise from Beijing, industry experts expect the will be greatly increased,” Land Resources sharply. According to the EIA publica- contract to be split between the Indonesian Minister Tian Fengshan warned at an April tion International Energy Outlook 2002, and Australian bids. To boost security and 18 energy symposium in Beijing. natural gas accounted for 23% of world income from these deals, China is also China has also invested heavily in energy use in 1999 but only 3% of China’s keen to take equity in the successful bid- foreign oilfi elds in a bid to guarantee consumption. However, demand for gas ders’ reserves. supply. The state-owned China National is expected to expand at a whopping 10% The China National Offshore Oil Petroleum Corp. has negotiated oil deals per year over the next two decades until it Corp. has also signed an agreement with in Venezuela, Peru, Iran, Iraq, Sudan, accounts for almost 10% of consumption. the Fujian authorities to build a 2 mil- Indonesia, Azerbaijan and Kazakhstan. To meet this demand, Beijing is plan- lion-tonne LNG receiving terminal in that These deals have given China control over ning an $18-billion west-to-east pipeline eastern coastal province. The facility is an estimated 2.7 billion barrels in foreign to link Tarim Basin gas deposits in Xinji- scheduled to begin operation by 2006 if oil reserves. ang province to the coastal city of Shang- the project wins approval in Beijing. The biggest of these agreements is a hai. The Anglo-Dutch oil major, Shell, While demand for oil and gas rises $4.6 billion commitment to buy 60% of signed a nonbinding agreement sharply, the future of nuclear power in Kazakh oil company Aktobemunaigaz, last year to take a 45% stake in the China is unclear. There is a substantial with undertakings to assist in development 3,800-kilometre pipeline that would also oversupply of electricity because too many over two decades. This opens the possibil- pick up additional gas from the Ordos Ba- plants--nuclear and conventional--have ity that China could pipe oil from Central sin. However, there are serious doubts that been built during the boom years. This Asia to domestic refi neries, but the cost of the venture can turn a profi t because of the oversupply is likely to be temporary as this at current oil prices seems prohibitive size of Xinjiang’s reserves. demand for electricity is expected to grow to many industry analysts. Even if the pipeline and other projects at about 5% a year in coming decades. But Russia’s unexpectedly rapid re-emer- go ahead, a sizeable proportion of demand the increasing demand is likely to be met gence as a major player on world oil mar- will still need to be satisfi ed from imports, mostly by new LNG-fi red plants. kets also offers an opportunity for China particularly for markets in southern China Even if all these measures to diver- to minimize its dependence on the Middle that are far from domestic gas fi elds and sify energy supplies are successful, some East. Beijing and Moscow have been planned supply networks. That is why oil-and-gas industry observers believe holding extensive talks on the feasibility China invited British Petroleum’s Tang- China will have little choice but to remain of pipelines that could supply oil and gas guh oil project in Indonesia, Australia’s a major customer for Middle East oil if its from Siberia and offshore deposits. North West Shelf partners and Qatar’s Ras economy continues to expand. One sign Analysts note that there is also Laffan LNG Co. to put in bids to supply that Beijing shares this view is the strenu- strategic risk in depending on Russia, a 3 million tonnes of LNG a year from De- ous diplomatic effort that it is making to longstanding rival for infl uence in East cember 2005. There has been speculation increase its infl uence in that region.

China Clippings | June 2002 21 GENERAL GENERAL

A new pipeline may wean the China’s Big Bet on Gas country off coal and oil

Dexter Roberts in Lunnan, not share in the pipeline’s spoils. “We tell build access roads for workers and equip- with Catherine Belton multinationals that investment in China ment. 29 April 2002 may be important,” says Mei Ng, director Cost is a matter not just for the build- of Friends of the Earth (Hong Kong). “But ers but for the central and local govern- In the arid reaches of China’s north- we hope they balance this with socially, ments, too. To meet its ambitious targets, western Xinjiang region, the daytime culturally, and ethnically sensitive projects China will have to spend tens of billions temperatures can reach 48C. In spring, that truly benefi t local people.” of dollars over the next few years build- sandstorms swirl in, fi lling the eyes, ears, For the pipe’s builders, the immedi- ing thousands of kilometers of pipe off the and throat with yellow grit. It’s easy to see ate concern is ensuring that the project main artery to supply markets all over the why locals call this desert Taklamakan, will pay off as soon as possible. “We’re country. The government also will have to meaning “You can enter, but never leave.” very much in the seed phase of developing foot much of the bill to switch over to gas But despite the extreme heat and intoler- the gas market in China,” acknowledges in houses, factories, and power plants-- able weather, a few kilometers outside the Martin Bradshaw, managing director of another multibillion-dollar undertaking. town of Lunnan, hundreds of workers in Shell Exploration China Ltd. But, he adds, “The real costs are downstream, with the red overalls and matching hard hats are “we’re here for the long term.” marketing and development of distribution frantically welding together 10-meter-plus Much depends on whether enough de- networks,” says World Bank energy expert sections of pipe before the next sandstorm mand for natural gas materializes in time. Noureddine Berrah, who notes that such blows in and forces a retreat. At current prices, the clean-burning fuel outlays usually run three to four times Their toil represents the starting point can cost twice as much as average-quality those of construction costs. Ultimately, of a controversial Chinese megaproject coal in China. Consumers in wealthy cities analysts say, gas conversion expenses that’s second in scale only to Three Gorges such as Shanghai and Beijing can probably could reach more than $100 billion, much Dam. When completed three years from afford gas. But the bulk of it, if all goes as of it paid by the central, provincial, and now, the $18 billion West-East Gas Pipe- planned, would go to such large-scale us- local governments. line will stretch 4,200 kilometers--nearly ers as power plants and chemical factories. Despite all the challenges, PetroChina two-thirds the length of the Great Wall- They are already hurting because Beijing insists the project will make money after -bringing natural gas from undeveloped has been cutting their subsidies. “If the 10 years. The mostly state-owned com- Xinjiang to go-go Shanghai and, eventu- industrial users can’t afford the price, there pany, which says it has already signed up ally, to countless villages and towns along will be no market for this gas,” says a 45 big customers, vows a 12% return on the way. Beijing has great hopes for the director at Shanghai Natural Gas Pipeline investment. In any case, the price of gas pipeline. The government plans to double Network Co., the city’s largest distributor. will fall as new customers sign up. Says gas usage, to an annual 80 billion cubic Moreover, consumers ready to pay for PetroChina President Huang Yan: “We meters, by 2005, and eventually use it to gas may fi nd cheaper stocks elsewhere. have great confi dence in this project.” For cut urban pollution by phasing out coal, Already, China National Offshore Oil Gazprom, the pipeline represents a chance wean China off imported oil, and jump- Corp. (CNOOC) has begun selling gas to eventually sell China gas from its start growth in the Far West. Says Chen to cities like Shanghai and Tianjin. The Siberian fi elds and, says company spokes- Li, a deputy director at the Economic company is charging 11 cents per cubic man Igor Plotnikov, “gain a hold in the Restructuring Offi ce of the State Council: meter--5 cents less than the expected price [Chinese] market.” “Development of gas will be extremely for West-East gas. CNOOC has a cost ad- Shell executives express similar rapid.” vantage, says chief fi nancial offi cer Mark enthusiasm, saying that over the long term Perhaps. But the challenges are as Qiu, because much of its gas lies a couple they expect the project at least to match daunting as the Taklamakan itself. The of hundred kilometers offshore. the 15% returns on other international pipeline’s main builders--mainland oil and Even if PetroChina and its partners operations. It doesn’t hurt that Shell won gas giant PetroChina, Royal Dutch Shell, fi nd enough buyers, they may face higher a 45-year contract, instead of the 30 years and Russia’s Gazprom--are betting that costs than expected. Indeed, it was the PetroChina originally offered, meaning China’s hunger for energy will increasing- project’s price tag that prompted British that Shell has more time to recoup its ly be fed by natural gas. It won’t happen Petroleum, which holds a 20% stake in costs. Moreover, the company is betting overnight: Coal now meets 68% of energy PetroChina, to pull out last year. While that the new pipeline will eventually carry needs, gas just 2.4%. PetroChina says its transparent bidding gas from Central Asia and Russia. “The Moreover, the project has its share of and procurement process has already West-East pipeline is a pathfi nder for fu- critics, who are girding for battle. They shaved 20% off estimated steel costs, the ture pipelines and gas from farther afi eld,” include environmental groups, which com- project faces unpredictable construction says Shell China’s Bradshaw. “Shell has plain that the pipeline will pass through challenges. For instance, some 700 km of interests in Russia and Central Asia. This fragile ecosystems, and human-rights the pipeline will run through uninhabited activists who fear Xinjiang’s Muslims will areas where the partners will be forced to Continued next page

22 June 2002 | CChinahina CClippingslippings GENERAL GENERAL

China Fears Flood Toll Tops 500, More Rain to Come “Some oceanographers attribute this year’s weather to El Nino, but I personally think it’s something related to global Reuters warming,” Zhang said. 19 June 2002 Tamora Vidaillet (additional reporting by Niu Shuping) huge swathes of the country from north in 1998, banned tree felling and urged BEIJING - China, bracing for more to south, raising fears of a repeat of 1998 farmers to plant trees to reduce the risk of devastating fl oods, fears the death toll when the worst fl ooding in half a century serious fl ooding. from some of its worst deluges in years killed more than 4,000 people. has already risen to more than 500 people, Shaanxi has so far confi rmed 152 HIGH ALERT offi cial newspapers said yesterday. deaths during fl oods that wrecked water State television showed soldiers and Offi cials have confi rmed more than supplies, highways and homes and is workers shifting rocks and sandbags to 200 people have been killed so far and expecting more heavy rain and potential reinforce the banks of the Yellow River the China Daily quoted the top offi cial in fl ooding this week, the paper said. - dubbed “China’s Sorrow” for disastrous the worst hit province, Shaanxi, as saying Southern China, where landslides and fl oods over the centuries - and smaller riv- there was little hope for hundreds more mudslides have killed scores of people and ers in several provinces, including Shaanxi who were missing. hundreds of thousands have been forced and Gansu in the west. “Some 300 people are still missing to evacuate their homes, was also expect- State media have said the Yellow and and are not expected to be found alive,” ing heavy rain in coming days, the offi cial Yangtze rivers, China’s deadliest, have not Jia Zhibang, the acting governor of the Xinhua news agency said. yet spilled their banks. northwestern province, told the newspaper. The fl oods have ravaged the central Around 118 small and medium- The fi rst of a wave of fl oods that province of Hunan and had destroyed sized reservoirs were being monitored in plague China every summer has struck hundreds of homes in the past few days, Shaanxi and some 45,000 people had been Xinhua said. mobilised to reinforce key points of rivers, Floods this year appeared abnormal China Central Television reported. ‘Bet on Gas’ continued in that they had hit inland provinces like Shaanxi offi cials had been on high Shaanxi, Guizhou and Sichuan earlier than alert since light rain began falling this is a strategic reason why we’re interested usual, weather expert Zhang Yan said. week, a fl ood control offi cial said. in the pipeline.” “Shaanxi and Sichuan normally have “If we receive a forecast of any disas- In addition, PetroChina is virtually rain and fl ooding in July and August. It is trous weather, we will promptly mobilise assured that Beijing will do just about any- happening one month earlier this year,” he relevant personnel to inspect the dams and thing to get the pipeline built. A measure said. dykes for weak and dangerous points,” he of the government’s commitment is its “Some oceanographers attribute this said. willingness to deal with--or at least pay lip year’s weather to El Nino, but I person- Shaanxi had been unable to prevent service to--the environmental and social ally think it’s something related to global extensive damage caused by the recent concerns swirling around the project. With warming,” Zhang said. fl ooding due to a lack of manpower de- Beijing’s blessing, Shell and the U.N. China has allocated $16.6 billion spite preparations that began at the end of Development Program will carry out an for fl ood control since the tragic fl oods May, he said. impact assessment aimed at making sure the pipeline will not harm people living along the route, including the Uighur Mus- China Briefi ng: lims of Xinjiang. Says Kerstin Leitner, the ADB Looks West UNDP’s Beijing rep: “The Chinese gov- ernment wants to ensure the project really Far Eastern Economic Review benefi ts” western China by providing jobs 18 April 2002 and other spin-offs. Ultimately, Beijing sees the West- The Asian Development Bank will make public-sector loans for only a narrow East Gas Pipeline as the backbone of its range of infrastructure projects in developed cities along China’s east coast, and will national energy plan. So the government is instead turn its attention to projects in the central and western parts of the country. Bruce certain to offer PetroChina heaps of cheap Murray, the bank’s China country manager, told a press conference that the ADB will fi nancing, as well as waive land-use taxes only lend money to provincial or municipal governments along the coast for projects in remote areas and tariffs on imported regarding air-pollution control, waste-water management and human-resource develop- equipment. The pipeline “has enormous ment. The bank does, however, make some private-sector loans and equity investments government support,” says CNOOC’s Qiu. in ventures ranging from banks to power producers. In setting its lending priorities, the The West-East pipeline is a fact of life-- ADB, which lends around $1 billion per year to China, is turning its attention to lesser- whether it is economically viable or not. developed areas in central and western China. Murray said about 70% of the bank’s

China Clippings | June 2002 23 GENERAL GENERAL

World Bank Advises China to Clean Up its Economic Growth

10 April 2002

China is modernizing and becoming the most important cause of air pollution across the country closed more than a powerful player in the world economy. in cities. Among the worldís top-10 pol- 65,000 outdated and polluting factories Unfortunately, its economic growth is cre- luted cities ranked by the United Nations from 1997 to 1998. By the end of 1999, ating some major ecological problems. in 1999, seven of them were from China. the Chinese government had closed small Niu Wenyuan, who as chief sci- Taiyuan, capital of Shanxi province thermal power stations with a combined entist of the Chinese Academy of Sci- and a typical coal-producing area, ranked capacity of 2.9 million kilowatts and small ences focuses on sustainable strategy fi rst among the top-10 polluted cities in cement plants with a combined capacity of research, said that according to a World the world. Among more than 600 cities in 20 million tons. Bank report, energy and natural resource China, fewer than 1 percent have fi rst- More than 5,600 oil-refi ning plants consumption in China is very huge due class air quality, according to international have been eliminated, while a total of 4 to outdated technology and poor environ- standards. million tons of iron purifi cation capacity mental management. Outdated production technologies and 10 million tons of steel rolling capac- With a low natural resource utiliza- result in continual discharges of industrial ity have been downsized. China’s envi- tion ratio and serious pollution discharge, sewage. Poor living conditions have led ronmental-protection sector generated 108 economic losses resulting from environ- to increases of urban waste at a rate of 10 billion yuan (US$13.06 billion) in output ment pollution in recent years have been percent a year. in 2000. increasing. Furthermore, due to outdated waste- However, despite continuous efforts According to World Bank estimates, disposal technologies, rubbish around to protect the environment, human activi- environmental pollution resulted in 38.16 urban areas keeps increasing. Primitive ties continue to infl ict ecological damage, billion yuan (US$4.61 billion) in losses agricultural-production methods have and things are getting worse. for China during 1986, equivalent to 6.75 put 400 million Chinese people under the The World Bank suggests that in an percent of the country’s gross domestic threat of desertifi cation. effort to improve environment quality, product that year. According to World Bank statistics, China should signifi cantly increase spend- Losses increased to 108.51 billion strong dust-laden blasts extensively at- ing on pollution prevention to more than yuan (US$13.12 billion) in 1993 and tacked northern China fi ve times during 2 percent of GDP. The nation is currently accounted for 3.16 percent of GDP. Ac- the 1950s, eight times in the 1960s, 14 spending about 1 percent of its GDP on cording to statistics for 1997, economic times in the 1980s and 23 times in the this effort. losses resulting from air and water pol- 1990s. China has suffered dust-laden Niu noted that the Chinese govern- lution reached as high as 54 billion yuan blasts six times since the beginning of ment should not only increase investment (US$6.53 billion), about 3 percent to 8 2001. in environmental protection, but also pay percent of GDP. In recent years, the desert has in- attention to fostering scientifi c research Quite a few people believe that Chi- creased in size faster than the net decline and establishing a technology support na’s ecological environment deterioration of cultivated land across the country. system. is related to its fragile ecological chain, Losses resulting from natural disasters It should not only strive to ease pollu- but Niu thinks otherwise. Niu believes caused by ecological environment deterio- tion by adjusting the industrial structure, China’s ecological environment deteriora- ration in China reached 300.7 billion yuan but also pay attention to improving local tion is mostly caused by human activities. (US$36.36 billion) in 1998 alone. Eco- people’s awareness of the need to protect nomic losses resulting from eco-catastro- the environment. Pollution caused by humans, not nature phes in 1994 reached about 420.2 billion China should not only work to boost Niu said coal smoke has always been yuan (US$50.81 billion). economic growth, but also pay attention to the major contributor to China’s air pollu- In recent years, China has bee reshap- improving the quality of economic growth, tion. Coal-oriented energy consumption is ing its economy. Authorities at all levels the article said.

24 June 2002 | CChinahina CClippingslippings GENERAL GENERAL

Special Report: Energy Challenges to

30 April.2002 China’s Sustainable Development

Energy is an important factor to affect crude oil import countries separately. It is and further to 26.2% in 1998. While the the economic and social development and estimated that the import dependence rate oil consumption was 40.0% and that of the environmental condition in China. Mr. (ratio of import amount to consumption natural gas was 23.8% in 1998,the sum Zhou Fengqi, former general directors of amount) of oil will be about 30% by 2010 reached 63.8%. Energy Research Institute, State Planning and 40% by 2020. The import dependence Development Commission, is invited to rate of natural gas will reach 15% and Developing clean coal technology analyze this issue. 25%, respectively in 2010 and 2020. Despite the hard effort at adjusting the energy structure, coal still is a main energy Challenges Strategy in China in the next two decades. Thus • Low per capita energy consumption Creating higher energy effi ciency than promoting the clean coal technologies is Though there is abundant energy that of developed countries one important task for energy industry. resource in China, the population in China Increasing the energy effi ciency rather is so large that the per capita energy than supply is the prerequisite to ensure Favorable policy for promoting renew- consumption is very low. In general, the the balance of long and middle term able energy development per capita energy consumption increases energy demand and supply in China. It is The Chinese government has for- accompanying with economic growth. estimated that if using the domestic exist- mulated “New and Renewable Energy Considering about the large population ing advanced technologies and equipment Development Outline from 1996 to 2010”, in China, any small growth in per capita to retrofi t the backward equipment, the The document requires that the actual re- energy consumption can demand the total energy saving potential will hit 30% newable energy consumption will increase increase of total energy production at big of the present energy consumption. from 300 Mtce now to 390 Mtce in the margin. future 15 years. Reducing the coal consumption • Energy structure dominated by coal It is a necessary option for China. In a Build multiple energy, multi-lateral and China over-depends on coal, which global view, since the last half-century, the multi-path energy supply system and makes up 75% of its total energy con- coal consumption in the world decreased setting up oil store system sumption and which has resulted in low from 57.7% in 1950 to 30.5% in 1970 effi ciency and heavy environmental pollution. In 1995, China’s coal consumption amount was 29% of the total in the world. The coal burning produces 70% of TSP, 90% of SO2, 60% of NOx and 85% of CO2.

• Low energy effi ciency Viewed from the en- ergy consumption of unit GDP, whatever calculation with the offi cial exchange rate or purchase power parity (PPP), China’s energy effi ciency is among the lowest group in the world.

• Energy supply security Since 1993 and 1996 China has listed in the net petroleum and the net

China Clippings | June 2002 25 GENERAL GENERAL

Beijing to Improve Environment, Traffi c for Olympics

3 April 2002

Beijing will improve its environ- is necessary to ensure that all the envi- mission, said that the municipal gov- ment—both natural and cultural—and ronmental-protection measures will work, ernment has invested 330 million yuan traffi c to ensure the success of the 2008 said Yu. (US$39.86 million) in the protection and Olympic Games, according to the Beijing Earlier this year, Beijing signed with restoration of more than 100 cultural relics Olympic Action Plan unveiled by the Hebei province fi ve environment-protec- over the past three years. municipal government and the organizing tion agreements, which cover cooperation In addition, construction and make- committee for the 2008 Games, Zhongguo on ecological monitoring and improve- overs of a number of modern cultural Huanjing Bao (China Environment News) ments in such areas as afforestation and facilities are also being planned, he added. reported March 30. preservation of water sources. The projects include the National In addition, the environmental-protec- Grand Theater, the second phase of the Protection of environment tion bureau will participate in a national National Library, the second phase of the Beijing will eliminate local sources plan to build a forest shelter in northern, China Fine Arts Gallery, the third phase of sand hazards by 2005, according to the northwestern and northeastern China to of the China Museum of Science and plan. By 2007, a green barrier, consist- Technology, the Capital Museum and new ing of afforested mountains and plains buildings for the China Central Television as well as urban green space, will be Station and the Beijing Television Station. erected, boosting the city’s forest cover- To create a better tourist environ- age to 50 percent, according to Beijing ment, the city will construct culturally Mayor Liu Qi. distinctive commercial areas to attract In addition, electricity and natural tourists and athletes participating in the gas will become the capital city’s main Olympics, Shan noted. source of energy by 2008, said Yu Xia- oxuan, deputy director of the municipal Expansion of rail transit environmental-protection bureau. As a Beijing has conducted researches to result, the proportion of coals and cokes anticipate traffi c fl ows during the Olym- pics. Specifi c plans on rail transport, in its energy consumption will drop to Beijing Mayor Liu Qi speaks at a presspress con- below 20 percent from more than 50 public transit, private vehicles and other ference regarding the 2008 Summer Olympic related issues are also under study. percent currently. Games To reduce air pollution caused by car Having affi rmed rails as the focus deter desertifi cation and conduct exchang- emissions, Beijing will introduce emission of the city’s transportation infrastructure es with western provinces and regions on standards equivalent to the Euro II ones and the major transportation means dur- funding, technology and personnel. for new cars in 2003. ing the Olympics, Beijing is planning the According to Yu, Beijing started construction of an urban light-rail system, Preservation of ancient capital March 1 a program focusing on exhaust- the Bawangfen-Tongxian subway, the No. The bureau will soon launch a mas- emission monitoring. It will build 10 sites 4 and 5 subway lines, a subway line lead- sive cultural-relics-restoration project, the conducting annual auto checks and install ing to the Olympic village and an express largest over more than a decade. 31 checking lines to screen out cars failing railroad from Dongzhimen to the Capital In the next few years, restoration to reach the emission standards. Airport. efforts will focus on the protection of To prevent water pollution and ensure By 2008, newly added urban rails Bejing’s original layout as an ancient drinking-water quality, seven water treat- will reach 148.5 kilometers (92.8 miles) to capital, preserving its spaciousness and the ment plants will be built to increase the raise the total mileage to 202 kilometers harmony between cultural relics and their urban waste-water recycle rate to 50 per- (126.3 miles), and subways will account surroundings. cent and treatment rate to above 90 percent for 10 percent of Beijing’s total transporta- Shan Jixiang, director of the Beijing before 2008, according to the plan. tion capacity. Municipal Development Planning Com- Cooperation with neighboring regions

26 June 2002 | CChinahina CClippingslippings GENERAL GENERAL

Andrew Ness The environment industrial purposes by half, to 7 percent. In March-April 2002 Beijing still suffers from severe dust addition, to safeguard the quality of water storms, which blanket the city with some in, around, and under Beijing, the city In the run-up to the 2008 Olympic 25,700 tons of sandy dust each spring and will require the treatment of 90 percent of Games in Beijing, Chinese government give rise to the glowing, purplish-orange its sewage in modern treatment plants by offi cials at both the central and municipal springtime sunsets for which the city is fa- 2010, up from 60 percent today. levels are keenly aware that they must mous. The city is also home to 110 pollut- transform Beijing into a world-class ing factories, which ring the inner city, and Transportation city. Indeed, China’s capital is woefully some 1.17 million automotive vehicles. In Traffi c in Beijing is frequently unprepared for what will undoubtedly be addition, around 10-15 percent of the inner snarled--in part because of the excessive the single largest international event that city’s 6 million residents still heat their number of lowgrade taxis and other simi- homes with coal-burning stoves in the lar vehicles that the city has licensed in recent years and because of the shortage of To prepare for the Olympics, Beijing plans to redevelop large tracts of north-south roadways and metro and light- central city real estate, extend its urban transportation infrastructure, rail links. The phasing out of the small, clean up its air, create new parks, and restore historic landmarks uncomfortable Xiali taxis, manufactured in Tianjin, which in 2001 accounted for China has ever hosted. winter, according to the Beijing Municipal 77.5 percent of the 67,000 taxis licensed to The pressure to transform Beijing will Environmental Protection Bureau (EPB). operate in Beijing, was markedly acceler- generate numerous benefi ts; most notably, China’s representatives pledged to the ated in early 2002. enduring changes to the city’s urban form International Olympic Committee that, if The metro system provides inad- through the completion of a comprehen- chosen to host the 2008 Olympics, Beijing equate service to the city’s northern and sive urban regeneration program. Mid- would reduce its ambient air pollution southern areas, with one line currently September 2008 is a decidedly harsh and to the level of Paris today. To attain this running east-west and the other following infl exible deadline by which the city will diffi cult goal, the Chinese government has the path of the second ring road. Olympic have to resolve numerous longstanding reportedly earmarked roughly RMB45 preparation plans include some RMB90 environmental, transportation, and other billion ($5.4 billion) to resolve some of billion ($10.8 billion) for various kinds infrastructure problems. Massive spend- the city’s most serious environmental of transportation improvements to the ing on infrastructure projects and related problems. In an attempt to control the inner-city light rail system and the metro, capital construction programs will benefi t dust storms, Beijing will soon take steps the inner-city expressway system, and the municipal economy in the short term to increase the forested area surrounding outlying high-speed expressways, as well by creating jobs. the central city by 50 percent by 2005, as the accelerated completion of the city’s The pace and scale of investment in through the addition of a 125-km tree belt. ring road system. The Beijing government urban infrastructure and environmental In another, dramatic bid to improve has made completion of the city’s light rail improvement will accelerate considerably, the air quality, 90 percent of the city’s system a high priority over the next fi ve leaving the city with a major new central 20,000-odd public buses will switch from years, with more than 100 km of new light park, where there is now none; a much-ex- diesel to natural gas by 2008, up from 60 rail currently under construction. Beijing’s panded mass transit system, which will in- percent today. Sixty percent of the city’s plans also include the completion of the clude a sorely needed connection between 67,000 taxis will also use natural gas by No.5 metro line, the Batong and Chunyi the north and south areas of the central 2008, up from 40 percent today. branch metro lines, and the Wangjing city; and fi - nally, much more rigorous Beijing will also move the 110 pol- branch line. Within the same time frame, environmental protection systems and the luting factories now inside the fourth ring the city will complete preparatory work to infrastructure and facilities required to road--which have a total fl oor area of 6.13 launch construction of the No.4 and No.9 back them up (see Figure 1). million m2 and primarily serve the chemi- metro lines. As a result of this work, by cal, pharmaceutical, and textile industries- 2006 Beijing will have 138 km of inner- Key problems and improvements -to locations outside of the fourth ring city metro and light rail lines, up from Specifi cally, Beijing plans to address road by 2007. According to the Beijing 53km today (see Figure 2). problems relating to: Municipal EPB, this move will cut the The more than 10 expressways that total amount of inner-city land devoted to

China Clippings | June 2002 27 GENERAL GENERAL

China plans to spend RMB30 billion ($3.6 billion) on “digitalizing Beijing.” This will entail upgrading the city’s basic informa- tion technology and telecommunications infrastructures and districtwide networks of fi ber-optic cable.

‘Olympics’continued and complete the fi fth and sixth ring roads, Utilities and high technology according to the Beijing Municipal Traffi c Beijing will use the RMB15 billion radiate outward from the center of Beijing Administration Bureau. In addition, the ($1.8 billion) that is earmarked for the are the spokes of a system that is giving Bejing-Miyun Expressway, which is cur- city’s utilities to improve the city’s water, rise to a dense network of transportation rently still in the planning stage, and the power, and gas supplies, according to the connection points, linking Beijing with its third phase of the Beijing- Badaling Ex- Beijing Organizing Committee of the 2008 outlying suburban areas. Also by 2006, the pressway are both scheduled for comple- Olympic Games (BOCOG). Within the city will revamp some 200 km of inner- tion by then. next fi ve years, Beijing will establish a city roads to form an expressway system second Shanxi-Beijing natural gas

28 June 2002 | CChinahina CClippingslippings GENERAL GENERAL

‘Olympics’ continued four enclosed courtyardtype residences Heritage and urban regeneration (siheyuan), four historical lane areas pipeline, tripling or quadrupling the city’s In the 1950s, the Beijing govern- (hutong), and three major commercial and current supply of natural gas. By 2005, ment chose not to preserve the whole of cultural streets. Almost all of these proper- BOCOG estimates that electricity use will the city’s historic center, which covered ties are situated near the Qing Dynasty-era soar from the present 31.8 billion kilo- 62 km2, on the grounds that it would be Imperial City. The plan aims to restore watt-hours (kWh) to 50 billion, with peak too costly and unmanageable. But as the ancient sites and monuments gradually period use expected to jump from 67.8 Jianguomenwai central business district, back to their original condition and con- billion to 100 billion kWh. China also plans to spend RMB30 Upon completion, the Olympic Park will provide a desperately needed new billion ($3.6 billion) on “digitalizing “lung” amidst the miles of macadam ringing Beijing’s concrete canyons. Beijing.” This will entail upgrading the city’s basic information technology and Fuchengmenwai Financial District, and vert the most attractive of them into public telecommunications infrastructures and the Wangfujing commercial area continue museums, thereby expanding the historical districtwide networks of fi ber-optic cable. to expand rapidly, the city’s leaders have areas open to Beijing’s tourists. The Chaoyang, Dongcheng, Haidian, come to realize that not merely the city’s Initially the Beijing government did Shijingshan, and Fengtai districts will be ancient monuments but also the cityscape not seem in any hurry to implement the the highest priority areas for the provi- in older neighborhoods constitute part of plan, but shortly after the city was granted sion of modern telecommunications the city’s charm and character. the 2008 Olympic Games it announced infrastructure, and as such will be the The Beijing Municipal Construc- an acceleration of the plan and designated city’s fi rst platforms for the widespread tion Commission issued two regulations some $208 million to restore historical use of ecommerce, e-administration, and in 1999 that identifi ed areas for historic sites and remove old, dilapidated buildings distance education. The Olympic Park area preservation within the second ring road that surround them. will have access to digital and broadband amounting to 5.58 km2 (about 9 percent City offi cials have also stepped up the telecommunications, wireless transmission of the area within the second ring road), removal of slum and substandard housing. and networking technologies, and other which was subdivided into 25 sites. This Between 1990 and 2000, a total of almost intelligent technology solutions, according area amounts to 15 picturesque ancient 5 million m2 of substandard housing was to BOCOG. streets, three cultural-historical areas, demolished in Beijing--the equivalent

China Clippings | June 2002 29 GENERAL GENERAL

‘Olympics’ continued the Olympic Games. According to the west sides of the central axis. Political estimates of a Beijing economist with power and social position were clearly of about 184,000 residential units averag- the China Research Institute of Science demarcated on the urban landscape.” The ing about 27 m2 each--forcing the reloca- Popularization, who used statistics from location of the Olympic Park thus embod- tion of some 165,000 urban households. the Sydney Olympics to derive a model of ies the Chinese government’s stated goal The government wants to demolish an ad- job creation, if Beijing attracts RMB74.5 of “integrating the 2008 Olympics with ditional 9.34 million m2 of older housing, billion ($9 billion) in additional outside Chinese culture and spiritual civilization.” out of a total residential stock of some 28 investment as a result of hosting the The park will include one central dis- million m2, resulting in the dislocation of 2008 games, and if each RMB100,000 trict, which has been offi cially designated yet another 350,000 inner-city households, ($12,100) invested creates one new em- the Olympic Green, and three non-contig- according to BOCOG. ployment opportunity, then Olympics-re- uous ancillary districts. The central district lated investment will create 745,000 new will contain the Beijing Olympics Ath- Raising--and spending--the money jobs in Beijing. In addition, the govern- letes’ Village, Reporters’ Village, News The PRC government has reportedly ment anticipates that the combination of Center, International Broadcasting Center, drawn up a budget of RMB180 billion Olympics-related fi xed-asset investment and 14 athletic competition venues. The ($21.7 billion) for 142 Olympics-related and foreign direct investment will add 0.3 three subdistricts include a northern scenic improvement projects in Beijing. Of this, to 0.4 percentage points to China’s annual district, a western living district, and a uni- some $14 billion will come from the PRC GDP growth in the six-and-a-half years versity village that contains sports training government and the remaining $8 billion leading up to the event. and competition facilities associated with will come from domestic and overseas eight Chinese universities. private- sector investment. The Beijing The Olympic Park Municipal Finance Bureau, under the To rectify the lack of a suitable, cen- Olympic facilities and hotels central government’s Ministry of Finance, tral city park area to serve as an Olympic China Olympics Commission Sports will reportedly allocate half of the neces- Park, the Beijing Municipal Government Director Lou Dapeng stated that for the sary PRC government funding. is now organizing a tender for the con- 28 competitive athletic events in the 2008 Directly or indirectly motivated by ceptual master plan of what will be the Olympics, China will provide a total of the Olympics, Beijing will develop some city’s newest park. The Olympic Park will 59 stadiums, sports arenas, gymnasiums, 25 million m2 of property in the 2002- occupy 12 km2, about 60 percent of which and workout and exercise areas, all of 08 period. This will entail not merely will be green and wooded space. Its size which will meet international specifi ca- the revamping or new construction of makes it the largest park in central Beijing tions. Beijing will provide 32 competition competition and sports venues, and the and the second largest within Beijing venues, located in the four districts of the development of a number of mega-malls Municipality, after Fragrant Hills Park in Olympic Park. For the convenience of the and other major commercial projects, but the city’s northwest. Upon completion, participating athletes, 14 of the competi- also includes an enormous “urban facelift” the Olympic Park will provide a desper- tion areas will be within 5 minutes’ drive program which will redevelop sizeable ately needed new “lung” amidst the miles of the Olympic Village, 10 of the competi- tracts containing substandard single-story of macadam ringing Beijing’s concrete tion venues will be within a 20-minute dwellings in the city’s Xuanwu, Chon- canyons. drive, and the remaining 8 venues will be gwen, Dongcheng, and Xicheng districts The park will be located at the north- within 30 minutes’ drive. Five additional competition venues will be located in The Beijing Municipal Tourism Bureau has announced that it intends to Shanghai; Tianjin; Qingdao, Shandong; more than double the city’s present stock of star-rated hotels to over 800 Qinhuangdao, Hebei; and Shenyang, Lia- oning. Qingdao will host the sailboat race and raise the number of hotel rooms in such hotels by some 60 percent, to competitions while the four other cities 130,000, by the time the games begin. will host soccer matches. into new residential areas composed pri- ern end of the central north-south axis In the late 1980s, the Beijing govern- marily of high-rise apartment complexes. that bifurcates central Beijing, straddling ment spent RMB2.5 billion ($302.1 mil- At the same time, the city is stepping up the fourth ring road. The importance of lion) developing sports venues and related the development of a new business district this north-south axis is clearly explained facilities for the 1990 Asian Games. These centered around the Zhongguancun area in by Zixuan Zhu and Reginald Yin-Wang facilities, with a total fl oor area of 1.3 Haidian and the second and third phases of Kwok in their essay “Beijing: The Expres- million m2, include 80 venues for athletic the Fuchengmenwai Financial District. sion of Political Ideology,” in Culture training and competitions--55 of which The hosting of the 2008 Olympic and the City in East Asia: “Following the were either renovated or newly construct- Games will thus be the second-largest Confucian tradition, Beijing was planned ed buildings. However, Beijing still faces public works project ever undertaken along a north to south axis, representing the sizeable task of building 24 completely in China--after the Three Gorges Dam. the authority of the state. The Imperial new competition venues and related facili- By some calculations, this is also the Palace, government offi ces, religious ties, and Beijing and the other host cities largest sum that has ever been spent in buildings, and minor royal residences were will need to revamp 13 existing facilities readying any single municipality to host all located, symmetrically, on the east and to bring them up to International Olympic

30 June 2002 | CChinahina CClippingslippings GENERAL GENERAL

‘Olympics’ continued Beijing Olympics to Get Green Aid Committee specifi cations, according to BOCOG. The housing for athletes and journal- Zhao Huanxin The commission plans to help build a ists who attend the roughly three-week 12 April 2002 State-level Olympic village pilot project, event will include 470,000 m2 of housing where a high-effi ciency, energy-saving for athletes (equivalent to 12,000 apart- The State Economic and Trade Com- lighting system will be used, He said in an ment units) and 400,000 m2 of housing mission (SETC) yesterday promised to interview with China Daily. for journalists and other media personnel lend money and labour power to shore up Solar-energy heat-collecting and solar (equivalent to 10,000 apartment units). the environmental theme of the 2008 Sum- power-generating systems will be integrat- Private sector developers will build all of mer Olympic Games in Beijing. ed with the buildings and some Olympic the housing in the two villages, and the The commission will sponsor 20 facilities in the village, he said. resulting units will be offered for sale as projects within the next two years to rein- Under the commission’s plan, notori- condominiums after the games. force the capacity of the Chinese capital in ous pollution-causing facilities - including In 2000, Beijing attracted some 67.4 treating pollution, recycling resources and the Capital Iron and Steel Corporation million domestic visitors and 2.82 million conserving water and energy, said division and a cement plant in Beijing’s Fangshan overseas travelers. The city’s 392 star- director He Bingguang. District and a coal-burning power plant rated hotels provided 80,000 hotel rooms. “An estimated 3 billion yuan (US$361 in the Shijingshan District - will undergo Though the city’s present stock of hotels million) will be channelled to the 20 proj- substantial technological transforma- would likely be suffi cient to accommodate ects to help make the 2008 sporting event tion. Cars using outdated technology the huge surge in visitors during the two a genuinely green one,” the offi cial said. will be phased out from Beijing’s streets. weeks of the Olympic Games, the Beijing Municipal Tourism Bureau has neverthe- less announced that it intends to more than China to Build Plant to Turn Coal into Oil Products double the city’s present stock of star-rated Reuters emissions. hotels to more than 800 and raise the num- 19 June 2002 At a ceremony in Washington an- ber of hotel rooms in such hotels by some nouncing the plant deal, Linda Conlin, 60 percent, to 130,000, by the time the WASHINGTON - U.S.-based Head- the Commerce Department’s assistant games begin. These plans seem to refl ect waters Inc. announced yesterday plans secretary for trade, praised China for being an anticipated rapid growth in the city’s with Shenhua Group Corp. Ltd to build in a leader in using clean coal technology. tourism and convention industry over the China the world’s fi rst commercial plant Headwaters subsidiary, Hydrocar- next six years, as opposed to demand dur- to turn coal into diesel fuel and gasoline, bon Technologies Inc., will provide the ing the Olympic Games. a move that could help China reduce oil technology license, process design and imports and cut pollution. technical services for the plant. After the games The clean coal technology will help The $2 billion Chinese facility will Once the games are fi nished, the the Chinese government counter com- able to produce 50,000 barrels a day of parks, competition venues, residential plaints from environmentalists that the cleaner, low-sulfur diesel fuel and gasoline facilities, sports complexes, media centers, country’s heavy reliance on coal causes from about 13,000 tons of coal. and commercial facilities now on the too much pollution and greenhouse gas Plant construction is expected to be- drawing board will provide the population emissions that lead to global warming. gin in early 2003, following approval from of Beijing with recreational and athletic Shenhua Group Corp. Ltd is China’s U.S. and Chinese governmental agencies. facilities for decades to come and establish largest coal company, producing about 60 The facility, located about 80 miles south Beijing as an ideal host for a wide variety million tons of coal per year and having of Baotou in Inner Mongolia, should be of national athletic competitions. reserves of more than 220 billion tons. operational in 2005. The placement of the Beijing Olympic The Bush administration has pulled Under the so-called coal liquefaction Park, extending northwards from the 1990 the United States out of the international process, coal is broken down into small Asian Games Village, represents the fi nal Kyoto treaty that seeks to reduce green- molecules with hydrogen to form oil step in the development of the northern house gas emissions. molecules that are then refi ned into diesel, terminus of the city’s north-south axis. The administration fears the treaty gasoline and other petroleum products. The park, which may feature a 120-story allows developing countries such as China Sulfur, nitrogen, ash and other impuri- Beijing World Trade Center and its own to spew more emissions while placing ties are removed from the liquid fuel in the business district, will provide yet another tough restrictions on industrialized nations process. space that may emerge as the center of a that could hurt the U.S. economy. Shenhua Group said it plans to build major new commercial development area Ironically, the U.S. Energy Depart- three more coal liquefaction plants in the to counterbalance the dense development ment helped pay for the research that Shengdong Coalfi eld of China, which in the city center to the south. developed the clean coal technology that spans the Shaanxi Province and Inner will be used by China to help reduce its Mongolia.

China Clippings | June 2002 31