《法学人》精读24: Painting the map green中国经济

As China gets tough on pollution, will its economy suffer?

The received wisdom was that green growth would be slower. So far, that
hasn’t happened

LEO YAO thought he had nothing to fear from the environment ministry.
Before, when its inspectors visited his cutlery factory, he says, they
generated “loud thunder, little rain”. After warning him to clean up,
they would, at worst, impose a negligible fine. Not so this time.In
August dozens of inspectors swarmed over his workshop in Tianjin, just
east of Beijing, and ordered production to be halted. His doors remain
shut today.If he wants to go on making knives and forks, he has been
told that he must move to more modern facilities in a less populated

Mr Yao’s company, which at its peak employed 80 people, is just one
minor casualty in China’s sweeping campaign to reduce pollution. For
years the government has vowed to go green, yet made little progress. It
has flinched at reining in dirty industries, wary of the mass job losses
that seemed likely to ensue. But in the past few months it has taken a
harder line and pressed on with pollution controls, hitting
coalminers,cement-makers, paper mills, chemical factories, textile firms
and more.

cutlery: forks, spoons, and knives used for serving and eating food:

flinch: to show fear: to hesitate from doing something unpleasant or


Tens of thousands of companies—mostly smaller ones, like Mr Yao’s—have
been forced to close, according to Chen Xingdong, an economist with BNP
Paribas. In the region around Beijing this winter, the government has
ordered steel mills to run at half-capacity and aluminium-makers to cut
output by nearly a third. Implementation, half-hearted in the past, has
if anything been heavy-handed. In Hebei, a northern province, a ban on
coal heating left thousands of residents shivering because the
replacement, a switch to natural gas, was not yet ready.

For the wider economy, the question is how steep the cost will be. A
sharp tightening of environmental rules in the world’s biggest polluter
has the potential to be a shock, both to China and the global
economy. Two worries are commonly heard: that it will drag down growth;
and, at the same time, cause inflation as production cuts boost
prices. Jiang Chao, an economist with Haitong Securities, a broker, says
it could end up making for “classic stagflation”. So far, though, these
worries are unfounded: growth has been solid and inflation subdued. A
possible explanation is that the economic impact is lagging behind the
pollution controls. Another is that, contrary to received wisdom, China
may be able to raise its environmental standards without paying a high

环境保护的八个顾虑: 经济放缓和通胀,未来数量看来还尚未发生


stagflation: an economic situation in which prices of goods and
services continually increase, many people do not have jobs, and
business are not very successful (经济滞涨与通胀一般同时发出)

subdue: not strong, loud, intense, etc

One thing is clear: China’s shift on pollution is real. True, some
extreme measures are temporary, especially those aimed at keeping
Beijing’s sky blue this winter. But many others will be lasting. As part
of a “war on pollution” declared in 2014, China has detailed targets for
cleaning up its air, water and soil. On January 1st it introduced an
environmental-protection tax, replacing a patchwork of pollution fees.
Last month it launched a market for trading carbon emissions, which,
though scaled back from early plans, will be the world’s largest. Most
crucially, the environment ministry, previously a political weakling,
has clout at last—as Mr Yao’s cutlery business found to its chagrin.
Besides fining companies, inspectors have disciplined some 18,000
officials for laxity over pollution.

The tougher tactics have already made a big dent in specific industries.
Just 60% of steel blast-furnaces are now in use, down sharply since
October and near a five-year low. Thermal-power output is now actually
declining year by year, evidence of weakening demand. Companies are also
feeling the pinch. Schaeffler Group, a German car-parts maker, warned in
September that pollution controls would knock out its supplier of needle
bearings. Taiwanese chipmakers in the city of Kunshan, an electronics
hub not far from Shanghai, say the abrupt tightening of water-quality
rules may lead them to move.

patchwork: something that is made up of different things

chagrin: a feeling of being frustrated or annoyed because of failure
or disappointment

make a dent in something is to decrease something slightly or to make
it somewhat weaker

Upward pressure on production costs has been intense. A surge in coal
and steel prices has attracted most attention, as China has pushed
companies to cut capacity (see chart). But similar trends affect a range
of smaller industries. In July China banned imports of 24 kinds of waste
such as paper and plastic; the ban came fully into effect on January
1st, but demand (and prices) for raw pulp quickly jumped. Restrictions
on the chemicals industry have fuelled a 50% increase in the price of
glyphosate, a popular weedkiller, over the past few months. Prices of
rare-earth metals, notably two used in electric magnets, have also

Yet the biggest economic surprise of China’s environmental campaign so
far is not that it has had an impact; it is how muted that impact has
been. Yes, industrial production has recently been weaker than forecast,
but it is still expanding at more than 6% year on year.And yes, some
commodity prices have shot up, but this has had very little effect on
general inflation.

Three factors suggest that this benign trend may endure. First, despite
the common assumption that industries such as steel or coal are vast,
they in fact account for a small, shrinking share of the Chinese
economy. Minsheng Securities, a broker, calculates that the full
complement of industries affected by the pollution measures adds up to
just 7% of total national investment. China has reached a stage of
development where manufacturing is fading in importance. Nearly 4m
people may lose jobs as a result of cuts in industrial capacity, but
strong demand for labour in the services sector, from restaurants to
health care, is cushioning that blow.

benign: not causing harm or damage


is cushioning that blow: 在缓冲…

Second, price increases have been concentrated and show little sign of
spreading widely. Prices of coal and steel, the first to heat up, are
already levelling off, making the increases seem big one-off changes
rather than the start of inflationary spirals. For the economy as a
whole, it amounts to a redistribution of resources. Companies that use
commodities as inputs face higher costs. But producers benefit. And
since metals and mining companies are heavily indebted, the rebound in
revenues is helping to fortify their balance-sheets and, in the process,
easing Chinese financial risks.

Lastly, green restrictions can themselves generate growth and jobs.
China’s drive for cleaner energy sources has gained momentum. Estimates
suggest it installed nearly 55 gigawatts of solar-power capacity in
2017, more than the existing capacity of any other country at the start
of the year. China accounts for about two-fifths of global production of
electric cars. And in more established industries, companies feel
pressure to upgrade. To stay in business, Mr Yao says he will move his
cutlery factory to a new industrial park, where waste-disposal standards
are higher.



If the economic downside from China’s clean-up remains relatively mild,
it prompts an obvious question: why did it take the government so long
to get tough on pollution? One big reason is surely the uneven
distribution of pain. Smokestack industries are based in a small number
of provinces such as Shandong in the east and Shanxi in the north. So
long as enforcement was in local hands, officials had little incentive
to act. None wanted to throttle companies in their own backyard. But
from a national perspective, the economic trade-offs of greener growth
ought to be easier to stomach. China will both pay a price and reap

smokestack: a tall chimney on a factory, ship, etc. , for carrying
smoke away, also called chimney stack




Lexile®Measure: 1100L – 1200L

Mean Sentence Length: 15.97

Mean Log Word Frequency: 3.18

Word Count: 990




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