July 29th, 2008:

By JOE McDONALD 07.29.08, 1:46 PM ET – Forbes.com

BEIJING – Factory shutdowns and other industrial restrictions intended to help reduce Beijing’s eye-searing smog for the Olympics are making business more complicated – and costly – for Chinese providers of steel, pharmaceuticals and other goods and services.

The financial impact of the disruptions is hard to estimate and China’s exports should not be greatly affected, because suppliers had months to prepare, analysts and company representatives said.

Still, manufacturers have spent extra to produce and warehouse supplies ahead of the games, or to arrange special transport. These costs come on top of the $40 billion the government is spending on Olympics venues and improvements to Beijing’s infrastructure.

Businesses across China also are reeling from a government decision to tighten security screening of applicants for both business and tourist visas.

Some tourists have been blocked from traveling, while others simply have been turned off. Upscale hotels, many of which went through costly renovations for the Olympics, have been half-empty in the past three months. Industry executives say it is the worst slump since a severe pneumonia outbreak that jumped from China to the world.

“It is almost as bad as 2003, when SARS broke out,” said Matthew Lin, director of Bravo Tours China in Shanghai, where he said business is down 30 percent. “Many foreigners canceled their trips or didn’t bother to come.”

Ordered to shut down its blast furnaces to help clear the air for the 10,500 athletes and 500,000 tourists expected for the games, steel producer Beijing Shougang Group embarked on a massive effort to ensure its customers would not be affected. The company, a key supplier to China’s booming construction industry, ramped up output in the first half of the year so it could fill orders during the shutdown, and it shifted some production to a mill outside Beijing.

Once the games and then the Paralympics end in late September, Shougang will ramp up production in the final quarter, said a manager who asked not to be identified by name because he was not authorized to talk to reporters. Shougang’s press office refused to confirm details of its plans.

Shopkeepers and manufacturers throughout Beijing will suffer from rules that ban trucks from the Chinese capital, making deliveries more costly or impossible. They will have to cut operations or pay sharply higher prices to move goods by van. The city already has banned 300,000 older trucks and other vehicles since July 1.

While Daimler AG can keep making Mercedes-Benz sedans at its Beijing factory because its emissions are below government limits, managers worry about getting parts delivered, said Daimler spokesman Trevor Hale.

“We’ve tried to make sure our logistics providers all have those `green’ trucks, but we’re trying to be flexible,” Hale said. “We have a little bit more inventory than we did in the second quarter just in case.”

The controls also are disrupting less-visible industries such as pharmaceuticals, where China is a major supplier of materials such as penicillin used by global producers for drugs sold in the United States, Europe and elsewhere.

“The supply of some raw materials was indeed affected by restrictions during the Olympics,” said Xu Xiaofang, a spokesman for GlaxoSmithKline (nyse: GSK – news – people ) China. “Since we were informed about the restriction in advance, we have stored appropriate supplies.”

Xu declined to say what materials GlaxoSmithKline sources in Beijing or how much it cost to prepare for the supply interruption.

Pollution controls will require more than 150 steel, petrochemical and other industrial facilities to suspend production for the games, the official Xinhua News Agency reported, citing Zheng Jiang, vice chairman of Beijing environment bureau.

The interruption of steel production is expected to have little effect trade because most of Beijing’s output goes into construction, said Linda Lin, a Shanghai-based analyst for the industry newsletter Metal Bulletin. She said only 15 percent of China’s steel production last year was exported.

“July and August are the low season for steel. The market in north China can’t digest all the backlog anyway,” Lin said.

Some last-minute rule changes came with no warning.

Foreign companies complained this week after a surprise announcement that the government was further tightening restrictions on business visas after suspending the issuance of multiple-entry visas in March. Especially hard-hit will be foreign entrepreneurs in Hong Kong who need to visit mainland suppliers of garment, toy or furniture factories.

“The introduction of such restrictions without warning creates serious problems for companies operating in China,” the European Chamber of Commerce in China said in a written statement.

At Bravo Tours China in Shanghai, managers plan to use the lull for staff training, Lin said, “and preparing for the business comeback after the Olympics, hopefully.”

Associated Press Writer Bonnie Cao in Beijing contributed to this report.

Tue 29 Jul 2008, 14:48 GMT – By Chris Buckley

BEIJING (Reuters) – Olympic host Beijing saw hazy pollution lift on Tuesday, but a damning Amnesty International report brought into sharp view tensions over China’s human rights policies ten days before the Games begin.

With the 2008 Olympic Games due to open in the shining Bird’s Nest Stadium on August 8, the human rights group on Tuesday gave a scathing assessment of China’s record, saying many of its citizens’ protections and freedoms have shrunk, not expanded, in the seven years since Beijing won the right to hold the Games.

China had not honoured vows to improve rights that officials made in lobbying for the Games, and was not living up to commitments as an Olympic host, Amnesty International stated in the report released in Hong Kong.

“There has been no progress towards fulfilling these promises, only continued deterioration,” it said in the report, titled “The Olympics countdown – broken promises”.

“The authorities have used the Olympic Games as pretext to continue, and in some respects, intensify existing policies and practices which have led to serious and widespread violations of human rights,” it said in the report released in Hong Kong.

Amnesty said Chinese authorities had targetted human rights defenders, journalists and lawyers to “silence dissent” ahead of the Games, jailing dissidents such as prominent AIDS activist Hu Jia and often intimidating their families.

A Chinese government spokesman dismissed the Amnesty report as a product of habitual bias that ignored big improvements.

“This is a statement that anyone who knows China cannot agree with,” the Chinese Foreign Ministry’s chief spokesman Liu Jianchao told a news conference in Beijing. “I hope Amnesty International can take off the coloured glasses it has been wearing for years and look at China fairly and objectively.”

Several Chinese lawyers and activists pressing for lifting censorship, stronger judicial protections and improved treatment for AIDS patients, told Reuters the Games had brought pressure for some improvements but was making life difficult for them.

Teng Biao, a Beijing-based lawyer who has experienced detention, said China’s Olympics run-up had brought some gains in media freedom and emboldened Internet-based citizen activism.

“But in many aspects the Amnesty report is right — there has been no progress or even deterioriation,” Teng said by telephone. “Everything has had to give way to the Games, and that’s also led to rights violations.”

Wan Yanhai, an advocate for AIDS-HIV patients, said China’s leaders had made vague promises to improved rights without anticipating the growing pressure from Chinese activists and outside groups to act on those promises.

“The government doesn’t know how to adjust to holding such a big event in an open, challenge-filled environment,” Wan said of the Games. He said he had left his home in Beijing to escape pre-Games pressure from security authorities.

RESPITE FROM HAZE

The city’s chronic pollution, a sometimes stifling mix of construction dust, vehicle exhaust and industrial fumes, has also been one of the biggest worries for Games organisers.

Winds and rains on Tuesday lifted much of the sultry haze that had hung over Beijing in past days, trapping pollution and worrying Games officials and athletes readying for competition.

Beijing authorities have raised the prospect of more pollution controls, in addition to keeping nearly half of Beijing’s 3.3 million cars off roads and shutting many factories near the capital.

But Du Shaozhong, deputy chief of the Beijing Environmental Protection Bureau, said the haze, reducing visibility to a few blocks, did not mean air quality was bad.

“Cloud and fog are not pollution. This kind of weather is a natural phenomenon, and has nothing to do with pollution,” Du told reporters.

Beijing is not the only Games city to suffer. Hong Kong, host to the equestrian events, was hit by its worst air pollution ever recorded on Monday. Pollution was thick again on Tuesday, making it hard even to see across the city’s famed harbour.

The International Olympic Committee (IOC) said it may reschedule endurance events such as the marathon to prevent health risks to athletes if pollution is bad.

“The IOC medical group has said that the air quality will be okay for any competition up to an hour, and beyond that we’re in a position to reschedule,” senior IOC member Kevan Gosper told Reuters.

Japanese athletes may don masks made for construction workers to guard against air pollution during the Games, a doctor affiliated with the Japanese Olympic Committee said on Tuesday.

Cars in Beijing are already banned from roads on alternate days under an odd-and-even licence plate system and many government cars have been ordered off the roads. Taxis, buses and Olympic vehicles are exempt. Around Beijing, heavily polluting factories, such as steel plants, have also been closed.

“It’s a worry, but then it’s the same for everybody,” Julian Jones, an Australian team staff member in Beijing, said of the pollution worries. “But we’re all in the same boat.”

By HENRY SANDERSON

BEIJING (AP) — Environmental officials say their efforts are starting to clear the haze above Beijing, while strong wind and some rain have also raised hopes of blue skies when the Olympic Games start in just over a week.

The city has put in place a series of drastic pollution controls since July 20 that included pulling half the city’s 3.3 million vehicles off the roads, halting most construction and closing some factories in the capital and surrounding provinces.

But Beijing has been dogged in the last week by a persistent haze that cloaked the city, threatening assurances by Chinese authorities that skies will be clear when the games start on Aug. 8.

Tuesday’s relatively clearer skies highlighted how much weather conditions play a part in the overall equation for curbing pollution. Winds and rain were a “major factor” in causing pollutants to dissipate, said spokeswoman Zhai Xiaohui with the Beijing Municipal Environmental Protection Bureau.

The government has worked on cloud seeding to control rain, but has acknowledged the wind remains an unpredictable factor. A cold front pushing through northeastern China brought light rains and temporary relief from sweltering temperatures.

A top environmental official said Tuesday that the air in July had greatly improved when compared to the same month last year.

“After the adoption of these measures, we have seen visible improvements,” Du Shaozhong, deputy director of Beijing’s Environmental Protection Bureau, told a news conference.

There have been 25 days of clean air in July, two more than the same period last year, he said. Du did not say what constituted clean air, but said since July 1, major pollutants have been reduced by 15 to 20 percent.

Tian Jun, 26, who works in sales at a downtown hotel, said Beijing’s air had improved overall in the last three to five years. The Olympics have helped because they enabled the government to move industries outside of the city and plant more trees, as well as limit the number of cars, he said.

“The government has done a good job,” Tian said, standing outside a cafe with his friends. “It should continue after the Olympics.”

But Frederick Szeto, a consultant from Hong Kong who has been in Beijing for nearly two months, said he doubted the restrictions could have already made such a difference.

“If this could last until fall, then that would be good,” he said. “I think it’s because it’s rained, not because of the air quality.”

The city’s chronic air pollution has been a source of concern for Olympic organizers. The games will bring 10,500 athletes and hundreds of thousands of spectators to Beijing.

Highlighting Beijing’s fears that air quality won’t improve in time, Du said a contingency plan has been devised and could be implemented as part of last-minute emergency measures if needed.

The official China Daily newspaper said Monday that Beijing could pull even more cars from the roads and shut down additional factories as part of last-ditch efforts.

The air pollution index for particulate matter, a major pollutant, dropped to 90 on Tuesday from 96 on Monday, after reaching 118 on Saturday, a level classified as unhealthy for sensitive groups.

An API below 50 is considered good air quality and between 51 to 100 is moderate, according to the Web site of the city’s Environmental Protection Bureau. But critics say even moderate levels are still above the World Health Organization’s guidelines for healthy air.

Associated Press reporter Chi-Chi Zhang contributed to this story.

Firms didn’t live up to promises: Greenpeace

Shi Jiangtao in Beijing – SCMP – Updated on Jul 28, 2008

Corporate sponsors for the Beijing Olympics have delivered only partially on commitments for a green Games, an international study has found.

The study on sponsors’ performance is included in a Greenpeace report entitled “China after the Olympics: lessons from Beijing”, looking at how the host city has delivered on its promises.

Like previous assessments of Sydney in 2000 and Athens in 2004, the study focused on refrigeration technologies and electronic products containing toxic substances, because they could be “addressed or solved with more leadership from select corporate leaders”.

It said the best way for sponsors to uphold the green theme would be “to provide best-available technology and to engage in best practices that not only reduce their environmental footprint for the Olympic Games but also serve as a model for their respective industries”.

It found that most of the seven refrigeration-using and electronic sponsors listed in the report had not made full use of the Olympics to showcase state-of-the-art, climate-friendly technologies.

While Coca-Cola had lived up to its pledges to use natural refrigerants to power more than 5,600 coolers and vending machines to be used in Olympic venues, hydrofluorocarbons (HFCs), a climate-damaging cooling agent, were still widely used in many other products provided by Games sponsors.

It noted that Haier, the country’s largest appliance maker, which provided more than 30 products for the Games, had showcased HFC-free solar-based air conditioners in the Olympic Village and tennis centre.

But it failed to make the majority of its electronic products for many other Games venues HFC-free.

“Moreover, while Haier has provided Coca-Cola with HFC-free coolers, which can be seen throughout Olympic venues, Haier has also provided a large fleet of commercial coolers using HFCs for other sponsors who did not request Haier to supply HFC-free cooling technology,” it said.

Refrigeration-using sponsors like McDonald’s and Yili, one of the mainland’s largest dairy companies, were also criticised for failing to set an example to help phase out climate-damaging cooling technology.

“Industry sources have confirmed that Yili is providing commercial coolers containing HFCs for the Olympics,” Greenpeace wrote. “Greenpeace urges Yili to use the post-Olympics period to phase out the use of HFCs in its ice-cream coolers in favour of refrigeration systems using natural refrigerants.”

The green group also said repeated attempts to contact Yili to discuss the issue had failed.

The study also looked at three electronic sponsors – Samsung, Lenovo and Panasonic – to see whether they had eliminated the use of toxic chemicals and other hazardous raw materials in their products.

All three were found to have used toxic vinyl plastic (PVCs) and brominated flame retardants (BFRs) in their Games products.

Samsung had honoured its commitment to make one of the three models of phones used in Olympic venues, and sold to consumers across the mainland, free of PVCs and BFRs. But the study said the company had failed to do the same for the other official Olympic phones.

Both computer models Lenovo supplied to the Games contained the two toxic chemicals.

The mainland’s top computer maker had “missed an opportunity to use the Olympics as a platform to phase in green computers that do not harm the environment”.

The study also said the company had promised Greenpeace in 2006 that it would eliminate the use of PVCs and BFRs from all of its products by the end of next year, but it had yet to put a 100 per cent PVC- and BFR-free product on the market.

Lenovo and Haier did not reply to e-mail requests from the South China Morning Post for comments, and telephone numbers published on Yili’s official website went unanswered.

Greenpeace urged the International Olympic Committee and the host city to be more responsible and balance financial considerations and environmental standards when making decisions on Olympic partners and sponsors.

“While financial considerations are undoubtedly important, the IOC and every host city should also require basic environmental guidelines for sponsors to encourage real leadership on the environment.

“As part of the sponsors bidding criteria, the IOC should set mandatory standards that prohibit or limit sponsors from using substances that are toxic, polluting, or contribute to climate change, and make sure they are enforced by host cities.”

The report, which also covers a wide range of other environmental issues Beijing has dealt with, including air pollution and the treatment of toxic waste, will be released today.

Greenpeace says Beijing’s develop first, clean up later plan is not working

Shi Jiangtao in Beijing – SCMP – Updated on Jul 29, 2008

The persistent smog that has shrouded the Olympic host city for the past five days despite sweeping contingency measures to cut pollution was the result of a decades-long pursuit of development at the expense of the environment, an international green group said.

In a report on Beijing’s environmental performance for the Games issued yesterday, Greenpeace expressed concerns over the impact of pollution on competing athletes, who are much more sensitive to air-quality problems than the public.

Entitled “China After the Olympics: Lessons From Beijing”, the report gave a mixed assessment of the capital’s environmental efforts over the years, compiled a long list of missed opportunities for the host city and voiced dismay at authorities’ lack of transparency in handling environmental information.

It came as the city was shrouded in heavy smog again yesterday, which left the Games’ organisers struggling to find a solution with 10 days left before the opening ceremony. “Despite all the efforts, Beijing’s air quality today is probably not yet up to what the world is expecting of an Olympic host city,” said Lo Sze-ping, campaign director of Greenpeace China.

“This shows China’s growth model of ‘develop first and clean up later’ is wrong and should be dropped as soon as possible. It is easy to pollute but much harder to clean up the damage.” Beijing’s smoggy skies for the past five consecutive days were a good case in point.

“Despite the series of long- and short-term plans by Beijing, air pollution remains one of the toughest challenges for the city,” he said.

Visibility throughout the city was very low in the morning because of thick smog. The city was also hit by sultry heat, over 70 per cent humidity and little wind, although pollution readings were slightly improved from the four preceding days.

The reading for particulate matter, a key pollutant in the city, yesterday was 99 micrograms per cubic metre, while the figures for the previous four days were all above 100, which were officially classified as “slightly polluted”.

Under the air quality guidelines of the US Environmental Protection Agency, a reading of particulates in the 51-100 micrograms per cubic metre range is “moderate” air quality; 101-150 is “unhealthy for sensitive groups”.

Environmentalists and residents cast doubts over yesterday’s official pollution reading, saying they did not sense any marked improvement in either air quality or visibility.

Official figures partly backed their claims up, with 13 out of 27 monitoring stations across the city recorded “slightly polluted” figures, according to the website of the local environmental bureau.

Pollution readings of 86 mainland cities for Sunday showed the capital’s air quality was far worse than that of many industrial hubs and ranked the third most polluted on the mainland, the Ministry of Environmental Protection said.

While average concentration levels of particles 10 microns in diameter (PM10) in the past 28 days of the month were all below 150 micrograms per cubic metre and thus met national standards, they fell far short of the much stricter standards for good air quality set in the World Health Organisation 2005 guidelines, according to Mr Lo. “Beijing had only two days in July when its PM10 readings were below 50 micrograms per cubic metre as recommended by WHO,” he said. “It is fair to say that the air quality in Beijing is of concern, particularly on PM10. There are reasons for the world to be concerned with the PM10 situation in Beijing.”

Marathon world-record holder Haile Gebrselassie pulled out of the Olympic event in March because of concerns over air pollution, although he is planning to compete in the 10,000 metres event. Many have also expressed fears over the pollution’s impact on health and performance during the Games.

Greenpeace said it was regrettable Beijing had not included ozone and smaller airborne particles – which were believed to have impacts on health – in its pollution parameters, as the WHO had recommended.

The report noted that air pollution remained a serious problem despite a host of pollution-control measures Beijing has taken over the years.

“We recognise the long-term initiatives made by Beijing’s government in improving air quality, such as increasing investment, opening subway lines, promoting public transport, introducing tougher vehicle emission standards, and retrofitting coal-burning factories with clear technology,” Mr Lo said.

While Greenpeace said many of the efforts the developing country had made for the goal of a green Olympics were “commendable”, it said Beijing had missed “golden opportunities” to use the Games as a platform to promote more ambitious environmental initiatives.

“Although Beijing has undertaken factory upgrades to improve air quality, more could have been done to move the city towards clean production methods. In many areas, Beijing failed to take the opportunity of the Olympics to adopt the world’s best environmental practices,” it said.

Al Guo – Updated on Jul 29, 2008 – SCMP

Plant nursery owner Yu Dongsheng, from Beijing’s Changping district, thought he was well prepared for the Olympic traffic restrictions.

He thought his selection of cars with odd and even number plates would ensure he had transport at any time. But talk in the past week of further traffic restrictions that could take 90 per cent of private vehicles off the road caught him by surprise.

An inspection of his vehicles’ number plates revealed that if a new restriction goes into effect whereby a car may be driven only if the last digit on its plate matches the last digit of the date (for example, 9 for today, the 29th), he is assured of driving a vehicle on only four out of 10 days.

“I don’t have a bus line within 5km of my nursery, so I have no idea how I can get anywhere if the reported measure is real,” Mr Yu said.

Du Shaozhong, deputy director of the Beijing Environmental Protection Bureau, confirmed on Sunday that “even more stringent measures” would be adopted “in case of extreme weather conditions”.

Observers interpreted the comment as heralding the last-digit-matching-the-date restriction.

Beijing has tried to improve air quality by sidelining up to 2 million of the city’s 3.3 million vehicles through a daily, odd-even number plate restriction on private motorists, as well as scaling down production at heavy polluting industries and banning construction or renovations at city centre sites.

But those measures have failed to improve Beijing’s skies, with the air pollution index showing air quality worsening in the past week.

Officials and environmental experts said that if adopted, the new measure would take 90 per cent of vehicles off the road and should immediately improve air quality. But they neglected to say how the thousands who rely on their cars would get to work.

“It’s a typical way the government handles things. Everything is considered except the people. They call the Games the ‘people’s Olympics’, but obviously we are not part of that `people’,” motorist Li Zhengyu said.

Officials admitted that traffic on major roads had increased since the ban went into effect on July 20 because many drivers were trying to compress two days of driving into one.

The constant flow of security and traffic measures rolled out as the August 8 opening ceremony nears has angered many, and at least one disgruntled resident has publicly challenged authorities on the internet.

One man posted his picture with a slogan “boycott the Olympic Games” on the popular website tianya.cn, and many, even under the gaze of website administrators, left their real names as a show of support.

A joke making the rounds in chat rooms at the weekend said people with single eyelids would be allowed out on the streets on odd-numbered days and those with double eyelids would be allowed out on even days to cut the number of people using public transport.

“It’s funny but just as ridiculous as those government measures have been,” accountant Dong Xingguo said.

Despite the overcrowding and delays, people living in urban areas would be able to take public transport if the extreme traffic restrictions are introduced, but for those living in the city’s outskirts, it will mean isolation.