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August 11th, 2008:

Games Could Cause Brief Dip In Growth

Reuters in Beijing – Updated on Aug 11, 2008

The transport restrictions and factory closures that China has ordered as part of its drive to clean Beijing’s air for the Olympics could lead to a dip in overall economic activity in the short term, some economists say.

Hoping to cut down on smog during the Games, authorities have shut down dozens of polluting factories in Beijing and neighbouring provinces and are significantly limiting traffic in and out of the city. It has also banned certain goods from being shipped for security reasons.

Many economists have said that the effect of those measures would probably be offset by factories in other parts of the country ramping up production and by an Olympics-related boost to Beijing’s tourism industry.

But Hong Liang and Yu Song with Goldman Sachs said evidence was mounting to the contrary.

“While the long-term economic impacts of the Olympic Games are likely to be minimal, it increasingly looks like the Games’ short-term economic impacts are likely to be negative,” they wrote in a research note.

Liang and Song expect the measures to lead to a visible slowdown in both production and consumption in August and September, to be followed by a rebound in October after the restrictions expire. They are due to end on September 20.

“Therefore, it will be difficult to get a ‘clean’ reading of the underlying economic trend [as well as price trend] probably until after October,” they wrote.

Many economists expect China’s economy to slow in the second half, as weaker overseas demand and the stronger yuan drag down exports and tightening measures at home dampen investment. Annual growth slowed to 10.1 per cent in the second quarter, down from 11.9 per cent in all of last year.

However, economists agree virtually unanimously that the end of the Games themselves will not contribute significantly to any long-term slowdown in the country’s growth, as has been experienced by some past host nations, including after the Seoul Games in 1988, Barcelona in 1992 and Athens in 2004.

Jonathan Anderson, an economist with UBS in Hong Kong, noted that the impact of the Olympics on the overall economy was greatest in countries in which the host city accounts for a relatively large proportion of the overall population.

Whereas some past host cities have accounted for upwards of 40 per cent of the national population, that figure drops to 1.1 per cent for Beijing, Anderson said.

“Our estimates for China put the impact of the 2008 Olympics far behind the decimal point in terms of growth,” he wrote.

However, the end of the Olympics could be good for the economy in other ways, as that will allow authorities to shift their focus back to the many other pressing problems waiting to be tackled, said William Hess, greater China manager for Global Insight in Beijing.

“The Olympics have been a giant distraction when it comes to policy making, and movement on issues such as energy pricing and power shortages, rising producer costs and the plight of SMEs is arguably overdue,” Hess said. “There are still a lot of big issues out there that need attention.”

Smog Set To Lift As Rain Cleans The Air

Shi Jiangtao in Beijing – SCMP – Updated on Aug 11, 2008

Smoggy skies, which have shrouded Beijing for the past week and remain a persistent concern, are expected to clear today, meteorologists say.

The capital was still blanketed in thick haze yesterday, with poor visibility and sapping humidity. Rainstorms were forecast for overnight.

But Wang Jianjie , deputy director of the Beijing Meteorological Bureau, said weather conditions would help disperse trapped pollutants, especially airborne particles from dust and vehicle emissions.

“The forecasted rainfall tonight and tomorrow is certainly conducive to cleaning up airborne particles and clearing the air,” she said.

Olympic cyclists have complained about the heat and humidity, but weather officials said conditions would improve.

“It is unlikely we will have the sultry and humid weather in the coming days that we saw last week,” said Guo Hu , director of the Beijing Meteorological Observatory.

Amid concerns that frequent summer showers would affect outdoor events like beach volleyball and tennis, which were postponed due to rain yesterday, he said organisers were informed of conditions hourly.

Beijing has tried to reduce pollution ahead of the Games, but substantial improvement has not been seen.

Some international experts have voiced concerns that Beijing’s air quality standards have fallen short of those adopted by the World Health Organisation.

International Olympic Committee president Jacques Rogge and Achim Steiner, who heads the UN Environment Programme, have weighed in and defended Beijing’s efforts. Echoing mainland environmental officials, Mr Rogge said foggy air should not be confused with pollution.

Pacific Basin Says New Ship Orders Address Green Concerns

Charlotte So – Updated on Aug 11, 2008 – SCMP

Specialist dry cargo shipping company Pacific Basin Shipping believes the four roll-on/roll-off vessels it has ordered will help address challenging environmental issues in Asia.

“We have a strong view that environmental issues are going to become more important to the world,” said chief executive Richard Hext.

Governments in Europe were eager to take long-haul trucks off the road and replace them with roll-on/roll-off vessels plying the continent’s ports because carbon emissions from the vessels per unit of cargo per mile, were lower than those of trucks, said Mr Hext.

And the environmental awareness in Beijing as a result of its campaign to clean the air for the Olympic Games would reshape attitudes towards pollution in both China and Asia, he said.

“As a result, we expect demand for roll-on/roll-off vessels will grow in Asia,” said Mr Hext.

Pacific Basin ordered four roll-on/roll-off vessels in December for delivery between next year and 2010. The deal carries options for two additional vessels in June. The orders, worth US$577 million, amounted to 80 per cent of Pacific Basin’s total new vessels commitments.

Although management was confident of new business it could do with its roll-on/roll-off vessels, analysts said the outlook for the service was still unclear.

“We consider that forecasting rates for the sector is difficult at this stage as the large-sized [roll-on/roll-off ships] are new to Asia,” according to a Cazenove report.

The company will now be relying on its track record of being able to discover new markets and position itself in a market sector with less competition.

By focusing on handysize vessels of between 25,000 and 34,999 deadweight tonnes, it enjoyed 4-1/2 years of profit growth in the past 5-1/2 years, said analysts.

The new vessels ordered could operate at 21.5 knots (40km per hour) and were more fuel-efficient than the firm’s existing ships, said Mr Hext.

In addition, the company has invested US$40 million in a mainland gas supply company, Green Dragon Gas, to prepare for tougher environmental requirements on shipping.

“It is possible that shipping companies will be required to be carbon-neutral,” said Mr Hext.

Green Dragon Gas produces natural gas from coal-bed methane in a process that reduces the amount of methane released into the atmosphere during coal mining.

Since methane oxidises in the atmosphere to form carbon dioxide, Pacific Basin anticipates it will qualify for carbon credits that could be used to offset the greenhouse gas produced by its ships in the future.

More on For IPO news, listed company reports, announcements and press releases, go to our new investor relations website. For Pacific Basin, go to

Plastic Bag Tax Is Not The Way To Fight Pollution

Updated on Aug 11, 2008 – SCMP

I absolutely agree with Kevin McBarron (“Drastic changes needed to save environment”, August 6), in his response to Martin Brinkley’s letter (“Anti-plastic bag levy lobby must learn to live in the 21st century”, July 29), that a plastic bag ban is a placebo designed to fool people and convince them they are making a difference.

Mr Brinkley seems to have difficulty focusing only on the subject of the debate – supermarket plastic shopping bags. By emphatically defending the qualities of plastic bin-liners, he fails to understand why these are environmentally more harmful than the supermarket shopping bags.

Mr Brinkley suggested critics have implied that “all plastic bags are reused and ultimately serve as bin bags”; this is a distortion of what has been said. Various correspondents have always quoted the fact that 93 per cent of the respondents in the Environmental Protection Department’s (EPD) own survey reuse “supermarket plastic shopping bags” as rubbish bags, without using additional purpose-made plastic bin-liners. The same EPD survey also reveals supermarket plastic shopping bags only accounted for 20.3 per cent of all the bags disposed of in our landfills. It is known that plastic bags disposed of in landfills occupy less than 0.5 per cent of the total waste volume so they cannot be blamed for our landfill problems.

So, the more one reads the EPD’s public consultation report, the more one feels it has indeed no reasonable justifications for its so-called “environmental levy”.

This risible law on supermarket plastic shopping bags was blindly passed, even though such bags are positively contributing to the general environment.

The majority of Hong Kong citizens have been using and reusing them.

If supermarket plastic shopping bags were such environmental evils, why didn’t the government target those single-use plastic bin-liners also? Would environmental minister Edward Yau Tang-wah care to explain this?

Alex F. T. Chu, Clear Water Bay