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September 2nd, 2008:

Beijing Saw 14 ‘Top Grade’ Days In August

Agence France-Presse in Beijing – Updated on Sep 02, 2008

As Beijingers started their working week on another day of clear skies, the capital’s environmental protection bureau reported that the city experienced 14 days of “level one” air quality, the highest possible reading, last month.

Main pollutants were down 50 per cent from normal during the Olympics, and 45 per cent for the whole month, the bureau said on its website.

“This was the best level in 10 years,” it said.

Among drastic measures to ensure clean air for the Olympics, private cars were allowed on the roads only on every second day using an odd and even number plate system. This took about 1 million of the city’s 3.3 million cars off the roads.

More than 100 heavily polluting factories were also temporarily closed, while some construction work was suspended.

These measures started on July 20 and are due to remain in place until September 20 following the end of the Paralympics, which begin on Saturday.

The improvement in air quality has sparked online debates on whether to continue the measures, particularly the restrictions on car use. More than 400,000 people have joined a discussion on www.ynet. com, the website of the Beijing Youth Daily newspaper, on whether to keep anti-pollution measures going, with about half in support.

“In the past few years, many of the people I know have had cancer, and this is definitely linked to air pollution,” one posting said. “Where health is concerned, it’s worth making some sacrifices, like leaving the house earlier, being squeezed in the bus sometimes.”

The Beijing Times quoted the city environmental protection bureau saying it would take measures to continue to improve the air quality after the Games, including a possible charge on vehicle emissions. But it made no mention of the alternate driving days. The city’s air quality is routinely rated among the worst in the world by global agencies.

Manufacturers Suffer From ‘Olympic Effect’

Denise Tsang – SCMP – Updated on Sep 02, 2008

Mainland manufacturing shrank last month for the second consecutive month as exports softened and factories shuttered production to clear the air for the Beijing Olympics.

Slowing factory production increases pressure on Beijing to introduce new measures to avert a sharp fall in economic growth.

The purchasing managers’ index (PMI) compiled by the China Federation of Logistics and Purchasing remained at 48.4 for the second month in August. A reading below 50 means manufacturing is contracting.

Economists said the world’s fastest-growing economy was feeling the rippling impact of slowing economic activity in the United States, Japan and the European Union.

Manufacturing was likely to stabilise in the coming months when Beijing lifts anti-pollution measures that suspended factory production before and during the Olympic Games. Still, slowing global growth would continue to have an impact.

Zhang Liqun, an economist at the State Council’s development research centre, said companies continued to operate in a hostile environment even though factory gate price inflation was easing.

A separate purchasing managers’ index by CLSA slipped to 49.2 last month from 53.3 in July, the first drop since November 2005.

But CLSA said the “Olympic effect” had probably made the slump in last month’s manufacturing more severe than it really was. Factories within several hundred kilometres of Beijing were ordered to shut down to improve the air quality for athletes.

Without the Olympics, “it would have been modestly lower than July, primarily reflecting softer export orders, but still comfortably above the 50 break-even line”, said CLSA economic researcher Eric Fishwick. “Manufacturing growth is slowing but nowhere near as rapidly as the drop in the August PMI suggests.”

Morgan Stanley chief economist Wang Qing said he did not think manufacturing would shrink further in coming months as factories would gradually resume production.

“It will stabilise after the one-off factor of the Olympics-related suspension of production activities,” Mr Wang said. “Factory-gate prices will peak along with the downward trend of consumer price inflation.”

He added that shrinking manufacturing would foster a slower pace of yuan appreciation. A stronger yuan makes mainland-made good less competitive on world markets.

The yuan softened to 6.83 yesterday against the US dollar from its historical peak of 6.81 in July, according to the China Foreign Exchange Trade System.

Credit Suisse chief economist Tao Dong said a slowing economy would reduce inflationary pressure.

“The receding inflationary threat is positive news for Beijing, as the government has more policy tools and experience to deal with a growth slowdown,” Mr Tao said.

He expected that loan quotas for smaller firms would be lifted further and the reserve ratio for banks would be cut 50 basis points by the end of this year.

He also expected Beijing to beef up spending on infrastructure to avoid a sharp fall in growth.

Heat is on America

Updated on Sep 02, 2008 – SCMP

As the Democrats and Republicans rally round their candidates for the US presidency, it’s a good time to ask what we can expect the winner and his administration to do about climate change. Will the next president continue George W. Bush’s policy of trying to kill the international climate regime, or will he take this crucial problem more seriously?

One thing seems clear: starting next year, the US is unlikely to continue opposing efforts to devise policies that will significantly reduce greenhouse gas emissions. While we can expect Barack Obama and the Democratic-controlled Congress to join forces in promoting regulations that limit greenhouse gas pollution, even under John McCain things will change; he has expressed concerns about climate change for some years.

Under the next US president, policies on climate change will be driven by pressures building inside and outside Washington. Indeed, most action in the US to limit greenhouse gas emissions has occurred at the grass roots. The US public is expressing growing concern about climate change. A June poll found that 62 per cent of American adults believe the next president should take “strong action to address climate change soon after taking office”. This change in public opinion is reflected in consumer behaviour. The price of petrol has pushed many more consumers towards fuel-efficient and less-polluting cars, demonstrating the potential of climate-motivated petrol taxes to shape public behaviour.

In recent years, a growing number of US states have passed laws and adopted climate-change action plans. These measures include carbon-reduction targets, energy-efficiency and renewable-energy standards, and regional cap-and-trade agreements. This action outside Washington is raising the pressure on Congress to respond at the national level, and inevitably will affect how the US behaves in future international climate negotiations.

One thing to expect is for Congress to advocate trade policies and measures that will protect US businesses. This will involve a push for tariffs on imports made by methods more polluting than those in the US – with predictable opposition from free-trade advocates and adversely affected industries. Many of these trade-related measures are implicitly, and often explicitly, focused on Chinese manufacturers, which have long enjoyed subsidised energy and relatively low environmental standards. Alas, it is not the nature of Congress to pass ideal legislation. The first of the new climate-related trade laws is likely to be messy, have unpredicted outcomes and favour politically influential industries.

Trade measures being considered by Congress will not be welcomed by some countries, which will challenge them for undermining free-trade agreements. But if vocal opposition comes from China, already perceived in Washington as trading unfairly, resolve in Congress to protect US industries might be reinforced.

Alternatively, collective opposition from major developed economies, if led by the European Union and combined with evidence of harm to American businesses and consumers, could blunt major climate-related tariffs.

If too few countries are willing to join in substantially limiting greenhouse gases, it is possible that the US government could focus on protecting entrenched industrial interests and mustering support among countries opposed to robust cuts. In this respect, the US and China could become allies.

It is possible the next US president will seek to muster global support for the kind of greenhouse gas cuts being implemented in Europe. The US has the rare ability to use economic incentives to bring more countries into a much stronger climate agreement.

It is now undeniable that US policymakers at all levels, and the American people themselves, are catching up with climate science. We may soon view the Bush years as a temporary, if painful, pause in US international environmental leadership.

Paul G. Harris is director of the Environmental Studies Programme, director of the Centre for Asian Pacific Studies, and a professor of political science at Lingnan University, Hong Kong