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Beijing Clamps Down On Pollution Before Olympics

By V. Phani Kumar, MarketWatch – The Wall Street Journal

Last update: 3:56 p.m. EDT April 24, 2008

HONG KONG (MarketWatch) — When the Olympic Village officially opens in Beijing this July, visitors could be in for a treat.

In all likelihood, they will find that what’s inside the 163-acre campus presents a sharp contrast to the horrible tales they have heard or read about the pollution in the Chinese capital.

And for most of the 10,708 athletes expected to arrive there for the Olympics a few days later, the energy-efficient buildings and air-conditioning, solar-panels generated electricity and the biological sewage treatment technology being used in the facility, as well as the lush greenery at the adjoining 1,680-acre Olympic Forest Park, should ease some concerns about environmental sensitivity.

“The harmony between culture, architecture and environment has been achieved in the green residential area,” Liu Rong, an official with the Beijing Guoao Investment Development Co., which built and owns the facility, told the media last month.

But for athletes participating in the endurance events that include an hour or more of physical effort such as marathon running, triathlon and urban road cycling — as well as the Games organizers — Beijing’s air quality may well give some sleepless nights.

A decision last month by Ethiopian runner Haile Gebrselassia to pull out of the 42-kilometer marathon fanned worries about the air pollution in Beijing, even though Gebrselassia, an asthmatic, said he would still participate in the shorter 10-kilometer run.

Earlier this month, the International Olympic Committee said a set of data collected at test events last year, and feedback from athletes’ physicians, showed that one year ahead of the Games, the health of athletes was “largely not impaired.”

The Games organizer, however, said its Medical Commission found there “may be some risk” to the outdoor events and that it was working with international sports federations to put in place procedures to allow a contingency “Plan B” for these events, if necessary. It didn’t detail the plan.

The IOC added “measures are continuously being taken by the Chinese authorities, which can be expected to improve the air quality further when compared with 2006 and 2007.”

The United Nations Environment Programme also agreed in a report that air quality has improved for some monitored pollutants.

“Beijing has implemented a number of initiatives to improve its air quality and reduce its air pollution. From the relocation and refitting of major polluting industries, to the conversion of coal burning boilers, to cleaner fuels and the implementation of vehicle emission standards, the city can boast significant achievements,” UNEP wrote in a report.

“However, it can take years to determine significant changes in air quality. Relevant progress may be evident only in the medium- to long-term,” it added.

Beijing shows it means business

Meanwhile, the Chinese authorities are in overdrive mode to avoid any embarrassment because of the threat from pollution. Leading its efforts are two state-run organizations — Beijing Municipal Environmental Protection Bureau and the federal-level organization, State Environmental Protection Administration.

Last week, Du Shaozhong, deputy director at the Beijing environmental watchdog, announced the suspension of construction activity between July 20 and Sept. 20, in addition to ordering 19 heavy-polluting industries to reduce their emissions by as much as 30% during that period, according to state media reports.

Du added that “in case of extremely negative meteorological conditions,” the watchdog could take even harsher measures.

With the Chinese authorities on the defensive after marathon champion Gebrselassia’s pullout, Du said he “guaranteed” that no events will need to be put back because of worries about air quality, according to reports.

Separately, Beijing will restrict movement of about half the city’s cars during the Games to clamp down on another major source of pollution. Under the plan, vehicles with odd- and even-numbered plates will be allowed only on alternate days, the reports said.

SEPA, on the other hand, is targeting companies and even cities with a weak track record on pollution, including a number of offenders in places surrounding Beijing. Last year, it put 39 cities on the blacklist for poor air quality, including seven in the Shanxi province, the country’s largest coal supplier and an equal number in Liaoning province, one of the most industrialized. Both states border Beijing.

The ministry also joined hands with the banking, insurance and securities market regulators to pin down the guilty parties.

In February, SEPA vice minister Pan Yue announced a “guide to green securities” following a one-year trial period, aimed at containing “excessive expansion of high energy consumption and high pollution industries” by raising funds from the stock markets.

The initial public offering of several Chinese companies, including some large ones such as China Coal Energy, reportedly got delayed last year as they awaited government approval for environmental reasons.

On a separate occasion in February, Yue said that several companies were denied bank loans, and in a few cases loans were even recalled, for violation of environmental laws.

Health & hygiene

As the Olympics draw closer, Beijing is also swooping down on health-related issues, in addition to environmental ones. With nearly 1.5 million visitors expected during the 15 days of the Games, authorities are redoubling efforts to ensure food safety and meet acceptable international standards.
Stefan Bollhalder, general manager at Shangri-La group’s China World Hotel in Beijing, said “there are regular inspections by the Beijing Hygiene Bureau,” in addition to the hotel’s own efforts to ensure food safety.

But efforts to impose a blanket ban on smoking in public places have run into slight resistance. China has more than 300 million smokers, according to World Health Organization estimates, and people habitually light up at public places, including restaurants.

According to a report in state-controlled newspaper China Daily, restaurants, bars and internet cafes have been exempted from the ban on smoking at public venues in the wake of concerns raised by those businesses. These places, however, will separate smoking and non-smoking sections from May 1.
A spokeswoman for the Hilton chain of hotels said the Hilton Beijing “recently launched a campaign to introduce smoke free zones into public areas around the hotel.”

Some rooms in the hotel will be designated “smoke-free zones, which is relatively unusual in China,” she added.

Some of the half a million foreigners expected to visit during the Games could, however, be inconvenienced, as most public toilets in China are traditional-styled squat toilets.

An Associated Press report cited a local official as saying renovations were under way at some venues, but that it was difficult to change every permanent toilet in the 37 event locations.

Who will benefit?

From investors’ perspective, tourism and hotel industries were likely to be the big beneficiaries from the Beijing Olympics, according to analysts. Despite the organizers’ efforts to keep hotel tariffs affordable, the quoted tariffs for hotel rooms have more than quadrupled in some cases, according to state media reports.

Real estate firms were also likely to benefit from the temporary restrictions on construction activity.
“The delay in construction work means less supply of property in the second half of the year. It’s good for the companies as prices will be better supported, but it’s not so good for their cash flows,” said Zhufeng Wang, an analyst with Evolution Securities China in Shanghai.

Mona Chung, a senior fund manager at Daiwa Asset Management in Hong Kong, said there has been a lot of hype about sector-specific stocks benefiting from the Olympics.

But it was unlikely “investors will be looking at the Olympic-theme when they decide their investment strategy for the second quarter,” she said.

End of Story

Varahabhotla Phani Kumar is a reporter in MarketWatch’s Hong Kong bureau.

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