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Financial Crisis

It’s peak season, but delta supply chain in doldrums

South China Morning Post – 24 Sept 2011

Plunging confidence in the US and Europe eats into orders, with just 13 weeks to go to Christmas

A chill wind is sweeping across the factory supply chain in front of a looming global recession.

From manufacturers in the Pearl River Delta, to freight forwarders and package delivery services in Hong Kong, to retailers and shoppers in the United States and Europe, confidence is falling sharply.

The spiralling euro-zone sovereign debt crisis and a lack of faith in US plans to push down interest rates have already cooled spending in advance of the Thanksgiving and Christmas seasons.

“We can’t feel even a tinge of Thanksgiving as the market is extremely quiet now,” Toll Global Forwarding (HK) managing director Kelly King said. Demand was abnormally sluggish for this time of year, traditionally the peak season for the air and sea cargo industry, he said.

The air freight rate from Hong Kong to Europe fell to HK$15 per kilogram this month, down from HK$18 to HK$20 per kilogram in June, King said. Even with sharp rate cuts, carriers and cargo agents found it tough to fill cargo space on the Europe leg.

With just 13 weeks to go to Christmas, shipping lines and freight forwarders are seeing little of the surge in shipped goods of last year. Airlines had cut their cargo flights and grounded some aircraft, King said.

FedEx, operator of the world’s biggest cargo airline, yesterday lowered its earnings forecast for this year by 10 US cents per share on falling shipments for the second quarter in a row in the US. FedEx chief executive Fred Smith said the company expected sluggish economic growth to continue. Rival UPS also said last week that the US economy grew at a slower rate than it had anticipated.

Hong Kong Garment Manufacturers Association chairman Willie Fung Wai-yiu said the confidence of overseas importers and consumers was battered.

“Buyers, who had already bought very cautiously so far this year, lost confidence,” he said. “Some place orders unexpectedly, but they want shipment right away.”

In some cases, buyers have ordered a container of garments to be delivered within four weeks. Fung said the normal lead time for production of fabric alone was four weeks, not counting production and shipping of the garments.

Federation of Hong Kong Industries deputy chairman Stanley Lau Chin-ho said the bleak outlook on trade – combined with issues on the mainland, such as industrial reform, cost inflation and labour shortages –would intensify a survival-of-the-fittest struggle in the Pearl River Delta.

“The European situation is the most worrying, with the fate of Greece hanging in the air,” Lau said. “It is uncertain whether the worst … is yet to come.”

Hong Kong Air Cargo Terminals, (Hactl), which handles 80 per cent of the cargo at Hong Kong International Airport, recorded its fourth consecutive monthly decline in cargo volume last month.

“There is no sign of optimism,” Hactl marketing and customer service general manager Lilian Chan said.The ongoing relocation of mainland factories further inland amplified the drop in air cargo in Hong Kong, she said.


Economic Crisis Gives Us A Chance To Become Environmentally Friendly

SCMP – Updated on Feb 01, 2009

Air pollution is a major concern in Hong Kong. I think the present financial crisis is the best time to begin changing our energy policies in an effort to lower our air pollution levels. We must do this, because as air quality deteriorates, our health will suffer. With [continuing dependence on oil] and fluctuating oil prices, we will face more economic instability. We have to recognise that as pollution gets worse, some professionals from abroad are reluctant to come and live in Hong Kong. Being a commercial city, there is huge demand for electricity. As a major entrepot in South China, our trucks, ships and aircraft consume a lot of fossil fuel.

I believe our power stations should come up with a strategy to develop renewable energy resources. We are using non-renewable energy, in the form of coal, natural gas and nuclear power. More should be done in Hong Kong to develop wind, solar and biomass energy. We should also consider co-operating with the authorities in Guangdong with a view to a joint venture through which we could develop green energy. Hong Kong could provide the necessary financing for such a joint venture and Guangdong could offer cheap labour and the spare land needed to establish the green projects. By lowering the cost of labour, land and energy, we can persuade foreign investors to set up companies in Hong Kong.

The government should also encourage Hong Kong citizens to save energy. For example, it could offer tax exemptions for environmentally friendly private cars. Tax penalties could be imposed on cars that pollute because of the fuel they use. I think the tax on plastic bags is a good start. We need to develop a new culture of responsibility regarding the environment. Instead of creating construction jobs as a way to stimulate the economy, we should consider ways of creating green job opportunities, especially for the unskilled who are out of work. For example, people will be needed to categorise our refuse and promote a recycling programme for Hong Kong’s households.

As I said, I think the economic downturn offers us a golden opportunity to diversify and develop green industries.

Stefan Lam Kit-yung, Tuen Mun

Workable Solution: China Wants Better, Cleaner Industry For Tomorrow, But Needs Jobs And Stability Today

Joseph Cheng, SCMP – Updated on Jan 08, 2009

The Guangdong leadership has been promoting industrial upgrading in the Pearl River Delta for many years, and this is perceived as the inevitable path of economic development. The processing factories in the delta are mainly labour-intensive manufacturing; their products are low value-added with minimum technological content. They are also responsible for the region’s environmental pollution. Hence, their demise is considered progress.

In the last two or three years, labour shortages in the delta have been pushing up wages, and industrial land is in short supply. The Guangdong authorities are also eager to tackle the issue of environmental protection, as pollution has had an adverse impact on the quality of life. These are obvious intermediate and long-term trends, and are not unexpected.

In early 2007, the Guangdong leadership began to take active steps not only to promote industrial upgrading, but to exert pressure on the processing factories in the delta as well. Hong Kong businessmen in the region felt the pressure.

Their plight was exacerbated by other developments. China’s export boom and huge trade surpluses pushed the yuan higher, and the Bush administration in the US, as well as other western governments, exerted pressure on Beijing to further appreciate its currency.

The Labour Contract Law was scheduled to be fully implemented at the start of 2008, which added a range of pension and insurance expenditure to the wages bill. Most processing factories operate at very low profit margins, sometimes only 3 per cent to 5 per cent, and it was natural that some had to cut back, relocate or even close down.

The Guangdong policy was in line with the central government’s broad economic development strategy. The Chinese leadership endorsed the approach. The new Guangdong Communist Party secretary, Wang Yang , appealed to local cadres to “adopt new thinking and to further liberate their thoughts”. However, when the impact of the global financial crisis began to be felt in late summer last year, the situation became different.

The crisis has certainly worsened the situation. Many processing factories have stopped operating, and millions of migrant workers have lost their jobs. Some have begun to return to their villages.

There are over 200 million migrant workers in China, according to Ministry of Agriculture assessments; 10 per cent of them losing their jobs means more than 20 million unemployed. The fact that factories are closing down has also generated a lot of labour disputes; migrant workers who have not received all their wages and benefits have joined street protests. This has affected social stability.

From the Guangdong leadership’s point of view, an economic downturn may be a good opportunity to accelerate industrial upgrading, as demonstrated by past experience in Japan. Developing more advanced, innovative industries and weeding out backward processing factories would raise Guangdong’s international competitiveness.

The Guangdong authorities are, therefore, inclined to keep with the existing policy, and are reluctant to help the labour-intensive small and medium-sized industrial enterprises.

The return of migrant workers to their villages, again, will not cause serious social and economic problems for Guangdong as most of these low-wage, unskilled workers come from less-developed neighbouring provinces. In fact, their departure will reduce pressure on Guangdong’s social services.

The central government, on the other hand, has a national, macro view. The current leadership accords the highest priority to stability. For many years, it has been trying hard to maintain an annual growth rate of 8 per cent or more.

The objective is to offer employment to new entrants in the labour market, as well as underemployed rural workers. Keeping a low unemployment rate is essential to maintaining social stability.

The promotion of industrial upgrading and reducing pollution in the coastal provinces have been supported by Beijing.

In the past decade, some labour-intensive industrial enterprises in the Yangtze River Delta have moved to central provinces. Less-prosperous Jiangxi province, for example, has been actively attracting factories to relocate there to boost its own industrialisation.

At this stage, however, the central government is more concerned with containing unemployment and ensuring social stability. Premier Wen Jiabao now advocates state support for small and medium-sized enterprises, for fear that their failure would cause only more unemployment.

Hence, this has become an issue to be negotiated between Guangdong and Beijing – but whose outcome will affect Hong Kong businessmen in the Pearl River Delta.

Joseph Cheng Yu-shek is a professor of political science at City University of Hong Kong

Perfect Partnership To Tackle Climate Change

Trevor Houser, SCMP – Updated on Dec 23, 2008

The current economic crisis cast a pall over climate change talks held this month in Poland. With American home values and retirement savings falling, and Chinese unemployment figures rising, observers worry that neither America nor China – the world’s two largest polluters – will have much appetite to cut emissions.

The paradox here is that the crisis presents a unique opportunity for the US and China to strike a deal that would lay the groundwork for a global climate agreement. Indeed, one of the main goals of the most recent biannual meeting of the US-China strategic economic dialogue was to begin work under the 10-year energy and environment co-operation framework, created earlier this year.

This initiative comes after a decade in which America abstained from international efforts to address climate change, concerned that if it acted but China didn’t, the world would fail to meet its emission-reduction targets and US industry would be disadvantaged.

China has countered that its historic and per capita emissions remain well below US levels, and that to cap aggregate national emissions at the same level as the US would imply a personal carbon budget in San Francisco five times greater than in Shanghai.

Economically, the US and China are mirror images, opposite sides of a massive global imbalance. Americans spend too much and save too little, leaving a US$250 billion trade deficit financed by other countries, notably China, whose firms and citizens save too much and consume too little, leaving a surplus of goods and capital that flows abroad.

This macroeconomic imbalance is reflected in the nations’ carbon footprints. In the US, more than 70 per cent of carbon dioxide emissions come from consumer-related activities. In China, more than 70 per cent of emissions are industrial.

In terms of brokering a climate deal, this imbalance is good news. It suggests a framework for reducing emissions that respects the development needs of China’s households, addresses US firms’ competitiveness concerns, and adheres to the principle of “common but differentiated responsibilities” embedded in international negotiations.

In recognition of its outsized historic and per capita emissions, the US should agree to economy-wide emission cuts in line with domestic climate laws under consideration. China should be excused of consumer-related obligations for now, but assume pledges on industrial production.

If China consolidates its energy-intensive manufacturing, thereby freeing up investment capital for lighter manufacturing and services, then it will emerge from the crisis with a growth model that pollutes less and employs more. If the US and China can find agreement on these issues in the midst of crisis, they will pave the way for success when climate negotiators meet again next year in Copenhagen.

Trevor Houser is a visiting fellow at the Peterson Institute for International Economics in Washington. Copyright: Project Syndicate

Vietnam Under Threat As Seas Rise

David Adam, SCMP – Updated on Dec 14, 2008

As Global Warming Raises Ocean Levels, Rich Nations Are Being Urged to Bail out the Vulnerable

Which country will be most affected by the steady rise of the seas?

Which country could see more than a tenth of its population displaced, a tenth of its economic power crippled and a tenth of its towns and cities swamped by the end of this century?

The answer, which may surprise you, is Vietnam, named by the World Bank as the nation with most to lose as global warming forces the oceans to reclaim the land.

Just a 1-metre rise in sea level would flood more than 7 per cent of the country’s agricultural land and wreck nearly 30 per cent of its wetlands, the bank says. And the situation could be worse than that: a 1-metre rise in sea level is at the conservative end of the predictions for the year 2100. Some climate experts, including Jim Hansen, director of Nasa’s Goddard Institute for Space Studies, argue the likely rise should be measured in several metres.

A 1-metre rise would still be enough to cause chaos. In a study recently published in the journal Climatic Change, the World Bank says such a rise would have an impact on about 0.3 per cent of the territory – 194,000 sq km – of 84 developing countries. That might not sound much, but it would affect about 56 million people. Coastal populations across poorer countries generally do better economically, so the surge in the seas would affect GDP even more – about 1.3 per cent.

The study, which summarises the findings of a 50-page briefing paper published by the bank last year, comes as campaigners call for rich countries to do more to help the developing world adapt to the inevitable effects of climate change.

Heather Coleman, senior climate change policy adviser with UK-based charity Oxfam, says: “Helping vulnerable people cope with the effects of climate change is desperately needed today because they already face increasingly severe and ever-worsening climate change impacts.”

The charity released a report last week that called for at least US$50 billion a year to be channelled from international carbon trading schemes into adaptation efforts.

“With a global financial crisis unfolding, these mechanisms could raise enough money from polluters without governments having to dip into national treasuries,” Ms Coleman says. “Many negotiators agree that this is one of the more practical approaches. Billions of dollars can be raised and invested to prevent future climate change and to help poor people adapt to the negative impacts of global warming.”

Oxfam says poor countries need help to upgrade national flood early-warning systems, plant mangrove “bio-shields” along coasts to diffuse storm waves, and grow drought-tolerant crops.

The report came out last week as ministers attended UN talks in Poznan, Poland, to continue negotiations on a new global climate treaty to replace the Kyoto protocol.

Ms Coleman said the world’s leaders had paid lip service to the issue of adaptation money for too long. “It is a vital part of the overall deal, a litmus test of how serious rich countries are in tackling the problem.

“Poor people around the world bear the brunt of climate change, and yet they are least responsible for global warming. Even during tempestuous financial times, rich countries can and should help poor people to cope. We can’t afford to exchange a short-term saving for a long-term disaster.”

If countries fail to adapt to the new reality of climate change, Ms Coleman warns, they would suffer far greater damage from floods, droughts and hurricanes.

Of those, the World Bank study, led by Susmita Dasgupta, of its Development Research Group, says some countries will suffer the effects of sea level rise much worse than others. Severe impacts will be limited to a “relatively small number of countries”.

As well as Vietnam, the report highlights likely damage to the Bahamas, which could lose more than a tenth of its territory to a 1-metre rise, and Egypt, which faces the flooding of 13 per cent of its agricultural land. Mauritania, Guyana and Jamaica are also among the biggest losers.

In the bank’s rankings of the top 10 countries affected by a sea level rise, across six different types of impact, Bangladesh – often associated with rising sea levels – features only once. The country is listed as the tenth most affected by land area, with just over 1 per cent likely to be flooded.

The report says: “The overall magnitudes for the developing world are sobering: within this century, tens of millions of people are likely to be displaced by sea level rise, and the accompanying economic and ecological damage will be severe for many.”

It adds: “International resource allocation strategies should recognise the skewed impact distribution we have documented. Some countries will be little affected by sea level rise, while others will be so heavily impacted that their national integrity may be threatened. Given the scarcity of available resources, it would seem sensible to allocate aid according to degree of threat.”

The bank says the study is the first of its kind, but admits it is not foolproof. It did not investigate the effects of milder sea level rise, which will be felt in the next few decades. And its methods were too crude to assess the fate of small islands, which are particularly vulnerable. It also fails to take into account adaptation measures put in place over the next century, which would lessen the damages, or storm surges, which would worsen them.

Nevertheless, its central message is clear: “There is little evidence that the international community has seriously considered the implications of sea level rise for population location and infrastructure planning in many developing countries.”

A separate Oxfam report last month investigated the situation on the ground in Vietnam, in the provinces of Ben Tre and Quang Tri.

The charity warned that the effects of climate change threatened Vietnam’s development achievements. It is one of the few countries on track to meet most of its millennium development goals by 2015, and it managed to reduce its poverty rate from about 58 per cent of the population to 18 per cent in 2006.

“Such impressive achievements are now at risk,” Oxfam says. In 2000, Vietnam produced just 0.35 per cent of world greenhouse gas emissions – one of the lowest contributions in the world.

It is not just rising sea levels that pose a threat; higher temperatures, as well as more extremes of weather such as drought and typhoons, will have a “potentially devastating impact on the country’s people and economy”, the report says.

Some communities are already adapting to changing weather patterns. Rice farmers are harvesting earlier, before the main flooding season, or growing a rice variety with a shorter cycle.

But the report found countless cases of poor people across Ben Tre and Quang Tri who were ill-equipped to cope with the consequences of climate change.

Oxfam says rich countries must step in – and quickly. “The amounts of investment needed are beyond [Vietnam’s] budgetary capacity,” it says. “International adaptation finance will be needed in the face of unavoidable impacts.”

The Guardian

California Passes Rules for Cleaner Diesel Trucks

By Peter Henderson, Reuters13 December 2008

SAN FRANCISCO (Reuters) – California on Friday became the first state in the country to force big diesel trucks to clean up their exhaust, despite warnings from truckers the new rules will force them out of business.

About a million vehicles, from big rigs to school buses, are affected by the new rules, which will begin taking effect in 2011 and do not require further ratification.

Some vehicles will have to start retrofitting engines in 2011 and some older trucks will be forced into retirement starting in 2012. By 2023, all trucks must meet 2010 new engine emission standards.

The rules regulate smog-causing oxides of nitrogen, which are greenhouse gases, and particulate matter, which is toxic. The California Air Resources Board estimated the regulations would cost about $5.5 billion. It put the health benefits of cleaner air at $48 billion to $69 billion over the next couple of decades.

The move by California, the leading U.S. state on climate change, complements a detailed strategy to cut carbon emissions that the board passed on Thursday as part of its sweeping plan to cut carbon emissions to 1990 levels by 2020.

While the federal government has no such rules for trucks or carbon, President-elect Barack Obama has said that climate change will be a priority when he takes office in January.

Individual truckers and companies told the board, which is the agency charged with carrying out the state’s landmark global warming law, that the new rules requiring retrofitting of recently purchased trucks and the replacing of older vehicles would prove too financially onerous during a global economic slowdown.

Board members recognized that the buckling U.S. economy could change the impact of the regulation, requiring changes.

But Chairman Mary Nichols said before two unanimous votes ratifying the changes that history showed such rules were not economically onerous.

“While this one is big and expensive and is being adopted in difficult times, we’ve never adopted a rule that I’m aware of that didn’t have severe opposition,” she said. “The reality has been that the cost of compliance has turned out to have been less than we estimated.”

(Reporting by Peter Henderson; Editing by Peter Cooney)

EU Agrees to Cut Greenhouse Gases 20pc by 2020

Agence France-Presse in Brussels, SCMP – Updated on Dec 13, 2008

EU leaders reached agreement on an ambitious package to slash greenhouse-gas emissions yesterday, urging US president-elect Barack Obama to follow their lead in the fight against global warming.

But environmentalists promptly panned the agreement, saying too many concessions had been made to industry and to poorer eastern European nations with their highly polluting coal-fired power plants.

French President Nicolas Sarkozy said at the end of the two-day European Union summit in Brussels: “No continent has given itself such binding rules that we have adopted with unanimity.” Mr Sarkozy chaired the gathering as head of the French EU presidency.

The EU’s climate-energy package, the “20-20-20” deal, seeks to decrease greenhouse-gas emissions 20 per cent by 2020, make 20 per cent energy savings and bring renewable energy sources up to 20 per cent of total energy use.

Mr Sarkozy denied the targets had been watered down with leaders fearing the package would hit energy and jobs as recession bites.

But Greenpeace, WWF and other groups denounced the deal as “a dark day for European climate policy”.

“European heads of state and government have reneged on their promises and turned their backs on global efforts to fight climate change,” they said.

One of their gripes was that the French concessions allowed more “polluting rights” to be given out for free rather than be paid for.

European Commission President Jose Manuel Barroso said the election of Mr Obama offered a chance for a joint effort between Europe and the US to combat global warming.

An Interview of Christian Masset on Topic of Air Pollution in Hong Kong

Christian Masset, Chairman of CTA, Bloomberg – 12 Dec 2008

Chairman of CTA, Christian Masset, was interviewed on 12 Dec 08 and broadcast in Bloomberg. He talked about the actions Government should take to clear the air in Hong Kong, even in the situation of recent economic crisis.

California Moves on Global Warming, Warned on Cost

Reuters in San Francisco, SCMP – Updated on Dec 12, 2008

California, the leading US state on climate change, set detailed goals on Thursday (Friday, HK time) to cut greenhouse gases and address global warming but faced criticism the plan’s economic assumptions were hopelessly optimistic.

Home to the world’s eighth largest economy, California confirmed its US environmental trendsetter status with an ambitious 2006 law that seeks to cut carbon emissions linked to global warming to 1990 levels by 2020.

The law spearheaded by Republican Governor Arnold Schwarzenegger was the first in the country to set carbon targets. The federal government still has no firm plan.

“[The plan] provides a road map for the rest of the nation to follow,” Mr Schwarzenegger said. US Democratic President-elect Barack Obama has promised to make climate change a priority when he takes office on January 20.

The California Air Resources Board voted on Thursday to adopt a plan to fill in details of how to cut carbon emissions, from forest conservation to energy efficiency and carbon emissions from industry and cars and trucks.

The goal of cutting carbon emissions about 30 per cent below projected business-as-usual levels by 2020 has been widely accepted as a desirable target, and debate has moved to a cost-benefit analysis of means to make the cuts in the midst of an economic meltdown.

“We have laid out a plan which if followed can transform our economy and put us on the road to a healthier state,” board chairman Mary Nichols said as all eight board members approved the plan.

Measures include requiring that 33 percent of electricity be from renewable sources, regional transportation emissions targets and a cap-and-trade system for cutting industrial pollution by letting utilities and other companies trade emissions permits.

Much more remains to be done over the next few years. The plan has been compared to a menu for a meal, with recipes for dishes yet to be worked out.

Critics have urged the board to reconsider, including some economists who argue the analysis is full of rosy assumptions and ignores potential problems.

“All economists are sceptical when approached with a free lunch,” said University of California, Los Angeles economist Matthew Kahn. “I wonder if there would be less likelihood of a backlash if there were more discussion now.”

Companies throughout California fear rising electricity and other costs will put them out of business.

“This plan is an economic train wreck waiting to happen. Up until now, that train wreck has only existed on paper,” said California Hispanic Chambers of Commerce legislative affairs chairman James Duran.

The board, responsible for carrying out the 2006 law, said it saw the growth of green business more than making up for the costs. Its analysis shows per-capita income rising about US$200 a year as a result of the changes to the economy and a US$7 billion per year rise in the gross state product of California as a relatively small effect on the nation’s most populous state.

James Fine, an economist for the Environmental Defence Fund, argued that the impact more than a decade from now of major changes to the state economy today was impossible to tell with the precision demanded by critics. The bottom line, he said, was that the economic impact was negligible.

“It doesn’t make a lot of sense to argue about whether the economic effects are going to be a little bit positive or a little bit negative,” he said.

Mr Fine and others expect California’s plan to spur action from the US Congress, which has fail

China “Cancer Village” Pays Ultimate Price For Growth

Reuters By Emma Graham-Harrison and Vivi Lin – Thursday, December 11, 2008

Once an isolated haven, the Chinese village of Liukuaizhuang is now a tainted hell, surrounded by scores of low-tech factories that are poisoning its water and air, and the health of many villagers.

One in fifty people there and in a neighbouring hamlet have been diagnosed with cancer over the last decade, local residents say, well over ten times the national rate given in a health ministry survey earlier this year.

Many fear they are paying for the country’s breathtaking economic expansion with their lives, as surrounding plants making rubber, chemicals and paints pour out health-damaging waste.

“They asked in the hospital whether my family had a history of cancer. I said: ‘No, in the last three generations no one had it’,” one villager told Reuters, pulling out his x-rays and doctor’s diagnosis that he had lung cancer. “It must have a lot to do with the pollution here.”

Three decades of reforms and opening up since 1978 have transformed China from a rigidly ideological backwater into the world’s fourth largest economy, lifting millions out of poverty, but not without a price.

Nationwide there are dozens of places like Liukuaizhuang, where factories have blackened streams, poisoned farmland and choked the air.

Just 120 kilometres south of Beijing, Liukuaizhuang was a quiet village before the dramatic economic boom was kicked off by a series of low-key Communist reforms on Dec 18, 1978.

Twenty years later almost 100 chemical plants were scattered across what used to be farmland and thirty years on someone in almost every family is dead or dying of cancer — the youngest just seven years old — according to a local activist.

Officials agree that the area, dubbed a “cancer village” in domestic media, had a huge pollution problem, although they insist cancer rates are below the national average and all the worst-offending factories are now shuttered.

“The factories were not far from homes and to a certain degree influenced the normal life of the villagers,” said the Communist Party spokesman for the county, Huo Junwei.

“(But) we think figures provided by individuals exaggerate pollution problems in our area,” he said. “For several years we have been looking into whether there is a link between cancer and chemical production and have not yet got a scientific answer.”


In recent years, national leaders worried about the mixed legacy of chasing economic expansion at almost any cost have stepped up calls for a more equitable society and cleaner industry nationwide.

But the pollution around Liukuaizhuang was so rampant that a crackdown driven partly by health concerns began in 2003, long before greener growth became a ubiquitous government mantra.

And activists say waste water and toxic gasses are certainly causing some illness there, even if an apparent link with cancer has not been proved.

“Pollutants including heavy metals like mercury and lead have already got into the food chain and all these chemicals will affect the normal function of cells,” said Gao Zhong, an environmental economist with a non-governmental organisation that works to clean the country’s polluted water.

Wong Tze-wai, an environmental health expert at the Chinese University in Hong Kong, said it would be premature to assume a link, but authorities should look into whether the number of cancer cases in the village was abnormally high, and if so, why.

“It’s important to investigate. We know that many industrial chemicals are carcinogenic and it is not unlikely that they can get into the eco-system,” he told Reuters.

The village’s richer inhabitants have backed that view by moving away, locals say, leaving behind the old, poor and ill. Some cannot afford even the most basic health precautions.

“We don’t have enough money to clean the water we drink. We put it all in a basin and let the pollutants sink,” said the daughter-in-law of one lung cancer sufferer.

All are reluctant to discuss the illness as they say health benefits were cut to victims who spoke out in the past, as well as one activist, Wang Dehua, who was jailed for several years.

“A lot of journalists came and went, but it did not change the situation at all,” said one middle-aged liver cancer patient whose husband was also diagnosed with cancer recently. Like all the other interviewees she refused to be named.


Some hope may ironically come from the global economic crisis, which is threatening so many Chinese jobs, as the world slowdown has dented demand for the products churned out from the country’s factories and so cut their waste.

The villagers say some of Liukuaizhuang’s bare bones factories, where paint is mixed in open drums in fume-filled warehouses guarded by vicious dogs, have already gone bust.

The crisis has also spurred Beijing to line up a multi-billion dollar stimulus package. Activist Gao hopes some of the cash will be spent on cleaner technology.

“Now we are facing financial turmoil. There is a good way to stimulate domestic demand and also keep society stable, which is to improve the environment to invest more into this so … the country will be able to develop with quality,” he said.

However there is also a risk that Beijing’s leaders, facing rising unemployment and the social problems caused by a slowing economy, will relinquish environmental goals and ease pressure on the heavy industries that have created so much of both the country’s growth and its pollution.

Many in the “cancer village” fear the clean up is too late for them but they cling to hope that it will save their children and grandchildren from terminal illnesses.

“Of course I am worried, but what is the use of being worried?” said a lung cancer patient.

“We have to save our concern for the next generation.”

(Additional reporting by Tan Ee Lyn in Hong Kong)