China Endorsing Tobacco in Schools Adds to $10 Trillion Cost

In dozens of rural villages in China’s western provinces, one of the first things primary school kids learn is what made their education possible: tobacco.

“On the gates of these schools, you’ll see slogans that say ‘Genius comes from hard work -- Tobacco helps you become talented,’” said Xu Guihua, secretary general of the privately funded lobby group Chinese Association on Tobacco Control. The schools are sponsored by local units of China’s government-owned monopoly cigarette maker. “They are pinning their hopes on young people taking up smoking.”

Anti-tobacco groups say efforts to reduce sales in the world’s largest cigarette consumer, such as a ban on smoking in public places introduced in May, have been hampered by light penalties, a lack of education about the dangers of smoking and the fact that the regulator, the State Tobacco Monopoly Administration, also runs the world’s biggest cigarette maker, China National Tobacco Corp.

China has more than 320 million smokers, a third of the world’s total, and about 1 million Chinese die from tobacco- related illnesses every year. Reducing mortality in the country from cardiovascular diseases, for which smoking is a main risk factor, by 1 percent a year over the three decades to 2040 could generate economic value equal to 68 percent of China’s 2010 real gross domestic product, or $10.7 trillion, according to a World Bank report published in July.

“Despite the strong will of the government to implement smoking control policies,” the volume of cigarettes sold in China is expected to keep rising from 2011 to 2015, London-based researcher Euromonitor International said in a July report. It forecasts China’s tobacco market will grow at an average 14 percent a year to hit 1.8 trillion yuan in retail sales in 2015.

Sales Rising

The tobacco industry grew at an average annual rate of 19 percent from 2006 to 2010, according to State Tobacco. Last year, earnings rose 17 percent to 605 billion yuan ($95 billion), including 499 billion yuan in taxes. About 53 percent of Chinese men and 2.4 percent of women smoke, according to a 2010 survey by the Chinese Center for Disease Control and Prevention.

While China’s laws ban tobacco advertising on radio, television and in newspapers, they “do not have clear restrictions on sales and sponsorship activities,” according to a report published in January by Yang Gonghuan, a former deputy director of China’s Center for Disease Control, and Tsinghua University professor Hu Angang. The report, titled “Tobacco Control and China’s Future”, cited the example of a Chinese cigarette brand that sponsored a TV series, ensuring that the name appeared during the closing credits.

The European Union banned all tobacco advertising in its member states in 2005. Last year, new U.S. rules ended the industry’s backing of sports like Nascar racing.

‘Healthy Mothers’

Other tobacco sponsorship in China includes funding for 42 primary school libraries in Xinjiang and 40 in Tibet in September 2010, and a 10 million yuan donation in Nov 2010 to a Chinese women’s development fund for a “Healthy Mothers’ Express” campaign, the report said. China National Tobacco, lists charitable activities on its website, including a 5 million yuan donation this month for drought-hit Yunnan province.

In a survey of more than 2,000 adults conducted in 2009 by the Chinese Association on Tobacco Control, 7 percent had a good impression of the tobacco industry because of its charity work, while 18 percent said they would pick a cigarette brand based on involvement in such activities.

State Tobacco’s press office didn’t respond to requests for interviews or a faxed list of questions about sponsorship.

China decided to create a tobacco monopoly in the 1980s when the industry supplied more than 10 percent of government revenue, said Wang Shiyong, the World Bank’s senior health specialist in Beijing. Today, tobacco contributes 6.7 percent, according to figures from Yang and Hu’s report.

Internal Lobbying

“Especially in tobacco-growing provinces like Yunnan and Guizhou, the tobacco industry is a very important part of local government income,” said Wang. “There is a lot of internal government lobbying to make sure the health consequences of smoking are not addressed.”

The lack of awareness is an issue lung surgeon Liu Deruo is trying to address, starting in his own hospital. Liu lit his first cigarette in 1974 while forced to work in a tobacco field in northeast China during the Cultural Revolution.

“All the farmers I worked with smoked, so I also smoked,” said the 55-year-old head of thoracic surgery at Beijing’s China-Japan Friendship Hospital, who quit after going to medical college. He persuaded the 15 surgeons who work for him also to kick the habit. “Now I tell my doctors they are allowed to smoke only in my office, and nobody dares to do so.”

Liu’s campaign is part of an effort to get doctors to lead reforms in people’s lifestyles.

‘Role Models’

“Doctors’ smoking behavior is of particular importance,” said Sarah England, technical officer at the Tobacco Free Initiative of the World Health Organization in China. “They are role models for their patients and for the general public.”

A government survey found that two in five male doctors light up every day in China. When Liu took over his department in 2001, 94 percent of the doctors smoked, he said.

Pfizer Inc. (PFE), whose Champix is the main prescription anti- smoking drug sold in China, funded a three-year program from 2008 to set up 60 smoke-free hospitals in Beijing, Shanghai and Guangzhou to help doctors quit. Smoking among the hospitals’ leadership more than halved to 8.4 percent from 19.1 percent, while overall rates for doctors fell to 6.8 percent from 10.7 percent, said Neena Moorjani, a spokeswoman for the New York- based drugmaker in an e-mail.

Western Images

The education drive has a way to go. Only one in four adults in China believe exposure to tobacco smoke causes heart diseases and lung cancer, and the percentage for smokers is even lower -- 22 percent -- according to the 2010 Global Adult Tobacco Survey for China.

“Socially, smoking is still part of everyday life in China and images, many from the West, still glamorize smoking,” said Linda Sarna, a professor at the University of California, Los Angeles’ School of Nursing, in an e-mail. “Quitting smoking is still not the norm,” said Sarna, who is recruiting 1,000 nurses at four Beijing hospitals for a new smoking intervention program.

China National Tobacco is one of the country’s biggest employers, with 510,000 staff and its monopoly on production has meant international rivals have made little progress in the country. The state cigarette maker controlled 97.9 percent of the market in 2010, followed by British American Tobacco Plc (BATS) with 0.6 percent, Philip Morris International Inc. (PM) with 0.3 percent, and Japan Tobacco Inc. (2914) with 0.1 percent, according to Euromonitor.

Closed Market

Philip Morris, the world’s second-biggest tobacco company, entered the market in 2008 after signing a license for China National Tobacco to produce Marlboros at two factories.

“For now, the Chinese market is pretty much closed,” Chief Financial Officer Herman Waldemer said at a conference on Sept. 7. “There is a complete monopoly on it. We are developing our relationships.”

In addition to State Tobacco’s control of the industry, it is also part of the Ministry of Industry and Information Technology, which chairs the eight-member body tasked with implementing the WHO’s Framework Convention on Tobacco Control in China, said Xu, a former deputy director at the Chinese Center for Disease Control and Prevention.

“The government and the industry are in the same body -- the regulator is also the enterprise,” she said.

Judith Mackay, a senior policy adviser to the World Health Organization, said the power of the tobacco industry in China made it more difficult to address the problem.

Health Warnings

“An amazing number of things in China come under the jurisdiction of the tobacco industry,” she said. “The health warnings on cigarettes for example. It’s not under the Health Ministry. There’s clearly a set of conflict of interests.”

Mackay was attending a United Nations meeting on Sept. 19- 20 at which global leaders backed a plan to fight non- communicable diseases such as lung cancer, including proposals to curb tobacco use.

Regional units of China’s tobacco monopoly fund more than 100 primary schools throughout the country, such as the Sichuan Tobacco Hope Primary School, the official Xinhua News Agency reported in May. Some are named after top-selling brands like Hongta, which means red pagoda, or Zhongnanhai, named after the compound next to the Forbidden City where China’s top leaders live and work.

“We’ve been trying to get the Ministry of Education to stop the tobacco companies from sponsoring these schools,” said Xu. “But the ministry wants us to show them proof that this is causing harm.”

--Daryl Loo. Editors: Adam Majendie, Bret Okeson.

To contact Bloomberg News staff for this story: Daryl Loo in Beijing at +86-10-6649-7540 or dloo7@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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Source: ChinaFotoPress/Getty Images

China decided to create a tobacco monopoly in the 1980s because the industry accounted for more than 10 percent of total government revenue said Wang Shiyong, the World Bank’s senior health specialist in Beijing.

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Source: ChinaFotoPress/Getty Images

China decided to create a tobacco monopoly in the 1980s because the industry accounted for more than 10 percent of total government revenue said Wang Shiyong, the World Bank’s senior health specialist in Beijing. Close

China decided to create a tobacco monopoly in the 1980s because the industry accounted for more than 10 percent of... Read More

Photographer: Teh Eng Koon/AFP/Getty Images

China has more than 320 million smokers, a third of the world’s total. Close

China has more than 320 million smokers, a third of the world’s total.

Photographer: Frederic J. Brown/AFP/Getty Images

The tobacco industry grew at an average annual rate of 19 percent from 2006 to 2010, according to State Tobacco. Close

The tobacco industry grew at an average annual rate of 19 percent from 2006 to 2010, according to State Tobacco.

Photographer: Bernardo De Niz/Bloomberg

China National Tobacco is one of the country’s biggest employers, with 510,000 staff and a monopoly on production. Close

China National Tobacco is one of the country’s biggest employers, with 510,000 staff and a monopoly on production.

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