Shanghai Air Pollution Wanes After Smog Forces Cancellations

Source: ChinaFotoPress/Getty Images

People wearing masks walk along The Bund in Shanghai on Dec. 8, 2013. Close

People wearing masks walk along The Bund in Shanghai on Dec. 8, 2013.

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Source: ChinaFotoPress/Getty Images

People wearing masks walk along The Bund in Shanghai on Dec. 8, 2013.

Shanghai’s air pollution fell to “light” levels after record smog this month prompted flight cancellations and the city warned children and elderly to stay indoors on at least seven of December’s first nine days.

The city’s PM2.5 air pollution was 63.1 micrograms per cubic meter as of 2 p.m., after hitting 360 micrograms per cubic meter yesterday. Today’s reading is still more than two times higher than the daily exposure level recommended by the World Health Organization. The particles, which are smaller than 2.5 microns in diameter, are more dangerous than other particulate matter, according to the World Health Organization.

“This is a shock,” said Robert Theleen, chief executive officer of ChinaVest Ltd. and chairman of the American Chamber of Commerce in Shanghai. “There was a perception that Shanghai was doing a better job in controlling pollution than Beijing.”

Heavy pollution may undermine plans for Shanghai, the nation’s commercial hub, to attract foreign investment and multinational firms, as the city implements a free-trade zone as part of a broader goal to become a global financial and logistics center by 2020.

Production Cuts

The city’s air quality index was 130, categorized as “lightly polluted,” according to the local monitoring center. A warning to stay indoors is triggered any time the index exceeds 200. The index surged to a record 482 on Dec. 6 to the “severe” level, the highest of a six-tier rating system, according to the China Daily newspaper. That prompted the government to order cars off the road and factories to cut production.

Baosteel Group Corp., the parent company of China’s largest-listed steelmaker, is using low-sulfur coal in its Shanghai power plants in line with government efforts to reduce smog, spokesman Alex He said by text message today. The company also suspended outdoor operations of its chemical facilities and is controlling production at its iron-ore processing operations, He said.

Premier Li Keqiang pledged in March to clean up pollution including cutting coal consumption, shutting steel plants and controlling the number of cars. Pollution has become the top cause of social unrest in China, Chen Jiping, a former leading member of the Communist Party’s Committee of Political and Legislative Affairs, said that same month.

China’s benchmark Shanghai Composite Index was little changed today after better-than-expected export data offset sales of coal producer shares amid concern worsening pollution may reduce reliance on the fuel. China Shenhua Energy Co., the biggest coal producer, declined 0.9 percent in Shanghai trading.

City Image

The smog is hurting the city’s image as it seeks to attract foreign businesses and talent to its fledgling trade zone, Theleen said. City officials need to do better job with information disclosure and find out the root cause of the smog. he said.

The pollution may be coming from coal power plants and factories such as cement works in the provinces of Jiangsu, Anhui and Shandong, Greenpeace China said on its website.

“Steps taken by the Shanghai government to alleviate pollution aren’t enough,” Huang Wei, who works on climate and energy issues for Greenpeace in Beijing, said by phone yesterday. “Smog brings a huge health risk to the public and definitely affects multinational companies’ investment decisions and makes them hesitate before sending foreign employees to China.”

Military Defense

In October, the Shanghai government announced a plan to cut 2012 PM2.5 readings by 20 percent by 2017. Outdoor air pollution can cause lung cancer, the International Agency for Research on Cancer, a WHO agency, said in October, ranking it as a carcinogen for the first time.

The recent bout of smog could be beneficial to military defense, the state-owned Global Times newspaper said in an article yesterday. During the Kosovo war, the Yugoslavian army used artificial haze by burning scrap tires to avoid bombing by NATO, the Global Times said. In a reaction to criticism of the article online, the editor of the Global Times, Hu Xijin, said on his Weibo that it was wrong to interpret as a defense of pollution. The party has interest in the topic, he wrote.

The city inaugurated in September its free-trade zone as a testing ground for free-market policies including plans to liberalize 19 industries from banking to shipping and allow freer convertibility of the yuan.

“Longer term, if there is no response, of course it’s going to have an impact on how Shanghai is perceived,” said Theleen. “If Shanghai is going to be a financial center, transparency is key.”

To contact Bloomberg News staff for this story: Allen Wan in Shanghai at awan3@bloomberg.net

To contact the editor responsible for this story: Gregory Turk at gturk2@bloomberg.net

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