How China’s Pollution Fight Is Roiling Commodities

China is planning to expand air pollution curbs in Beijing and nearby provinces to more cities that are crucial for the production of coal, steel and transport fuel. The move comes as President Xi Jinping tries to ensure blue skies for the Winter Olympics to be held in and around the Chinese capital in February, and are on top of national efforts to reduce carbon emissions and control power usage to improve efficiency and avoid crunches. The combined policies have roiled commodity markets and, taken together, reinforce the idea that the government is willing to take a short-term hit to growth in service of its environmental goals.

The expansion of the blue skies initiative aims to cut the amount of fine particulate matter in the air in parts of north China close to where the Winter Olympics will be held. That should cut the number of smog-heavy days. Beijing tries to reduce smog every winter, but is ratcheting up efforts this year because of the global attention that the games will attract. Rail transport will be favored over road, and output caps on highly polluting and energy-intensive industries -- steel and aluminum, for example -- will be extended.