Heavy industry is so ingrained in the spirit of Shanghai that the city recently started promoting what it calls “industrial travels” – not just your average stroll through the industrial park.
The municipal government has set up an office called the Shanghai Industrial Tours Promotion Center that schedules trips to some of the metropolis’s biggest factories, as well as to long-idle industrial sites in the surrounding Yangtze river delta region, some of which are the earliest footprints of the industrial revolution on the continent.
“Industry is a very important part of the city’s history and we want to promote that,” says Yang Peiming, a manager at the center. She notes that Shanghai is also planning to establish an industrial museum to recognize more than a century of dense and enduring smoke stacks, most of which are on the outskirts of the city.
One needn’t visit a museum to grasp the presence of heavy industry in the delta, which has a population of more than 100 million. In early December, residents in Shanghai and several nearby cities found themselves breathing in record levels of air pollution.
China uses an air quality index, or AQI, to measure particulate matter smaller than 2.5 millimeters in diameter. This so-called PM2.5 is small enough to penetrate deep into the lungs; health organizations have warned about the dangerous effects of prolonged exposure to this smog. On December 6, the AQI reading in Shanghai was above 500, the highest possible reading and about 20 times the World Health Organization’s recommended level. Pollution above 300 persisted for days.
A population in white surgical masks appeared on the streets while the tops of the city’s iconic skyscrapers disappeared into a gray haze. The palpable pollution no doubt made city leaders uncomfortable. While industry is a cornerstone of the Yangtze river delta’s economy, those officials hope to transform Shanghai into a world-class financial center by 2020.
Shanghai can’t do it all, that is, remain an industrial powerhouse and at the same time foster a thriving financial hub. Bad pollution threatens to keep much needed international financial talent away from the city and stymie investment from within, experts say. Factories will need to be moved and the urban sprawl that has emerged over the past 20 years better managed if it hopes to realize its goals.
“What’s the role you want to play? Financial center? City center? Industrial center?” Yang Fuqiang, senior advisor on energy, environment and climate change at the Natural Resources Defense Council in Beijing, asks rhetorically of Shanghai’s future. “You’ll have to give up something. Don’t think you can enjoy all the advantages.”
The smokestack in the room
Shanghai’s industrial advantages are vast. The Yangtze river delta has more than 80 industrial zones where factories have clustered to reap tax benefits and other subsidies. Within the city limits of Shanghai there are 16 major industrial areas. Baoshan district in northern Shanghai is home to one of the country’s biggest steel companies, Shanghai Baosteel Group.
Industrial parks with similar tax treatment are spread across the country but political favoritism dating back decades has made the region particularly welcoming of heavy industry. So has access to the world’s biggest shipping port, and the raw materials that enter through it.
When pollution levels soared in December, attention turned not just to Shanghai’s industrial legacy, but to the region’s reliance on coal burning for energy, to its expansive urban sprawl and to the number of cars that commute on its highways daily. Pinpointing the exact cause of the record-breaking smoke has been difficult, however.
“This is a hard question to answer; no one can answer directly,” says Qiang Ning, a professor at the College of Environmental Science and Engineering at Shanghai’s Tongji University. Qiang listed a number of predictable causes such as factory production but said the sudden jump in pollution levels in December was largely related to meteorological factors, namely a dead spell in wind. “It’s mainly due to the drop of average wind velocity,” he said.
Sun Xi, a Singapore-based analyst at environment and governance consultancy Sustainalytics, said that along with meteorological factors, coal burning and emissions from heavy industry and automobiles were the primary sources of the smog.
Between 2000 and 2012, the value of Shanghai’s heavy industrial output has increased more than six-fold from about RMB4.1 billion to RMB25.68 billion. Beijing’s output was lower at about RMB24 billion in 2012.
The city of Beijing has gone to great lengths to identify the sources of its pollution. A government report issued at the end of February showed that about 75% of the capital’s pollution came from within the city limits. Among the haze, 22% came from auto emissions, 16% from coal burning, 16% from heavy industry and 15% from dust thrown up into the air, likely at construction sites, Chinese media reported in March. The remaining 25% is thought to be blown in from industry such as steel mills and coal-fired plants in surrounding Hebei province.
As far as the eye can’t see
Shanghai’s battle against smog has been lost in the headlines about Beijing’s reoccurring “airpocalypse,” or sudden spells of hazardous pollution that often hang around for days. In Late February, the capital experienced its longest-ever period of dense smog, with dangerously high levels persisting for more than 150 hours. That was also the first time Beijing used its new system for smog warnings, issuing the second-highest alert for 132 hours.
Unlike pollution in many other global industrial centers, this kind of smoke in China’s conurbations isn’t bound by city limits. On a hazy day, traveling inland from Shanghai will give no respite from pollution but only reveal hundreds of kilometers of smoky scenery.
“If you say that Los Angeles air quality is bad, you can also see that outside of the city it’s okay,” Yang at the NRDC said. “That means this is a local problem. The smog is not spread out, covering many regions. But for China, this kind of smog covers much of the country.”
In places such as Shanghai, it’s hard to determine where one city ends and another begins. The Yangtze river delta comprises 15 cities and 35 county-level towns in what appears as endless urban space. The sprawl itself is a challenge for Shanghai’s municipal government because of the increasing amount of time that cars spend on the road while commuting from one area to another. High property prices have pushed many white-collared workers out of the city center and into distant suburbs. Driving time has soared for those who own cars.
For a city that will try to join the ranks of London and New York, better urban planning is desperately needed and will also play a large role in reducing pollution. Pan Qisheng, department chair of urban planning and environmental policy at Texas Southern University, said there is a major gap between research on how Chinese cities should be designed and how officials execute that design.
China has an abundance of urban research centers but their connection with policymakers can be fragmented. “There’s lots of very good analysis but planners don’t pay attention to that analysis,” Pan said. “There’s a kind of disconnect between research and practical government planning in China.”
Research can often reveal poorly planned points on a transportation grid. Those points, where a high concentration of cars may end up waiting for long periods of time during peak hours, cause excess amounts of exhaust fumes to be emitted. They also lead to congestion in other places. “It’s a ripple effect,” Pan said. Such problems can be rooted out and avoided in future urban design as long as analysis is applied to planning, he said.
The central government has an ambitious plan of attack for some of these ailments. In fact, during the annual National People’s Congress in Beijing that just passed, Premier Li Keqiang said China would “declare war on pollution.” The comments are a follow-up to lofty plans published last year. In September, the central government pledged to cut the concentration of fine particulate matter in the Yangtze river delta by 20% by 2017. In Beijing and surrounding Hebei province, as well as in south China’s Pearl river delta, the government will aim to reduce the lung-penetrating pollutants by 25% and 15%, respectively.
The Shanghai government’s response to severe pollution in December was muddled and directed residents to cope as best they could. School was cancelled for children and the elderly were advised to stay inside. Treading carefully behind central policy, Shanghai has issued its own contingency plans for heavy smog including a warning system similar to Beijing’s.
Qiang at Tongji University, who said he has attended municipal government meetings on pollution, pointed out that the government is in the process of drafting a law on air pollution but final approval has been delayed. “Maybe it’s because of the work style of the Shanghai government: They have to be 100% confident before they promulgate the law,” he said.
Local officials will want to expedite the process as they plan to transition the city to a global financial hub by 2020.
Last year, the central government announced it would open a free trade zone in Shanghai’s Pudong district. The zone will lift restrictions on local and foreign businesses and partially liberalize exchange and interest rates – highlighting Shanghai’s still-strong intention to lead the country forward in economic openness. Local officials led by reform-minded municipal party secretary Han Zheng promote the city as first and foremost a banking and finance hub, not an industrial center.
Shanghai 2020 or bust
Clinging to the reputation of an industrial hub will only hinder the city’s grand financial plans. Experts have pointed out that, as much as Shanghai would like to retain both its financial and industrial prowess, it can’t.” The city should not try to compete with other regions on heavy industry.
“Shanghai may have the intention to ‘do it all,’ but it is definitely not sustainable,” Sun at Sustainalytics said.
A report released in mid-March by the American Chamber of Commerce in China shows the kind of effect heavy pollution can have on a business center. The report said that 48% of the 365 foreign companies surveyed were unwilling to send executives to China because of the high level of pollution; the air problem was also prompting foreign business people to pack up and leave the country.
It’s not only foreign participation the Chinese government needs to worry about, a report from Beijing’s Foreign Economic and Trade University pointed out in March. The author, professor Xiao Xinrong, claims that hazardous pollution is lowering what he called the domestic population’s “survival rate,” which affects how much people invest into private businesses. That in turn hurts overall economic development. Xiao’s hypothesis is that increased investment into reducing pollution will ultimately result in more private investment and faster economic growth.
The clearest solution for relieving this kind of pressure may also be the most difficult. Too many cities burn coal as a source of energy, Yang said. Central policy, such as changing the tax on coal from volume-based to price-based, could encourage a slower consumption rate of the fuel. On a more local level, cities should build central steam-generating facilities that would replace the small, often inefficient coal-fired boilers that companies uses to generate power, Yang said.
That’s a slow process. And Yang pointed out that the rate at which the country burns coal is only speeding up. Another method is to relocate factories to other areas. In 2008, the central-level Ministry of Commerce said it would promote moving heavy industry from coastal areas to central and western regions. Shanghai has been doing that, albeit at a lethargic pace. In 2012, Baosteel Group, which reportedly produced 6% of Shanghai’s industrial output that year, said it would begin to transfer some factories to underdeveloped areas of the country with the hope of cutting local emissions.
Reform-minded officials in Shanghai should leverage the influential free trade zone to upgrade factories or move more of them out of the city, Sun said.
Powerful planners will need to turn their attention to the research coming out of Chinese institutions. Just as China’s central government has recently emphasized the market’s role in financial services, it must learn to recognize the role the market plays in building cities, Pan said. Shanghai will also need to coordinate with surrounding cities to lessen urban sprawl, Yang noted.
There’s a lot riding on the city’s transformation. As banks and financial towers continue to rise in Shanghai, local officials will need to make sure pollution levels are ever falling.