China orders smog-hit Hebei to draw up restructuring plans

Residents exercising amid heavy smog on the Bund in Shanghai as local meteorological department issued a yellow alert for smog on Nov 12, 2014. -- PHOTO: AFP
Residents exercising amid heavy smog on the Bund in Shanghai as local meteorological department issued a yellow alert for smog on Nov 12, 2014. -- PHOTO: AFP

BEIJING (REUTERS) - The Chinese government has ordered its most polluted province, Hebei, to draw up fresh plans to "upgrade" its economy in a bid to ease its dependence on heavy industries like steel and cement, the Economic Observer newspaper reported on Friday.

The local government is now drawing up new economic restructuring plans which will eventually be passed on to Beijing, the newspaper said, citing local officials.

Hebei, which surrounds the capital Beijing, is China's biggest steel producer and home to seven of the country's 10 smoggiest cities. It has borne the brunt of a war on pollution, with large numbers of industrial plants set to be shut.

It promised to cut 60 million tonnes of steel capacity and 40 million tonnes of coal consumption over the 2013-2017 period, but it has so far struggled to find alternative sources of growth.

The province's economy grew 6.2 per cent in the first three quarters, behind a 2014 target of 8 per cent, and in a speech last week, Hebei vice governor Yang Chongyong called for more incentives for the province.

"Hebei has paid a very big price, with its economy suffering grave injuries," he told a forum. "If there are just widespread enterprise closures and layoffs, if there are no new projects or employment opportunities, then there's no way of guaranteeing people's incomes and livelihoods, so how can we maintain stability?"

Steel mill closures are said to be ahead of schedule, with the major steel city of Tangshan expecting to have shut 20 million tonnes by the end of the year, half its 2013-2017 target, according to official news agency Xinhua.

It also shut large numbers of firms in early November in order to guarantee air quality during a meeting of the Asia-Pacific Economic Cooperation (Apec) summit in Beijing.

But the Ministry of Environmental Protection said in October that some local governments in Hebei were not doing enough and preferred "form over substance" when it came to combating smog.

China is currently drawing up plans to integrate the regions of Hebei, Beijing and Tianjin. The plan is designed in part to improve Hebei's economic prospects by relocating industries like car manufacturing away from the capital.

The integration plan could be published as early as this month, Xinhua reported this week.