China faces complex challenges to reduce air pollution while still promoting economic growth. No simple solution exists—but policy reforms to reduce excess capacity and get prices right can help in both the near and long terms.
Air pollution in China is not a new concern. In recent years, “red alerts” that signal especially poor air quality have frequently made headlines around the world. In late 2016, these alerts resulted in school and factory closures in Beijing and prompted the government to restrict the number of vehicles on the road. In December, Fortune reported that the air quality index in Beijing had climbed to 260—“more than five times what’s considered healthy”—while the index rose twice as high outside of the city. Beginning with the January 2013 “Airpocalypse,” a series of severe pollution episodes introduced the term “PM2.5” into the public lexicon, referring to particulate matter small enough to penetrate deep into the lungs and enter the bloodstream, causing cardiovascular and respiratory diseases, and even death among vulnerable populations.
At the annual National People’s Congress on March 5, Prime Minister Li Keqiang announced measures to cut coal consumption and vehicle emissions as well as punish “government officials who ignore environmental crimes,” as reported in the Guardian. The outlet noted, however, that “Li’s language was more cautious than three years ago when he used the same opening speech to ‘resolutely declare war on pollution’”—reflecting that air pollution reduction is proving much more difficult than officials originally expected.
Despite already substantial efforts to require enterprises and vehicle producers to install emissions-control equipment and promote more efficient and renewable energy sources, the inability of the Chinese government to reduce severe pollution episodes to date may indeed prompt even greater efforts by government officials. What challenges does China face in seeking to further reduce fossil fuel use—and what are the impacts of such efforts on businesses and daily life?
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