Intensifying efforts in China to address pollution may begin to take their toll on markets, according to many analysts.

Across the nation, inspections of coal-fired power plants and other industry have increased. This past August, authorities ordered over two dozen northern cities to cut air pollution by 15 percent for the coming winter.

At a press conference Monday, China’s environmental protection minister, Li Ganjie, cautioned that even tougher measures are on the way. Some economists are now warning that the Chinese economy could slow somewhat this winter, due to these efforts.

According to Li, “It is impossible that such efforts will not have any impact on enterprises. But in the long run, and from the macro perspective, the impact will be minimal.”

China’s accelerated growth has stirred debate over its costs, including widespread pollution and debt problems. The antipollution efforts seek to address health threats to the nation’s population of 1.3 billion.

According to Yang Weimin, deputy director of Central Leading Group on Financial and Economic Affairs:

“For those areas that have suffered ecological damage, their leaders and cadres will be held responsible for life. Our people will be able to see stars at night and hear birds chirp.”

Yet analysts are wary of the effect these efforts will have on growth. Research from the French bank Société Générale warned of a two-tenths reduction in economic growth.

“Modestly slower growth will be a necessary sacrifice for maintaining social stability over the medium term,” according to the research note.

What happens in China, given the size of its economy, has repercussions around the world. Already, global iron ore prices have fallen somewhat due to concerns that some Chinese steel producers will have to shut down temporarily this winter. This has caused concern for iron ore exporters in places like Australia, which “is absolutely dependent on China — that’s true of iron ore prices, but it’s also true of Australia’s national income,” according to Chris Richardson, an economist with the global accounting firm Deloitte.

China, while increasingly taking a leadership role in solar and wind power, is still dependent on coal for 75 percent of its electricity, with demand still on the rise. This means cuts in electricity use will largely fall on industrial users.

President Xi Jinping has hailed environmental efforts, saying “Clear waters and lush mountains are as valuable as gold and silver.” He has said the country needs to work harder on the balance “between unbalanced and inadequate development and the people’s ever-growing needs for a better life.”

Leave a Reply

Your email address will not be published.