Beijing will not renew significant cuts on steel production and coal use aimed at improving air quality this winter, as policymakers look to boost China’s economic performance in the midst of the country’s trade war with the US. The curbs — a rare restriction imposed on industries where state enterprises are prevalent — were meant to target airborne pollution, which worsens during the winter as much of the country’s northern cities are heated with coal-fired power.
Last year, steel producers in four major production cities were forced to halve their output during the winter months while reducing their use of coking coal by nearly a third. Twenty-eight cities and regions were mandated to cut steel and aluminium output by roughly the same amount. This winter, regulators are replacing hard caps on coal use and steel production with less stringent targets, weakening draft guidelines put out in August. Levels of particulate matter of 2.5 microns (PM2.5), a standard for measuring air pollution, must be cut by 3 percent, rather than the previously proposed 5 percent target.
A number of recent indicators, such as purchasing managers’ indices, household debt and fixed asset investment, have shown China’s economy is slowing. That has prompted Beijing to pare back environmental policies to boost gross domestic product, said analysts. “While the industry had largely fallen in line with previous environmental restrictions, there is much less consensus about the wisdom of imposing additional output curbs,” wrote Rosealea Yao, an analyst at Gavekal Dragonomics, in a recent note.