China's Regions Seek Support as Environmental Compliance Costs Hit

By Reuters 9 April 2019

SHANGHAI—China’s cash-strapped regions are lobbying Beijing to loosen its purse strings to help fight pollution, saying they don’t have the funds to meet state policies aimed at fixing the damage done by decades of unrestricted development.

The cost of environmental compliance was a major theme at this month’s annual session of the National People’s Congress, where thousands of non-binding recommendations submitted by delegates give an insight into the major preoccupations of legislators.

Beijing has been at pains to stress it will not ease up in the “war on pollution” launched five years ago by Premier Li Keqiang, even though the economy grew at its slowest rate since 1990 last year.

But with resources tight and controlling debt a priority, many parliamentary delegates called for more spending support from Beijing and a more “coordinated” approach to keeping pollution in check and the economy on track.

“We cannot stop or hinder economic development in order to pursue environmental protection,” said delegate Pei Chunliang from central China’s Henan Province, which has struggled to find new sources of growth.

“In some regions the rules of economic development have not been respected,” Pei warned in a proposal calling for more support for environmentally friendly firms.

For regions under pressure to meet smog targets or resolve long-standing environmental problems while trying to meet growth targets, immediate relief is seen as essential.

“There is a big gap between fiscal revenues and expenditure,” said Zhang Leiming, mayor of the city of Pingdingshan in Henan, blaming the economic slowdown and the city’s dependence on coal.

Zhang said his city had spent hundreds of billions of yuan to tackle problems like land subsidence, but it was “far from enough”, and the state needed to establish a giant fund to help resource-dependent cities meet their goals.

Many regions called for state aid to rectify such longstanding pollution problems, with delegates from coal-producing regions like Shanxi lobbying for tax and debt relief.

Other regions are also struggling to implement new directives to prevent agricultural pollution and clean up rivers.

“Due to insufficient local financial resources and historical debts, it is difficult to meet the funding requirements,” said delegate Yu Huiwen, head of the environment bureau in Sichuan province, which is responsible for protecting the upstream area of the Yangtze.

The finance ministry said in its report to parliament this month that it will allocate 25 billion yuan (US$3.7 billion) to a smog prevention fund this year, a 25 percent increase on 2018, and 30 billion yuan to treat water pollution, up 45 percent.

Environment Minister Li Ganjie, who acknowledged earlier this year that some regions were struggling with the “historical burdens” of polluting industries, also told a briefing during the parliamentary session that China would provide more support for local governments.

The government was “currently studying and preparing to adopt new measures,” he said, but added it wasn’t just about money, but also policies and technical guidance.

“Whatever the difficulties, we will help them find a reasonable solution,” he said.