Pollution fears over China's growth

By Richard McGregor in Beijing

China has recorded double-digit growth for the fourth year in succession, according to the country’s top economic planner, amid rising tension between the push for continued fast development and the environment.

Ma Kai, head of the National Development and Reform Commission, said on the agency’s website on Friday that the economy had grown by 10.5 per cent in 2006 “according to initial calculations”.

The figure, released by Mr Ma ahead of the official announcement of growth figures due on January 25, records an economy slowing slightly from the blistering growth of more than 11 per cent recorded during the first quarter of last year.

But the 10.5 per cent figure is in line with expectations following the government’s mild austerity campaign in the latter half of the year, when it directed banks to slow lending and also lifted interest rates. Mr Ma said the rate of growth was “still too fast and the cost is too large”.

In spite of his protestations, the government still favours high-speed growth to maintain employment, although it is worried about the pollution enveloping cities and the degradation of scarce water supplies.

“The contradiction between the [exploitation of] resources and the environment is increasingly serious,” he said.

Such tensions were on display this week when the State Environmental Protection Agency threatened to close scores of plants, some run by powerful state companies, unless they complied with pollution rules.

Sepa is a relatively weak agency that struggles to enforce its writ in large parts of the country but has in the past used publicity to publicise offenders to bring them to heel.

Its campaign may already be having an impact, with Datang International Power Generation, one of the country’s largest power producers, announcing yesterday it would begin to close five 50 megawatt coal-fired stations in Tangshan, a steelmaking centre near Beijing.

However, the company said in a statement to the Hong Kong stock exchange that the closures would have a “considerable impact on power supplies” during winter and should be done gradually.

Datang’s rapid response may have been driven by the demands of the stock exchange in Hong Kong, where it is listed, but it also reflects rising pressure to conform with antipollution laws.

Until recently, local officials have had little incentive to enforce pollution laws as their performance has been judged on how fast their district’s economy grows.

But the Communist party is trying to institute a system for judging officials that takes into account water and air quality.