Shanghai paying price of campaign against industrial pollution

Chinese steel production is moving from its heartland in Hebei province in the wake of government efforts to tackle pollution near Beijing, but Shanghai could be paying the price as steel mills around the commercial capital ramp up output.
Stricter environmental checks in Hebei have also created opportunities for polluting industries such as cement and glass-making plants in provinces near Shanghai.
While air pollution rates in Beijing and nearby cities in Hebei have been relatively low over the past month, index readings in Shanghai and elsewhere on the eastern coast have hit record highs.
Following Beijing's lead to eliminate steel production in the city, Shanghai cut its steel output by more than 10 percent last year. But it could be suffering due to rising production in surrounding provinces such as Jiangsu, where small mills are taking advantage of a sustained government effort to shut plants in Hebei.
Steel output fell sharply in Hebei at the end of 2013 but rose in Jiangsu, Anhui and Zhejiang provinces, all near Shanghai, according to data from the National Bureau of Statistics.
"We've seen production in Hebei dropping quite dramatically," said Graeme Train, a Shanghai-based commodities analyst with Macquarie Group.
"It could be that they reduce pollution in Hebei and it just pops up again here in Shanghai. What it does tell us is that China has a hell of a lot of steel capacity."
Environmentalists have said China's campaign to improve air quality in major northern cities such as Beijing is likely to mean the relocation of big polluting industries in the steel, cement and thermal power sectors. The most favoured destination is China's less-developed interior provinces, some of them around Shanghai.
Hebei, a major industrial region which surrounds Beijing, was home to some of the most polluted cities in China. Its capital Shijiazhuang routinely recorded "beyond index" measurements of particulate matter (PM) in early 2013.
The province was also identified by the China Academy of Sciences as a major source of a noxious smog cloud that hung over Beijing a year ago.
China has since vowed to tackle pollution in Hebei, saying in a wide-ranging action plan in September that it would ban new projects in certain industries, close outdated steel and cement facilities and slash coal use.