Finally, it seems, the various international and national Olympic committees are beginning to take notice of Beijing’s significant pollution and its likely impact upon the athletes. As James Fallows of the Atlantic has been pointing out in his blog, interested observers have long assumed that the Chinese government has “a last-minute, draconian plan” to deal with the pollution issue in advance of the Olympics. But, until recently, nobody – so far as I know – has actually laid out the specifics of that plan.
I, too, have always assumed that most of China’s industrial base will be shut down for a few weeks in advance of the Olympics (via “draconian” measures, whatever those might be). But before August 8, I’d never actually heard anybody say how, or for how long, this would be done. Enter the AP and an under-reported story on the one-year countdown to Beijing 2008. Toward the middle of the story, after a description of Beijing’s plans to manipulate the weather, we get this:
“They’ve told us the factories will be closed for three months in 2008 and that they will have a directive to encourage residents to stay off the roads with their cars,” said Steven Roush, chief of sport performance for the U.S. Olympic Committee.
For reasons that elude me (and, I hope, editors at the AP), there is no followup on just how China plans to shut down the world’s manufacturing center for three months in mid-2008. Nor, for that matter, does the AP indicate whether that shut-down will be confined to the north, or (as I expect) the rest of the country, too. Anyway, most aggravating is the fact that the AP story doesn’t bother to follow-up on the identity of “they“; that is, nobody bothered to ask Steven Roush who told him that the factories would be shut down for three months.
Truth be told, though, shutting down the factories probably won’t be enough to clear up the skies, either. Yes, China’s manufacturing sector tends to be dirty. But the real problem – the one that sends all of that haze from Inner Mongolia to Beijing – is the simple fact that roughly 70% of China’s energy needs are provided by coal burning power plants, most of which lack even rudimentary pollution controls. Now, I’m not one to speculate, but I think it’s safe to assume that the Chinese government won’t be shutting down 70% of its power-generating capacity during the summer of 2008.
For now, I’ll pass on examining the economic consequences of shutting down China’s manufacturing for three months. However, I think it’s worth noting that traders in metal-oriented commodities (ore, scrap, coke) can make a pretty sure bet that prices on those items will decline precipitously in spring 2008. Gentlemen, place your short orders!
[UPDATE: A reader writes to inform me that National Review's media blog is asking the same questions about the AP story.]