Corporate News

Postcards from China

April 3, 2017
Postcards from China

We always learn a lot from research trips, sometimes in the most unexpected places.

We were in Beijing last week and an off-the-cuff remark from our interpreter highlighted how pollution levels are approaching crisis point and how radical changes are now urgently required rather than just being desirable.

While we’ve written about Chinese pollution in years gone by, levels today are dangerously high and have now reached a point where they’re embedded in the local psyche. Nowadays locals check pollution levels before venturing outside in the same way Australians check the weather. Our interpreter suggested that for levels above 300 (PM 2.5* score) – which is common in Beijing – he avoids going out (levels above 200 are considered to be too dangerous for outdoor exertion).

Despite Beijing recording modest improvements in air quality in recent years, the national capital is 13th amongst Chinese cities for pollution according to Greenpeace. Refer some images from this trip; it’s worth noting March is actually a “good” month for pollution (winter is worst). That there are a dozen other Chinese cities with a bigger problem is difficult to fathom.

Pollution is now absolutely a mainstream issue in China and a significant source of mass frustration and anxiety. Baby steps have been taken to reduce pollution but major structural reforms are necessary, including a shift away from the country burning more than 3.9 billion tonnes of coal (billions not millions, about 10 times Australian production!) which is now inevitable.

While coal stocks have rallied hard over the last 12 months we remain very sceptical about the outlook for the sector.