Hebei & Today's Super-Polluting, Overproducing China

The Once-ler would feel right at home in Hebei.

A significant part of the world-famous air pollution choking the Chinese capital of Beijing actually comes from nearby Hebei province. Hebei is a truly Dickensian place, with coal-fired plants blackening the skies, with additional help from steel mills, cement plants and more. The excesses of the industrial revolution never really left us; they just picked up sticks and moved to China. Given mounting concerns over pollution and overproduction, Hebei has been marked for dialing back of its dark, Satanic mills that manufacture hell on earth:

Last year the province’s economy was one of China’s worst-performing, growing 6.5 percent, below its 8 percent target. Hebei’s mills produce some 25 percent of China’s more than 800 million tons of steel. The province is one of the country’s biggest glass and cement manufacturers. All three industries face serious oversupply, much of it built up since cheap loans became available after the 2008 global financial crisis. China’s steel factories run at 72 percent of capacity: A mill generally has to run at 80 percent to make a profit.

Under pressure from top leaders, provincial authorities have promised to cut capacity in steelmaking and cement manufacturing by 60 million metric tons each by the end of 2017 and reduce coal use by 40 million tons.

The future, supposedly, lies in smaller steel plants--mini-mills, if you will--closer to the coasts which receive coal from Australia:

By the time Hebei finishes restructuring its industries, an estimated 200,000 steel jobs will be gone, the Hebei Provincial Development and Reform Commission says. The factory shutdowns fit with a national plan to consolidate steel production in larger, more efficient mills closer to the ports that bring in Australian iron ore, says Michael Komesaroff, principal of Urandaline Investments, a Melbourne-based consulting firm. “The transition is coming at a much faster rate and on a larger scale than had been previously anticipated. That’s making it much harder for everyone to manage,” Komesaroff says.

It will be interesting to see if China can transition from Hebei's high-pollution, heavy-industry model of economic growth since it epitomizes the PRC's old-style "commanding heights" approach, dominated as it is by state-planning. Having created a overproducing, super-polluting, Hebei, can the same sort of centralized planning deliver on a lean, mean and green Hebei? Perhaps state direction has run its course; or perhaps not. At any rate, the preponderance of half-finished apartment complexes also speaks to the misallocation of credit which has occurred post-global financial crisis in China to accompany the ills mentioned earlier.

The apparatchiks had them built but nobody came.