David Stanway

Coronavirus Cases Rise Again in China’s Hubei; Japan, Singapore on Brink of Recession

Across mainland China, officials said the total number of cases rose by 2,048 to 70,548, with 1,770 deaths.

Shanghai: The number of reported new cases of coronavirus in China‘s Hubei province rose on Monday after two days of falls, as authorities imposed tough new restrictions on movement to prevent the spread of the disease which has now killed more than 1,700 people.

With no end in sight for the outbreak, Japan and Singapore appeared to be on the brink of recession with data on Monday pointing to possible contractions in the current quarter.

In Cambodia, hundreds of people who had disembarked from a cruise ship that docked there last week were anxiously awaiting information on when they could return home after a former passenger tested positive for the virus in Malaysia.

In Hubei, the epicentre of the outbreak, health officials reported 1,933 new cases and 100 new deaths on Feb. 16, the lowest daily death count since Feb. 11. The number of new cases rose nearly 5% from the previous day, but the number of deaths fell from 139.

Nearly 90% of the new cases were in the provincial capital of Wuhan, a city of 11 million people where the virus is believed to have originated at a market illegally trading wildlife late last year.

Across mainland China, officials said the total number of cases rose by 2,048 to 70,548, with 1,770 deaths.

Chinese health officials on Sunday said two days of falls in the number of new confirmed cases showed their efforts to halt the spread of the virus were bearing fruit, although international experts say it is too early to tell whether the epidemic has peaked. Of the 70,000-plus cases in mainland China, 10,844 people have been treated and released from the hospital.

Outside China, more than 500 cases have been confirmed, mostly of people who travelled from Chinese cities, with five deaths.

Restrictions were tightened further in Hubei on Sunday with vehicles, apart from essential services, banned from the roads and companies told to stay shut until further notice.

Also read: Coronavirus: 406 Returnees from Wuhan to Be Released Next Week After Test Results

Recession fears

Across China many factories remain closed following the extended Lunar New Year holiday, disrupting supply chains around the world.

China‘s central bank cut the interest rate on its medium-term lending on Monday, a move expected to pave the way for a reduction in the benchmark loan prime rate on Thursday, to lower borrowing costs for companies hit by the virus.

Customers wearing face masks shop inside a supermarket, as the country is hit by an outbreak of the novel coronavirus, in Beijing, China February 15, 2020. Photo: Reuters/Stringer

Beijing also announced plans on Sunday to roll out targeted and phased tax and fee cuts to help relieve difficulties for businesses.

Even so, many economists expect China‘s economic growth to slow and rating agency Moody’s on Monday revised downward its 2020 GDP growth forecasts for China to 5.2%. That compares with the 5.7% growth China would need this year to meet its long-term goal of doubling GDP over the decade to 2020, according to a government economist.

In Japan, the Nikkei tumbled 0.7% after official data showed the economy shrank in October-December at the fastest pace since the second quarter of 2014.

Virus-related damage to Japan‘s economy is expected to show up in the current quarter, stoking fears of a recession in the world’s third-largest economy.

Japan evacuated more nationals from the epicentre of the coronavirus outbreak on Monday, while concerns about the spreading disease raised the possibility that organisers may cut the number of participants at next month’s Tokyo Marathon.

With more than 400 people infected, the majority passengers on a cruise ship docked off the country, Japan is the country most affected by the epidemic after China, where the outbreak was first detected in December.

Trade-dependent Singapore downgraded its 2020 economic growth forecast and is set to unveil measures to cushion the blow from the epidemic on Tuesday. Singapore Prime Minister Lee Hsien Loong said on Friday that a recession was a possibility.

Asia’s woes have yet to spread elsewhere, with Wall Street indexes scaling record highs.

Also read: Two More Indians Test Positive for Coronavirus on Cruise Ship off Japan

Search for cruise ship passengers

Cruise ship firm Holland America Line said it was working with governments and health experts to track passengers who disembarked from its Westerdam ship docked in Cambodia after an American woman tested positive for coronavirus in Malaysia.

More than 100 have already left the country, while some 300 are reportedly still in Cambodia.

American passengers were taken off another cruise liner on Sunday to fly home after being quarantined for two weeks off Japan.

Buses believed to carry the U.S. passengers of the cruise ship Diamond Princess, where dozens of passengers were tested positive for coronavirus, leave at Daikoku Pier Cruise Terminal in Yokohama, south of Tokyo, Japan, February 17, 2020. Photo: Reuters/Issei Kato

Seventy new coronavirus cases were confirmed on board the Diamond Princess where 3,700 passengers and crew have been held since Feb. 3. Some 355 people on board have tested positive for the disease, by far the largest cluster of cases outside China.

Canadian, Italian, South Korean and Hong Kong passengers were expected to follow soon after their governments also announced plans to repatriate passengers.

“Leaving in a few hours. No details. Might be going to Texas or Nebraska,” Gay Courter, one of the American passengers on board, told Reuters. She said she expected to spend another two weeks in quarantine on the US soil.

The ship, owned by Carnival Corp., has been held in the Japanese port of Yokohama with 3,700 passengers and crew on board. Those with the disease have been taken to hospital in Japan and no one from the ship has died. Around half of the guests onboard are from Japan.

Countries that have announced plans to fly their citizens home from the ship say they will take them only if they are symptom-free, and quarantine them on arrival.

Taiwan reported its first fatality on Sunday. The first fatality in Europe was reported on Saturday, an 80-year-old Chinese man who died at a Paris hospital.

(Reuters)

Chinese Diplomat Calls Hong Kong Situation ‘Worst Crisis Since 1997’

Honk Kong has been engulfed in protests for the past three months against the now suspended extradition bill that would allow greater Chinese control over the city.

Shanghai: Senior Chinese diplomat Wang Yi told a Hong Kong business delegation that more support should be given to the city’s government to end violence that has evolved into the biggest crisis it has faced since the return to Chinese rule in 1997.

Hong Kong has been engulfed in angry and sometimes violent protests against the government for three months, sparked by a now-suspended extradition bill and concerns that Beijing was trying to bring the territory under greater mainland control.

Police fired water cannon and tear gas at anti-government demonstrators on Sunday, and Hong Kong leader Carrie Lam later warned that authorities would be forced to stamp down on the escalating violence.

The China Daily warned in an editorial that the gap between the government and protesters appeared to be “unbridgeable”, with the administration not able to “swallow the pills the demonstrators prescribe”.

However, Wang said in Beijing on Tuesday that, while Hong Kong was facing its most serious challenge since the handover, it was capable of overcoming its problems with the support of the government and the unity of Hong Kong residents.

According to a notice on China’s official government website, Wang said business groups should also play a positive role by helping young people take part in the city’s economic development.

(Reuters)

China’s Greenhouse Gas Emissions Soar 50% During 2005 to 2014

As the world’s biggest greenhouse gas producer, China is aiming to bring its total emissions to a peak by “around 2030”

Shanghai: China’s climate-warming greenhouse gas emissions hit 12.3 billion tonnes in 2014, up 53.5% in just a decade, the environment ministry said on Monday, citing the country’s latest carbon “inventory” submitted to the UN.

China’s carbon emissions data is notoriously opaque, but as a signatory to the UN Framework Convention on Climate Change, Beijing is obliged to submit an official inventory to the UN regularly. It has previously released figures for 2005 and 2010.

Also read: A Twist in the Tale: Electric Vehicles Will Worsen India’s Pollution Crisis

As the world’s biggest greenhouse gas producer, China is aiming to bring its total emissions to a peak by “around 2030”, though it has also pledged to show “the highest possible ambition” when it reviews its targets next year.

The 2014 figure, based on the most recent calculations by the Chinese government, includes China’s emissions of greenhouse gases such as carbon dioxide and methane but does not make adjustments based on changes in land use or increases in forest coverage.

The environment ministry said if the impact of forests and other “carbon sinks” were taken into consideration, total emissions would have stood at 11.186 billion tonnes in 2014, still up 17% from 2010.

Total net US emissions were measured at 5.74 billion tonnes of carbon dioxide equivalent in 2017, down 0.5% on the year, according to the country’s Environmental Protection Agency.

Also read: Developed Countries Need to Do More for Climate Finance: Economic Survey

A study published by the Nature Geoscience journal last year estimated that China’s total emissions hit a record 9.53 billion tonnes in 2013 and then declined over the following three years.

The decline in CO2 from 2014-2016 came as a result of falling energy consumption, but it has since rebounded.

Record production levels in carbon-intensive sectors such as steel could mean carbon dioxide emissions are still on the rise and could hit fresh records this year, environmental group Greenpeace said.

(Reuters)

China State Media Blames Hong Kong Protests on ‘Lawlessness’

The Hong Kong Hospital Authority said 72 people had been hospitalised by 10 pm on Wednesday.

Shanghai: Protests in Hong Kong over planned new extradition laws with China are “hammering” the city’s reputation, with outbreaks of “lawlessness” undermining the rule of law, Chinese state media said in editorials published on Thursday.

Hong Kong riot police and protesters braced for possible further clashes on Thursday. They have shut government offices in the city’s financial district for the rest of the week after a day of violence over the extradition bill that would allow people to be sent to mainland China for trial.

Police fired rubber bullets, tear gas and pepper spray in a series of skirmishes to clear demonstrators from around the city’s legislature. It was some of the worst violence in Hong Kong since Britain handed it back to Chinese rule in 1997.

The Hong Kong Hospital Authority said 72 people had been hospitalised by 10 p.m. on Wednesday.

The English-language China Daily said the new amendments were in line with international conventions but “the opposition camp and its foreign masters seem willing to oppose it for their own purposes at the expense of the city’s rule of law, public safety and justice.”

“It is lawlessness that will hurt Hong Kong, not the proposed amendments to its fugitive law,” it added.

The state-owned tabloid The Global Times blamed “radical opposition forces” and “the Western forces behind them” for hyping up and politicising the amendments.

“Playing with uncontrolled street politics is to push Hong Kong to backwardness and disturbance,” it said. “This is not a wise direction for Hong Kong.”

Hong Kong has been rocked by three nights of violence since a protest on Sunday drew what organisers said was more than a million people.

(Reuters)

Chinese Chemical Plant Explosion Kills 47, Leaves Hundreds Injured

The cause of the explosion was under investigation, but the company has been cited and fined for work safety violations in the past.

Shanghai: An explosion at a pesticide plant in eastern China has killed 47 people and injured more than 600, state media said on Friday, the latest casualties in a series of industrial accidents that has angered the public.

The blast occurred on Thursday at the Chenjiagang Industrial Park in the city of Yancheng, in Jiangsu province, and the fire was finally brought under control at 3:00 am on Friday (1900 GMT), state television said.

Survivors were taken to 16 hospitals with 640 people being treated for injuries. Thirty-two of them were critically injured, it said.

The fire at a plant owned by the Tianjiayi Chemical Company spread to neighbouring factories. Children at a kindergarten in the vicinity were also injured in the blast, media reported.

The cause of the explosion was under investigation, but the company – which produces more than 30 organic chemical compounds, some of which are highly flammable – has been cited and fined for work safety violations in the past, the China Daily said.

President Xi Jinping, who is in Italy on a state visit, ordered all-out efforts to care for the injured and to “earnestly maintain social stability”, state television said.

Smoke billows from fire behind a damaged building following an explosion at the pesticide plant in Yancheng. Photograph: China Stringer Network/Reuters

Authorities must step up action to prevent such incidents from happening and find out the cause of the blast as quickly as possible, Xi added.

“There has recently been a series of major accidents, and all places and relevant departments must fully learn the lessons from these,” the report cited Xi as saying.

Also read: Sending a Message to China, Dalai Lama Says His Successor May Come from India

The Jiangsu environmental protection bureau said in a late Thursday statement the environmental monitoring station in the area had found no abnormal concentrations of toluene, xylene or benzene.

Concentrations of acetone and chloroform outside the perimeter of the explosion zone were also within normal limits, it added.

Jiangsu will launch inspections on chemical producers and warehouses, according to an emergency notice published by official media on Friday.

The notice, published on the news website of Jiangsu province’s Communist Party, said the government would shut down any chemical firms found not complying with regulations on dangerous chemicals.

Public anger over safety standards has grown in China over industrial accidents ranging from mining disasters to factory fires that have marred three decades of swift economic growth.

In 2015, 165 people were killed in a series of explosions at a chemical warehouse in the northern city of Tianjin.

The explosions at Tianjin, one of the world’s busiest ports and not far from the capital, Beijing, were big enough to be seen by satellites and register on earthquake sensors.

Despite repeated pledges by the government to tighten safety, chemical plants, in particular, have been plagued by disasters.

In November, a series of blasts during the delivery of flammable gas at a chemical manufacturer killed 23 people.

China Cancels Trade Talks With US as Tariff Threats Escalate

A mid-level Chinese delegation was due to travel to Washington ahead of Vice Premier Liu He’s visit, but the trip has now been abandoned.

Shanghai: China has cancelled upcoming trade talks with the US and will not send vice-premier Liu He to Washington next week, the Wall Street Journal reported, citing sources.

The Wall Street Journal said a mid-level delegation was due to travel to Washington ahead of Liu’s visit, but the trip has now been abandoned.

Earlier this week, China added $60 billion of US products to its import tariff list as it retaliated against US duties on $200 billion of Chinese goods set to go into effect from Sept. 24.

(Reuters)

China to Launch National Probe Into Policy Implementation

According to Chinese state news agency Xinhua, China will be conducting a series of inspections to ensure implementation of government policies at the local level.

Shanghai: China will conduct a series of “targeted inspections” this year in a bid to ensure that central government policies are being properly implemented at the local level, state news agency Xinhua said late on Monday, citing a senior government official.

Xiao Jie, secretary-general of China‘s cabinet, the State Council, said the inspections would focus on the way local governments implement policies relating to priority issues such as cutting poverty, tackling pollution, promoting innovation and revitalising the rural economy.

China‘s central government has traditionally struggled to impose its will on local authorities worried about the impact of new legislation on jobs and economic growth.

But Beijing has stepped up efforts to ensure that the regions carry out its policies and guidelines, particularly when it comes to protecting the environment.

The central government has also been cracking down on what it calls “perfunctory” or “formalistic” behaviour by local authorities, accusing officials of implementing the letter of the law instead of its spirit.

China Floods Wreak Havoc Across the Country

Heavy rain and flooding hits much of China this time every year, often with hundreds killed, but the number of casualties this year has been relatively low.

Shanghai: Heavy rain and thunderstorms are wreaking havoc across China, with floods along major rivers destroying bridges, blocking roads and railways, and forcing thousands of residents to evacuate, state media reported today.

Weather authorities are forecasting more downpours throughout the country today, with floods and landslides expected in the southwestern province of Sichuan.

Heavy rain and flooding hits much of China this time every year, often with hundreds killed, but the number of casualties this year has been relatively low, at least in the early summer, with one province reporting 12 dead and another three.

The National Meteorological Center said that rainfall could exceed 80 mm per hour in some regions today. It also warned of floods in the northeast and called on authorities to halt outdoor activities and watch out for collapsing structures.

The flood-prone Yangtze river, which runs from Yunnan in the southwest to Jiangsu and Shanghai on the east coast, has seen a massive increase in water volume, causing flooding in many of its tributaries and bringing water volume in the giant Three Gorges reservoir close to record levels.

State news agency Xinhua reported on Friday that more than ten highways in Sichuan were inaccessible as a result of flooding, and a bridge across Sichuan’s Min river, a Yangtze tributary, had collapsed.

Floods in the province had caused damage to the tune of about 2.4 billion yuan ($358.74 million) by Thursday, according to the Ministry of Emergency Management.

Meanwhile, the nearby city of Chongqing had evacuated more than 80,000 residents by Friday, reported Xinhua.

Heavy rain has also caused the Yellow River, which runs through northern China, to burst its banks, blocking a section of a railway line in the northwest province of Shaanxi.

Gansu province, also in the northwest, reported 12 people killed and more than one million affected by a week of heavy rain and flooding, said the official China Daily today.

The normally arid region of Inner Mongolia, which had suffered weeks of drought, also issued a flood warning on Friday.

($1 = 6.6900 yuan)

(Reuters)

China’s Recyclers Eye Looming Electric Vehicle Battery Mountain

The Chinese government is trying to transform the country’s recycling system and large-scale battery makers are being pressed to establish their own recycling facilities.

Batteries for electric vehicles are manufactured at a factory in Dongguan, China September 20, 2017. Credit: Reuters

Shanghai: After years of dismantling discarded televisions and laptops, a Shanghai recycling plant is readying itself for a new wave of waste: piles of exhausted batteries from the surge of electric vehicles hitting China’s streets.

The plant has secured licences and is undergoing upgrades to handle a fast-growing mountain of battery waste, said Li Yingzhe, a manager at the facility, run by the state-owned Shanghai Jinqiao Group.

“We believe there will be so much growth in the number of electric vehicles in the future,” he said.

Shanghai Jinqiao will be entering a market that includes Chinese companies like Jiangxi Ganfeng Lithium and GEM Co. Ltd, whose share prices have risen as they invest in battery recycling facilities of their own. That confidence comes even as companies face considerable hurdles launching battery recycling businesses, including high operating costs.

The growth of China’s electric vehicle industry – and the ambitions of recycling companies – is underpinned by a government drive to eventually phase out gasoline-burning cars, part of a broader effort to improve urban air quality and ease a reliance on overseas oil.

Led by companies like BYD and Geely, sales of electric vehicles in China reached 507,000 in 2016, up 53% over the previous year. The government is targeting sales of 2 million a year by 2020 and 7 million five years later, amounting to a fifth of total car production by 2025.

According to the International Energy Agency, China accounted for more than 40% of global electric car sales in 2016, followed by the EU and the US. It also overtook the US as the market with the greatest number of electric vehicles.

Production in China of the lithium batteries that power those cars has also soared. In the first eight months of 2017, Chinese manufacturers produced 6.7 billion batteries, up 51% from the year-earlier period, according to industry ministry data.

All that activity could put China in pole position for dominating the global electric car industry, as well as related businesses like batteries and recycling.

China began promoting electric vehicles in 2009, and as the first of those cars reach the end of their lifespan, lithium battery waste could be as much as 170,000 tonnes next year, industry experts estimate. The figure is likely to keep multiplying in tandem with car sales.

Dealing with all that waste poses huge problems for China. Lithium batteries are not yet classified as hazardous waste and are therefore not subject to stringent disposal controls. Battery waste includes heavy metals like cobalt and nickel, as well as toxic residues that could end up in waterways and the soil if not handled properly.

Batteries for electric vehicles are manufactured at a factory in Dongguan, China September 20, 2017. Credit: Reuters

Despite the challenges, battery waste also represents a significant opportunity for the country’s growing recycling industry.

The China Automobile Innovation Centre, an industry think tank, estimates the recycling market could be worth 31 billion yuan ($4.68 billion) by 2023.

Wang Chuanfu, president of BYD Co Ltd, China’s leading electric carmaker, last month described the lithium, copper and cobalt extracted from spent batteries as “treasures”.

Larger companies with high-tech recycling operations are already reaping the benefits, including Jiangxi Ganfeng Lithium , Sinolink Securities, a local brokerage, said in a note to investors. The company’s share price has surged more than 200 percent this year. Sinolink also cited GEM , a self-proclaimed “urban miner” that runs China’s largest automated battery dismantling facility in Shenzhen. GEM’s shares have risen more than 60% since January.

Recycling challenges

Still, the industry faces numerous obstacles.

Recycling lithium batteries can be prohibitively expensive for many companies. And the industry has yet to agree on the standardisation necessary to handle spent batteries more profitably and in big numbers.

Some executives also say China is not doing enough to encourage the industry with subsidies and enforce existing environmental regulations.

“Speeding up the recycling of lithium batteries is a matter of urgency, and has become a major issue for the development of the new energy vehicle industry,” Zhang Tianren, chairman of the battery maker Tianneng Power, wrote in a proposal submitted to China’s parliament in March.

Batteries for electric vehicles are manufactured at a factory in Dongguan, China September 20, 2017. Credit: Reuters

The commercial viability of the sector has been undermined by soaring waste treatment costs, as well as high taxes, Tianwei’s Zhang said.

In his paper, Zhang cited one recycling company as saying that the value of materials extracted from one tonne of lithium-iron-phospate battery waste stood at 8,110 yuan, but the cost of recycling them would be 8,540 yuan.

Automating the recycling process in China was another major challenge due to a lack of standardised product designs, said Zhang.

Automation was also being held back by poor equipment and technology, especially among smaller producers, Xiao Hai, chief engineer with the Shenzhen-based Clou Electronics, a company that develops new energy products, said at an energy conference in August.

The government, meanwhile, is trying to transform the country’s recycling system into a high-tech regulated industry.

Large-scale battery makers are being pressed to establish their own recycling facilities, and polluting backyard recyclers have been forced to close.

China’s industry ministry last year urged the sector to introduce standardised designs and raise technology to “international” levels by 2020. It plans to publish comprehensive new battery recycling rules before the end of the year.

But Tianneng’s Zhang said regulators were not enforcing policies and penalising unqualified companies.

“Because policies are not enforced and there is no clear incentive mechanism, lithium battery recycling is not profitable,” he said.

China’s Ministry of Industry and Information Technology, which regulates electric cars, did not respond to faxed requests for comment. The Ministry of Environmental Protection also did not respond.

Battery companies have for the moment been bearing much of the cost of recycling. While carmakers are technically liable for recycling batteries, in practice they sign deals with suppliers to recycle batteries on their behalf.

Green Cheng, chief executive of Shenzhen Cham Battery Technology Co. Ltd, said that recycling was a strain on the resources of battery makers. Shenzhen Cham churns out 300,000 lithium batteries a day at its factory in Dongguan, in southern China, and lists Geely, the automaker, among its partners. The company has to pay a recycling company to dispose of batteries.

“If manufacturers like us are going to be responsible, then the government definitely needs to provide funds to support us,” he said.

(Reuters)

China Aims Blow at ‘Iron Rice Bowl’ Welfare System

China has ordered state firms to smash the decades-old system of providing cradle-to-grave welfare support, known as the country’s ‘iron rice bowl’.

Employees work inside a factory of Pingmei Shenma Group in Baofeng County, Henan province, China, April 8, 2015. Credit: Reuters

Pingdingshan, China: China has ordered state firms to smash the decades-old system of providing cradle-to-grave welfare support, known as the country’s “iron rice bowl”.

But the order, part of a plan to reduce financial pressure on bloated and heavily indebted state-owned enterprises (SOEs), is likely to be easier said than done as cities navigate the social and financial wrenches the changes will cause.

At the heart of soot-covered Pingdingshan in central China is the Pingmei Shenma Group, a state coal conglomerate that dominates the economy, society and air of the heavily polluted city in Henan province.

Apart from coal, it has chemicals and construction businesses. But it also has a startling number of other responsibilities.

It operates 41 hospitals and 18 schools and provides pensions, subsidised housing for workers, water, heating and power. It even runs a plush retirement home, complete with golf course, for its senior managers.

The fate of these facilities, landmarks for the city’s residents, is now unclear. If they are not closed down, much of the infrastructure will need to be renovated, which state council researchers estimate will cost more than 1 trillion yuan ($115 billion) nationwide.

Some of Pingdingshan’s hospitals already had fewer miners to treat after capacity cuts in coal production.

“We can only try to provide better services,” a doctor, who only wanted to be identified by his surname Li, said at a small outpatient clinic near Pingmei Shenma’s defunct Number Seven coal mine.

“Though this is a big place, we are far away from the city centre, there is no good transportation and it isn’t convenient for ordinary people to come,” Li said.

Beijing has given SOEs until 2020 to ditch their “social functions”. For Pingdingshan, the deadline is more imminent because Henan wants to complete the process by the end of 2017 under a pilot project, putting it in the spotlight not only of Beijing but also other provinces facing similar challenges.

While state firms in wealthier regions of the country moved away from paying for social welfare services some years ago, poorer provinces and especially one-company towns like Pingdingshan struggled to make the switch given the central role their SOE played.

“Removing social functions and resolving the problems left behind by history is an important condition for SOEs to become market entities,” Xiao Yaping, head of the State-Owned Assets Supervision and Administration Commission, said on the institution’s website.

China’s SOEs accumulated total debts of 85.3 trillion yuan by the end of September, in a credit splurge encouraged by Beijing following the global financial crisis. Executives have repeatedly called on Beijing to help reduce their costs.

China’s central government-administered SOEs run around 8,000 units providing community services, and the efforts to ditch them could also increase a firm’s redundancy and labour redeployment costs, especially as authorities try to limit unrest in regions already hit by an economic downturn.

They spend 850 billion yuan a year on schools, pensions and other “social functions”. Local government-run firms pay even more, a delegate to China’s parliament said in March.

In Henan, state firms spend 800 million yuan a year just to supply residents with heating, water and electricity.

Cutting the cord

While the economic slowdown and a fall in commodity prices have done the most damage to China’s lumbering SOEs, expensive “social functions” have also contributed to punishing losses in recent years.

“Today, when we are creating world class energy enterprises and competing against global firms, continuing to bear these heavy burdens is obviously outmoded and hard to sustain,” said Halidan Abdulla Kader, a legislator from the northwestern frontier region of Xinjiang.

China’s ‘iron rice bowl’ system was launched in 1951. Many state-owned firms began life as government bureaus and frequently acted as microstates responsible for the entire social infrastructure of a region.

The first cracks appeared in 1986 when a rapidly modernising China introduced new pension schemes and put an end to permanent tenure at state firms. By 1995 it was calling for the systematic transfer of “social functions” in preparation for radical SOE reforms that closed thousands of bankrupt firms and led to more than 20 million layoffs.

Poorer provinces struggled to make the switch, especially in remote mining regions where the SOE was the only source of political authority.

Neither the Pingdingshan government nor the provincial authorities would respond to requests for comment.

In a document sent to Pingmei Shenma and other state firms in Henan, local regulators warned that some health and education facilities would be shut down if they were not economically viable.

“Where there is duplication they will close them down,” said a doctor surnamed Liu at an independent clinic near one of Pingmei Shenma’s mines. “There are a lot of small pits that need to be closed and after they close, their medical institutions will go too.”

Pointing to the challenges ahead, state council researchers said the cost of transferring social functions to a local authority was as much as 4.3 billion yuan for the Longmay Group, a struggling state coal producer in northeast China’s Heilongjiang province. That compared with annual running costs of 300 million yuan.

The Kailuan Group, a coal producer in Hebei province, needs around 4.6 billion yuan to upgrade heating, water and power facilities to acceptable standards before transferring them, one estimate showed.

Insecurity

In Pingdingshan, teacher Zhang Kai is already experiencing change. Operational rights for the kindergarten where she works have shifted from the local coal mine to the staff of the school.

It must now stand on its own feet as a commercial business, Zhang said.

“Every mine has a kindergarten and every situation is different,” she said. “We don’t really know what’s going to happen next.”

At its peak, Pingmei Shenma’s Number Seven Mine employed 8,000 workers. Now, around 500 miners turn up at the pit on a reduced wage of just 410 yuan ($60.52) a month while the company tries to find jobs for them at other state mines. In the meantime, they while away the time playing cards.

“We worry the most about whether we have jobs or not,” said one of them, a 51-year old miner who gave his name as Chen.

Sitting in the gatehouse of the mine, Chen lifted his shirt to show the scars from a kidney operation, paid for by his company insurance that he assumes is no longer provided.

“When the company’s performance gets worse, it doesn’t pay health insurance. We haven’t been getting it for several years,” he said. “After the closure of the mine, a lot of the old welfare we get just isn’t going to exist.”

($1=6.77 yuan)

(Reuters)