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The Upside to an Economic Downturn

Upon my January return trip to Guangdong, the world’s factory floor, I surmised that the unusually clear skies could have been the upside to the worldwide economic downturn that has shuttered many of China’s factories. Now there seems to be evidence that this could be true:


To get to the bottom of the question, I totaled pollution indices from the Ministry of Environmental Protection for 8 cities comparing the global financial crisis (which I chose somewhat arbitrarily as starting September 2008 through March 2009) against the figures from the year before. Except for a rise in air pollution in December, the numbers are all lower than they were last year.

Given the special air-clean up measures in Beijing around the Olympics that had nothing to do with the economic slowdown, I excluded Beijing from the calculations. Instead I focused mostly on southern cities: Guangzhou, Shenzhen, Shantou, Zhanjiang (all in Guangdong), Hangzhou, Shanghai, Chongqing, and Datong.

There are a number of complications. For one, clearing skies could be due to anything from tougher environmental enforcement to changing weather patterns. The government statistics may also be subject to fiddling, as a report by a former PiAer suggests. There’s also the possibility that a downturn could cause more pollution, if increased cost pressure on factories caused them to turn off costly emissions-scrubbers.

But it makes sense that a downturn could clear the skies, and I wouldn’t be the only to make such a claim. The China Daily reported that the downturn had cleaned China’s air and water. Another China Daily article reported:

Wu Changhua, greater China director of London-based Climate Group said last year saw fewer emissions as most of manufacturers reduced production in the wake of fewer orders.

Lest the China Daily be the final word on the matter, Charlie McElwee of the China Environmental Law blog wrote: “A portion of these gains are no doubt attributable to the economic downturn which kicked in in the 4th quarter of last year.”

If this analysis is correct, it means the crisis that’s making so many investors see red is also helping many over here finally see a little blue.

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