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For Chinese New Year, Beijing Expects to Be Gasping

By Evan Soltas
February 09, 2013 11:00 AM EST

On Feb. 10, Beijing will celebrate the Chinese New Year -- assuming the city can catch its breath. January may have been its worst month ever for air pollution. The level of airborne particulates was six times higher than the U.S. Environmental Protection Agency considers safe.

The EPA’s Air Quality Index measures small-particulate pollution on a scale that runs from 0 to 500. Last month, Beijing’s intraday high was often 360, deemed “hazardous.” The daily average was 230, deemed “very unhealthy.” A typical reading for New York is 80, considered “moderate.” On Jan. 22, Beijing’s pollution was literally off the scale. Its AQI score was 755. On five other days, the reading exceeded 500, the nominal maximum.

It’s no surprise that the medical effects of breathing air like that are grim. Living in Beijing is equivalent to smoking one to three cigarettes a day, according to C. Arden Pope III, an environmental economist at Brigham Young University. The risk of respiratory and cardiovascular disease increases substantially, Pope said in an e-mail. The risk of death from lung cancer is roughly 40 percent higher, and the risk of cardiovascular disease 30 percent higher (see this 2011 study).

Air pollution, of course, is the textbook case of externality: The costs are borne by everyone, not just those responsible for it. In effect, the polluters are subsidized. Hence they pollute too much. In principle the government should step in, either to “internalize the externality” by pushing the cost back on to the polluters or by regulating to similar effect. But that would slow (conventionally measured) economic growth, something China’s government has been reluctant to do.

“Air pollution is obviously not one of the priorities of the Chinese elite, who are not responsive to their middle class, and environmental protections would directly conflict with their strategy for economic growth,” said Daron Acemoglu, a development economist at the Massachusetts Institute of Technology. This isn’t just market failure, he said, but a failure of institutions -- a reflection of China’s undemocratic politics. “The Chinese political system does not make it so easy for voices to be heard and actions to be taken in response.”

Recently though, the situation has gotten so bad that it’s becoming impossible even for China’s rulers to ignore. Protests have been on the rise and the government has begun to respond -- for instance, by allowing state media to report levels of small particulates, which it had previously resisted. The government has also announced that somewhat stricter vehicle-fuel standards will be mandatory by the end of next year. That’s something. At least it’s no longer denying the problem.

If real change starts to happen, it may go further than either the city’s choking residents or the Chinese government envisage. Acemoglu said, “As the number of middle-class Chinese people unhappy with air pollution increases, and they come to understand that such problems stem from their lack of political voice, this could be a spark for something bigger.”

(Evan Soltas is a student at Princeton University and a contributor to the Ticker. The opinions expressed are his own. Follow him on Twitter.)

To contact the writer of this article: Evan Soltas at esoltas@bloomberg.net.

To contact the editor responsible for this article: Clive Crook at ccrook5@bloomberg.net.

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