Restructuring Industry for Cleaner and More Efficient Production

IN July 2012 the Ministry of Industry and Information Technology （MIIT） released a closure list of manufacturers with obsolete industrial capacity， and Xiaonanhai Cement Plant in Chongqing was on it. Two months later the 40-year-old business， with an annual output of 400，000 tons and a workforce in excess of 400， was demolished.“We had no other choice but to shut the plant down. Our equipment and technology were outdated，” said vice general manager Zhao Xiangjin. Panning out obsolete capacity， however， is not necessarily precursory to wiping out a whole business， Hou Shiguo， an MIIT official explained. In many cases only certain production lines of a manufacturer or part of its operation fall under the obsolete capacity category， so all it needs to do is shed or renovate the concerned lines and operation segments. Even if the entire production chain is obsolete， it can still be “back in business” after installing advanced machinery and upgrading techniques. Only manufacturers beyond hope of a solution face closedowns.

Fortunately for Xiaonanhai， the demolition is a prelude to renewal -- there are plans for a new plant in the vicinity of the old site. It will be equipped with imported machines and produce cement with a greener curing process.

Sifting out Obsolete Capacity

The chronic structural flaws of Chinese industry have led to a sizable obsolete capacity， particularly in sectors of higher energy consumption and higher emissions. Efforts to eliminate it started in the 1980s， the most prominent being two campaigns to shutter， merge or transform diminutive iron and steel plants and one to downsize spindles at cotton mills.

As pressure on the environment mounts up， it has become the common goal of the Chinese government and businesses in the 21st century to develop the economy on the basis of environmental conservation. In 2005 and again in 2010 China set out specific obsolete capacity reduction targets for 11 industrial sectors including electricity， iron and steel， and coal. During these periods， the country shut down small thermal power plants totaling 76.82 million kW， and cut obsolete capacity of iron， steel and cement production by 120 million， 72 million and 370 million tons respectively.

In the current plan， China intends to extend the obsolete capacity cut to 21 industries （see Table 1） by 2015. As part of the strategy that was drawn up in 2010， every year the priority sectors are named and the list of enterprises to be closed is publicized. The focal sectors for 2011 and 2012 were iron and steel， coal， cement， and paper-making. It is estimated that major projects to save energy consumption and reduce emissions during the five years could slash the use of standard coal by 300 million tons， and bring down new chemical oxygen demand （COD） by 4.2 million tons and emissions of sulfur dioxide， ammonia nitrogen and nitrogen oxide by 2.77 million， 400，000 and 3.58 million tons respectively.

Industrial Upgrading

Weeding out obsolete capacity opens up space for industrial upgrading. Tongling City of Anhui Province is an example of success in this respect. As its name indicates， the city sits upon rich deposits of copper （tong）. But as the mineral resources are running low， the local government has conscientiously shifted the focus of its economy from mining to a more diversified structure consisting of deep processing of copper， chemical industry， information technology， building materials， textiles and new materials.

According to Deputy Mayor Huang Huafeng， who has lived in Tongling for 23 years， the city kicked off the industrial overhaul back in 1991， nurturing emerging industries through founding large stateowned enterprises and international cooperation. Meanwhile， it invested generously in technical innovation and upgrading of the copper smelting industry. Five years ago it shut down the highly polluting No.1 Copper Smelter， and built a waste treatment facility employing the latest technology at a cost of billions of yuan， which raised the sulfur recovery rate to 99.99 percent in the copper smelting process and significantly reduced sulfur dioxide emissions.

Tongling earmarked a RMB 25 million fund for industrial upgrading in its 2013 budget to boost environmental protection industries and the circular economy and to accelerate transformation of conventional industries.

“Preserving the environment and achieving green GDP both require the government to learn relevant expertise and advanced experience and to devise innovative policies in this regard， pooling respective strength of the government and the market. Non-environmentally friendly operations should be phased out or changed，” said Huang.

Clean Production

Since the 1990s China has moved the focus of its anti-pollution combat from the last to the first link and finally to the whole production chain， and introduced ISO 14000 environmental management standards. These provide practical tools for companies and organizations to identify and control their environmental impact and improve their environmental performance. So far about 4，000 Chinese enterprises involved in sectors ranging from chemicals， light industry， power generation， coal and machinery to building materials have passed clean production certification audits. At the Dongguashan Copper Mine of Tongling Nonferrous Metals Group Holdings Co.， Ltd， all drilling debris and 85 percent of mine tailings are deposited in abandoned burrows and tunnels， leaving no solid waste on the ground.

Numerous examples of clean production initiatives can be found at Anhui Conch Cement Co.， Ltd， a forerunner in the industry. A good part of its raw materials are urban waste and sediment from the process of drinking water production. The waste gas produced in the course of cement production is converted into electricity that can meet up to 40 percent of the power demand of its production. There is an encased 30-meter-deep waste recycling pit on the factory premises and an integrated café where visitors can watch the odorless waste treatment process through the glass wall – transparency in the fight against industrial pollution is vital.

As the notion of clean production takes root among Chinese manufacturers， industrial projects and parks demonstrating a mutually beneficial and ethical cycle between industrial activities and the environment have mushroomed across the country. Since 2005， China has selected 60 typical cases of the circular economy from 178 state-level circular economy demonstration enterprises in energy， chemicals， metallurgy， paper-making and other sectors and 14 auto parts remanufacturing pilot enterprises， which have reused 25 million tons of renewable resources.

In some sectors the waste from certain producers is supplied to other operators as raw materials to optimize the use of resources and reduce industrial waste. So far China has built 14 eco-industrial parks， which pioneer China’s green industry drive.