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Choking on Smog, Shanghai Hits the 1960s

NEW YORK (TheStreet) -- China's modern economic era began with a Communist Party plenum in 1978, which was focused on economic liberalization. In the 35 years since, China has rushed through centuries of industrial development, and now finds itself facing the problem American industry hit in the 1960s.

Smog.

Old-timers in Los Angeles or Pittsburgh can tell you all about smog. I first saw the word, a combination of smoke and fog, in old Warner Brothers cartoons.  But it was no joke. Smog can be deadly. It consists of fine particulate matter suspended in the air, creating haze and endangering lung health.  And now Shanghai faces some of the deadliest smog ever recorded.

Today in Shanghai, cars were ordered off the road, flights were canceled, factories were ordered to halt production and children were kept indoors. Smog had reduced visibility to just a few feet.

The level of small particulates in the air at 7 a.m. local time was measured at 466 micrograms per cubic meter by government measures. The U.S. Consulate showed a level of 503. The official government measure for the day was 384, but a peak level of 590 was recorded.

By contrast, the air in New York City averages a measurement of 10.

Chef Alan Yu, who works in Shanghai, described the air on his microblog as having "a layered taste," at first "slightly astringent with some smokiness," and an aftertaste of "earthy bitterness," in which you can actually feel the dust on your palate.

Shanghai's geography is unlike the geography of Los Angeles, which resembles a bowl ringed by mountains that trap dirty air. Shanghai instead is a humid riverfront city at the mouth of the Yangtze River. It is more akin to New Orleans, which is about one degree of latitude north of it. The current smog is coming in part from Zhejiang, an industrial province to its south, although the air to the north is little better

The smog is tightening its grip just three years after the Beijing government spent $4.8 billion cleaning Shanghai for Expo 2010, an international fair attended by more than 70 million visitors. The Expo's theme was "Better City, Better Life."

It also comes just three months before a major trade liberalization aimed at turning a 29-square-kilometer section of the city into a free-trade zone, something like Hong Kong. The particulate matter index for Hong Kong today was less than a third of Shangai's, at a still-unhealthy 159.

The smog is going to have an impact on the markets as well as on health.

Last month, the country's Communist Party held a plenum, similar to the 1978 meeting which launched its industrial age. Pollution and the environment were high on the agenda.

The communique resulting from last month's meeting urged the creation of a "red line" to protect the environment and charge businesses fines for ecological damage. Reform laws protecting the environment were also proposed. The government has stated it will even sacrifice economic growth in order to deal with the smog problem.

The short-term impact will be bearish for coal but bullish for natural gas, with plans under way for China to turn domestic coal into gas. The problem is that the synthetic gasification process actually increases carbon dioxide pollution.

But at least then China will be on the same pollution page as the rest of us.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

 

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