Jiangsu may face huge environmental, fiscal burden in downsizing its chemical sector: analysts

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East China’s Jiangsu Province may face a huge environmental and fiscal burden as it pursues a campaign of drastically downsizing its chemical sector, following a blast that killed 78 people in March.

The province, a heavyweight of chemical production, reportedly aims to shut down some chemical plants in areas along the Yangtze River and those located in chemical parks by 2020, 21jingji.com reported, citing a provincial government circular.

The report said many industrial parks and producers in the sector will face tough regulatory scrutiny, relocation or closure.

An employee at Nanjing Jinxi Chemical Group told the Global Times Monday the company is on high alert for safety inspections by local authorities, but there hasn’t been any official notice yet from the government. The company is located on the north bank of the Yangtze River.

Industry experts said the crackdown could push up chemical products prices.

However, a brokerage analyst who wished to remain anonymous questioned the approach taken by the province and warned that the East China province may face a hefty environmental cost once these chemical parks are emptied of their tenants.

“Jiangsu will have to consider what to do with the land in those parks, which is contaminated and unsuited for other industries,” the person told the Global Times on Monday.

“Environmental remediation of 1 mu (0.076 hectares) of land will cost 2 million yuan ($296,000). A thorough cleaning, going 10 meters below ground, will drive the cost straight up to 6 million yuan per mu,” the person said. “Jiangsu may not have that much money.”

The analyst argued that the best strategy for Jiangsu at the moment might not be an outright shutdown but drafting a plan to encourage companies to upgrade their plants via innovation and attract advanced producers with tax and fee breaks.

China ordered a nationwide checkup with special rectification efforts for high-risk areas that may have systemic safety issues following the Xiangshui blast in Jiangsu Province.

The Jiangsu provincial government plans to shut down as many as 30 industrial parks that house chemical plants and close thousands of companies, media reports said.

Jiangsu is one of the largest bases for chemical production in China. In 2017, it had over 5,400 such companies, which generated more than 2 trillion yuan in revenue, said a report on news website thepaper.cn in April.

However, two-thirds of the country’s 676 chemical industry parks lacked proper facilities to handle hazardous waste, the Economic Information Daily reported in April, citing an official with the Ministry of Industry and Information Technology.

“The current policy may be too rash and may not be in the province’s long-term interest,” the analyst said.

Newspaper headline: Chemical crackdown faces limits

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