SHIJIAZHUANG: Severe natural gas shortages are hitting businesses and residents across China’s industrial heartland as an unprecedented government effort to clean up an environment devastated by decades of unbridled growth backfires. Factories are closing or operating at reduced capacity, businesses are seeing profits shrink as supply chains are disrupted, and people are shivering through sub-zero temperatures without adequate heating at home, according to interviews conducted across the region last week. The gas shortages, which have sent prices soaring nationwide, have undermined a sweeping campaign to switch millions of households and thousands of businesses from coal to natural gas in north China this winter, part of long-running efforts to clean the region’s toxic air. Much of the gasification of the region, involving over 4 million homes, was rapidly launched by local authorities acting on their own initiatives in response to calls by the central government to control air pollution. But the plan appears to have been overly ambitious. Despite the installation of gas lines and boilers for factories and homes across the northeast, supply has been hampered by insufficient infrastructure to bring the fuel to the industrial region and store it, according to Liang Jin, an independent analyst previously with the oil and gas consultancy JLC. And in some areas, many homes have yet to get the gas boilers needed for heating. The gas plan was also implemented as China tries this winter to reduce production from polluting industries like steel and cut back on the use of diesel trucks. That has raised concerns about whether the anti-pollution campaigns may hit economic growth. Interviews with business owners, families, utilities and gas producers in Hebei province highlighted the problem and suggested that many cities were unprepared to cope. Hebei is adjacent to Beijing and its factories are often blamed for much of the pollution that often cloaks the capital in the winter. Xue Huabing, who owns a small floor-tile factory in rural Hebei, said compliance with the new environmental standards means he has only been able to operate for four months this year. Production at his factory near Shijiazhuang, Hebei’s capital, has been disrupted several times by environmental inspections and halted over the summer to install new natural gas boilers, he said. After moving from coal to natural gas and reopening in September, the factory halted production again in October as gas prices soared. “The price of gas is 6-7 yuan per cubic meter, up from 2 yuan last year,” Xue told Reuters by phone. “If we open, we are going to run at a loss.” He added that it was also difficult for him to secure gas supplies. Domestic liquefied natural gas prices have jumped more than 70 percent since mid-November, hitting record highs above 8,000 yuan per tonne this month, according to market.yeslng.com, an online exchange for domestic gas supplies. High prices are raising production costs in industrial cities like Baoding and Shijiazhuang in Hebei province, with knock-on effects for retailers and wholesalers downstream, business owners said. Reduced industrial activity from the earlier effort to curb smokestack factories is also hitting suppliers of raw materials, according to businesses. The gas shortages are also now being felt in southern China, where local governments are sounding the alarm, and some companies are closing down or slowing production. [nL3N1OC370][nL3N1OD2T2] “I think there already has been an impact from the campaign on growth,” said Julian Evans-Pritchard, an economist at Capital Economics in Singapore, referring to the anti-pollution drive. “We saw quite a sharp slowdown in October data.” At Zheng Wenmin’s shop selling kitchen fixtures in Shijiazhuang, a city of 10 million and Hebei’s capital, business is down more than 20 percent this year. Disruptions to housing construction, which has slowed amid the crackdown on pollution, mean fewer people are decorating new homes, she said. Published in Daily Times, December 15th 2017.