Factories Shuttered in China Pollution Crackdown

As many as 40% of factories in China have been at least temporarily shuttered as part of a sweeping government-led campaign to combat rampant air pollution – a clampdown that could send repercussions rippling through supply chains around the world, analysts say.

As NPR reports, China’s Ministry of Environment has, over the last year, dispatched inspectors to 30 provinces in the sprawling nation to fine, reprimand or charge officials at more than 80,000 factories. The inspectors are the foot soldiers in the ministry’s ramped-up effort to enforce environmental laws, particularly those related to emissions, in a country where such regulations have long been flouted. As part of the inspections, crews have nixed electricity and gas flow to factories in an effort to pinpoint which operations are following China's environmental laws and which are not.

“Entire industrial regions of China are being temporarily shut down, and the unusual sight of blue skies is reappearing as environmental inspectors go about their work,” wrote NPR’s Rob Schmitz. “After decades of doing little about the pollution that has plagued much of the country, China's government may be finally getting serious about enforcing its environmental laws.”

While that is a good thing for the environment and human health, it also has potential implications for supply chains. Some companies have already shifted operations to Bangladesh or India in an effort to meet orders. The shutterings have also affected factories producing products for the Christmas season in the U.S. – something that could increase retail prices this holiday season, Michael Crotty, president of MKT & Associates, a company that exports textiles from China, told NPR.

Experts on the situation in China say that factories in the textile/apparel production business are among those feeling the impacts of the clampdown, according to NPR and Sourcing Journal. “It’s mainly some dyeing factories and some finishing factories closed because they cannot control the pollution problem,” said Wang Hua, general manager for China’s Ningbo Dragonsilk Fashion Co., speaking in September at Apparel Sourcing in Paris. “Sometimes some orders will ship delayed one month because of the pollution problem. Because some dyeing factories are closed, the good factories…need more time.”

The intensified environmental focus on factories has its roots back in 2013 when China announced 10 measures aimed at cleaning up the nation’s befouled air by the end of 2017. Measures include reducing emissions from polluting industries by 30%.

This month, China pledged to reduce the concentration of PM2.5 hazardous fine particle matter in the air – the pollutants that can trigger health problems like heart disease and lung cancer, Sourcing Journal reported. The objective is to cut the particulates down to 35 micrograms per cubic meter by 2035. That would be down from the current 47 micrograms, but still more than average levels in notoriously smoggy cities like Los Angeles (20 micrograms) and New York City (12 micrograms).