Under the Dome

News from China, an initiative by Melton Fellows from Zhejiang University in advance of the upcoming Global Citizenship Conference (GCC) 2015 in Hangzhou, China, covers a wide variety of issues concerning China, as well as the world as a whole.This week it gives a critical view on the Chinese documentary "Under the Dome", which covers the subject of smog.

At the end of February, a documentary concerning China’s air pollution situation became fairly popular on China’s mass media and raised discussion among millions of Chinese people. When I turned on my phone and checked my Wechat account on the day it was released, I saw everybody sharing a documentary named “Under the Dome”. In just two days, this documentary has been played over 90 million times on Tecent Video and 30 million times on Youku Video, two popular video viewing sites in China.

Chai Jing, a former CCTV (China Central Television) anchor and a well-known best-selling author, published this self-funded documentary online on Saturday to raise the Chinese people’s awareness of the disastrous air pollution problem in China. After quitting her job, Chai took one year to finish this documentary. It introduces some concepts about smog and where it comes from. Chai also wants to use this documentary to call for stronger reform in environmental protection.

You can find the video with English subtitle on Youtube:

After watching this documentary, I found something quite interesting.

Though Chai claimed herself as self-funded to produce this documentary, I believe she may be supported by some important people in the government. There are several things that reflect the government’s positive attitude towards it. First, People’s Daily, the most important Communist Party Paper, published an article about this documentary and published the interview report with Chai shortly after Chai released her video online. Second, in her documentary, Chai successfully had conversations with some government officials and some important interest-related parties. Those people also agreed to present themselves in the video. Third, the newly appointed minister of the Environmental Protection Chen Jining publicly praised this documentary just one day after the video’s release. In China, all of those three things would be very difficult to happen without the support or agreement from someone important in the Political Bureau.

If we regard Chai as an actor representing senior government officials’ opinion, together with a focus on China government’s actions in the past year, we can predict some possible changes in China’s economic structure.

1. Reform in the energy industry. In this documentary, Chai points out that the low-quality oil that state-owned monopolies like Sinopec or Petrochina provide is a major issue contributing to the worsening air pollution problem. She believes that the cause for this situation is the lack of competition. Thus, she calls for policy reform in the energy industry. If we take the Wall Street Journal's recent report about the possible mergers among China’s state oil companies into consideration, we can predict that the Central Government will try to merge several big companies first and then open the energy market and welcome more players, regardless of where the capital comes from.

2. Reduce excess capacity in some pillar industries. There is tremendous excess capacity in the steel, coal and petrochemical industries, and the process of generating those products would lead to greater emission and cause huge amounts of air pollution. Many companies don’t have a strong financial performance and the way for them to survive is through the high fiscal subsidies from the government. Now, the profit of those industries has become quite low and they’ve become a financial burden for the central government. Chai has a focus on those industries in her documentary and emphasizes on how much damage they can cause in environment. I believe that the Chinese government will gradually reduce fiscal subsidies to those industries, and in the next several years, many companies in this industry might go bankruptcy.

3. Focus on environmental industry. Some industries will be no longer huge and other industries will rise. Chai uses the example of UK to show that the transformation in energy structure (less reliance on coal and more reliance on clear energy) is possible and the economy can still function in a healthy way. She believes that the environmental industry will be among the most promising ones to develop. It is very possible that companies which produce air filtration or environment-related products will get help in different aspects (finance, policy, technology) from the government.