China's Fractures Widen: Q1 Growth In industrial Heartland Of Hebei Province Slumps Sharply

From Bloomberg News

The increase in gross domestic product compares with national growth of 7.4 percent and the province’s previously reported 9.1 percent pace a year earlier. Hebei’s industrial output rose 3.5 percent in the first three months, down from 12 percent a year earlier, as the province pursued “structural changes to its growth model,” according to a statement on the government’s website dated April 23.

The slowdown in Hebei’s expansion underscores the impact of the government’s campaign to reduce industrial overcapacity and contamination of the environment in the world’s second-biggest economy. Premier Li Keqiang said last month he will “declare war” on pollution and pledged to reduce emissions, impose a ceiling on energy consumption and boost clean-water supplies.

Hebei’s first-quarter growth was the second lowest of 29 provincial-level regions that have so far released data, according to a table on official Xinhua News Agency’s website yesterday. Northeastern Heilongjiang reported the weakest expansion of 4.1 percent, it said. That’s down from 9 percent in the first three months of 2013, according to previously released data from the province....

Hebei, which surrounds the Chinese capital Beijing, is the country’s biggest steelmaking region and accounted for about a quarter of national output last year. Seven of the 10 Chinese cities with the worst air pollution in the third quarter of last year were located in the province, according to government data.

As one of China’s industrial heartlands and home to heavy industries such as steel manufacturing, petrochemicals and coal, Hebei has been the focus of the government’s campaign to rein in overcapacity and lower pollution. Dangerous levels of smog that have engulfed Beijing over the past two years have been partly blamed on emissions from the province’s factories.

In July last year, the government ordered more than 1,400 companies in 19 industries nationwide to reduce capacity, targeting steel, ferro-alloys, aluminum and copper smelting. Hebei pledged to cut 60 million tons of steel capacity by 2017.

China’s first-quarter GDP increased at the weakest pace in six quarters, government data released April 16 showed, as industrial output growth slid to 8.7 percent....

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