VZCZCXRO9650
RR RUEHCN RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHVC
DE RUEHGZ #0212/01 1020801
ZNR UUUUU ZZH
R 110801Z APR 08 ZDK
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 7037
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCNARFC/ASEAN REGIONAL FORUM COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEAEPA/HQ EPA WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/CDR USPACOM HONOLULU HI//J00/J2/J3/J5//

UNCLAS SECTION 01 OF 02 GUANGZHOU 000212 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
 
STATE FOR EAP/CM AND OES/PCI 
EPA FOR OFFICE OF INTERNATIONAL AFFAIRS 
 
E.O. 12958: N/A 
TAGS: PHUM SENV ECON PGOV CH
SUBJECT: Hundreds of Highly-Polluting Factories Relocated to 
Outskirts of Guangzhou 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (U) Summary:  Guangzhou's municipal government will force more 
than 400 hundred highly-polluting enterprises to move to designated 
zones on the city's outskirts to improve environmental conditions 
downtown.  Many of the factories are scheduled to relocate to 
Nansha, despite the area's delicate ecological system.  While 
concerns have arisen about simply 'relocating' pollution problems 
from Guangzhou's city center and close periphery to a place ninety 
minutes from Guangzhou, Nansha insists that relocated factories will 
be held to higher environmental standards (through certifications 
and approvals).  What is unclear is whether government has the 
capacity to follow through with this claim.   End summary. 
 
------------------------------- 
Guangzhou Pushing Out Polluters 
------------------------------- 
 
¶2. (SBU) Guangzhou plans to force 427 highly-polluting enterprises 
to move away from the city's center, according to Zeng Lei, Deputy 
Director General of Guangzhou Nansha Economic and Trade Bureau. Most 
will be required to move to industrial parks located in the city's 
outskirts in an effort to improve environmental protection. These 
include the Conghua Economic and Technology Development Zone, the 
Huadu Textile and Rubber Industrial Parks, the Panyu Innovation 
Technology Park, and the Nansha Heavy Machinery Equipment 
Manufacturing Base. 
 
¶3. (U) Several factories forced by the Guangzhou government to 
relocate will soon call Nansha Economic Zone their new home. Located 
in the southeast section of Guangzhou, about one and a half hours 
away from city center, Nansha lies on the mouth of the Pearl River 
Delta Region. With easy access to all of Guangdong's major cities, 
Nansha prioritizes eight industrial sectors in its economic 
development plan: shipbuilding; electronic information; iron and 
steel; automobiles; petrochemicals; machinery and equipment; 
high-tech; and port logistics. 
 
¶4. (SBU) With many polluting enterprises scheduled to relocate to 
the area, some have asked whether the government is simply moving 
the pollution problem from one area to another.  However, Nansha's 
administration emphasizes that environmental protection will remain 
a high priority, and that enterprises are required to be in 
compliance with stringent environmental regulations.  They argue 
that in many cases Nansha's regulations are more stringent than 
those other parts of Guangzhou municipality. 
 
------------------------------------------ 
Making Sure Pollution Isn't Relocated, Too 
------------------------------------------ 
 
¶5. (U) For enterprises relocating to Nansha, emphasis on adherence 
to environmental regulations begins during step one of the 
relocation process: government approval. Once Nansha's government 
receives an inquiry from an individual enterprise, or receives the 
Guangzhou government's list of enterprises required to relocate, the 
local government requires several procedures prior to approval, 
including the establishment of an Environmental Impact Assessment 
(EIA), which addresses the nature of the proposed location's 
environment, and the hazards that a factory may cause to the 
ecological system as well as to the public. The EIA is conducted by 
a certified third-party, who subsequently files the report with the 
local Environmental Protection Bureau (EPB). In the case of 
large-scale projects, additional approval regarding environmental 
suitability may be required from the State Environmental Protection 
Administration (SEPA). Finally, the EIA must be approved by the 
Development and Reform Commission (DRC), a policy mandated from the 
state-level. 
 
¶6. (SBU) According to Zeng, Nansha does not approve all factories 
that Guangzhou recommends for relocation, or individual requests by 
companies, regardless of potential for economic development in the 
area. Zeng cited the case of Haotian Chemical Company as a prime 
example. Haotian, Guangzhou's largest chlorine alkali chemical 
enterprise, recently appeared on Guangzhou's relocation list because 
it is a heavy polluter. Following an EIA that revealed potential 
chemical hazards Haotian might pose to nearby residents, the 
relocation request was denied. (Note: Despite Zeng's claim, a 
subsequent media report indicated that Guangzhou is still planning 
to relocate the 50-year-old company to Nansha.) 
 
GUANGZHOU 00000212  002 OF 002 
 
 
 
¶7. (SBU) For those enterprises that are approved, Zeng told us they 
must install and utilize 'state-of-the-art' equipment to adhere to 
Nansha's current environment standards. According to one senior 
official at the Nansha EPB, the local government currently relies on 
factory-located air and water emissions monitors, installed at 
discharge points, to evaluate factories' pollution levels. Data 
collected from the monitors is recorded in an online EPB system. 
 
------------------------------------------ 
One Relocated Company Raises Its Standards 
------------------------------------------ 
 
¶8. (SBU) Guangzhou Paper Company, one of the city's oldest 
enterprises and largest sources of factory pollution, has been 
forced by the municipal government to relocate to Nansha. According 
to Jiang Peng, Vice General Manager and Chief Engineer, the firm is 
planning to make upgrades in order to meet Nansha's environmental 
standards. It will install new production lines that reduce energy 
consumption for every unit of output; upgrade end-treatment 
technologies to include anaerobic and aerobic treatments to reduce 
pollutant levels; and use 100 percent recycled raw materials. With 
these and additional upgrades, the firm expects to discharge 50 
percent less wastewater for each ton of output. 
 
------------------------------------- 
Challenges for Nansha's Government... 
------------------------------------- 
 
¶9. (SBU) Nansha will face many challenges in living up to its claim 
that the influx of factories will not adversely affect the local 
environment. One Guangdong official to whom we talked speculated the 
Nansha government might place environmental protection second to 
economic development. The official further pointed out that based on 
a past EIA, Nansha has been identified as an ecologically-fragile 
area, suggesting that it is a less than optimal site for factories 
that have already been identified as heavy polluters. The official 
said that in many cases local environmental authorities are more 
accountable to local government priorities, including economic 
development goals, regardless of national or provincial 
environmental mandates. 
 
¶10. (SBU) In addition, the city lacks resources to enforce 
environmental regulations.  Due to installation and operating costs, 
the factory-located air and water emissions monitors described by 
the Nansha EPB only cover key enterprises, such as power plants or 
factories that discharge more than 100 tons of waste water daily. 
The capacity of the EPB to monitor other enterprises is less 
certain. The Guangdong official explained this is because national 
and provincial level environmental bureaus provide very little 
funding, if any, to local level EPBs, leaving them dependent on the 
local government's budget. In addition, municipal governments award 
promotions and raises to EPB officials. 
 
------------------ 
...and Enterprises 
------------------ 
 
¶11. (U) Many enterprises forced to relocate will find it difficult 
to fund both relocation costs and costs of employing energy 
efficient, less-polluting technologies. For Guangzhou Paper Company, 
the new Nansha-based plant is expected to cost RMB 7.5 billion (more 
than USD1 billion). For those company's identified as 'pillars' of 
economic development, like Guangzhou Paper, the government will 
allocate subsidies for relocation and will give preferential access 
in obtaining land in industrial parks. Those enterprises not 
included must scout a location on their own, as well as foot 
relocation costs. 
 
GOLDBERG