It’s rarely a good idea to ask an industry to police itself, especially when billions of dollars are on the line. Just take a look at China’s efforts to curb cigarette smoking. It’s not just the smokers who can’t kick the habit – the men responsible for replenishing the state’s coffers have also grown dependent on their tobacco fix.
That’s the remarkably candid conclusion of ‘Tobacco control and China’s future’, a new report on the country’s seemingly inexhaustible tobacco addiction. The report’s authors found that, despite tax hikes and attempts to educate the public on the dangers of smoking, tobacco production actually went up 40% after 2005. The country now has more than 300 million active smokers.
“China is the world’s largest producer and consumer of tobacco,” confirmed the China Daily this week, estimating that one in every three cigarettes smoked globally is made and consumed in the country.
It’s an expensive habit. The cost to the local healthcare system last year: at least $9.8 billion. “The medical costs, loss of manpower and other social costs caused by smoking have been much higher than the total value of the tobacco industry including the total tax payments,” argues Yang Gonghuan, vice-director of the China Centre for
Disease Control and one of the academics in charge of the project, “and in the next 20 years this [trend] will increase.”
But in the fight against tobacco, it seems, the government has been its own worst enemy.
The reason? “The Ministry of Industry and Information Technology [in charge of controlling smoking], also manages the State Tobacco Monopoly Administration (STMA),” Yang told the Beijing Times recently, “which combines two conflicting interests within the same organisation.”
That can lead to perverse outcomes. “Although cigarette consumption taxes were increased, the [STMA] hasn’t raised the price of cigarettes,” according to China National Radio. “This completely undermines tobacco control objectives.”
And profits from tobacco sales revenues are only one half of the puzzle – the other is tax revenue. “’Income from tobacco is a major pillar of local government economies,” argues the Economic Observer magazine, “so tobacco control in China has ended up as a tug of war between the need for anti-smoking propaganda and increasing local revenue.”
The China Daily agreed, penning an unusually hard-hitting editorial this Monday. It was particularly disappointed that the government kept quiet on Sunday when it was supposed to execute a nationwide ban on smoking in indoor public places. “The silence shows either indecisiveness on the part of the government or its unwillingness to cut down on its addiction to its revenues from tobacco. This state of affairs can’t continue,” the editorial concluded.
Keeping track：China’s latest step towards kicking its legendary smoking habit has been welcomed by anti-smoking activists – even if it was just a small one. Last week, the State Administration of Radio Film and Television ordered film and television studios to ensure that scenes with actors smoking be made “ as short as possible”. The move follows there lease of a Beijing Centre for Disease Control survey that found that nearly a third of students polled wante d to smoke after seeing actors light up. China seems to have an ambivalent approach to tobacco control (see WiC91), and the sections of the government that benefit from cigarette sales have so far managed to talk down most of the more restrictive policies proposed by anti-smoking advocates.（18 February 2011）
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.