Puffing dragon: China's new smoking ban faces economic blowback

Beijing now forbids smoking indoors. But the government agency charged with carrying out the ban also owns the company that makes and sells cigarettes. 

Kim Kyung-Hoon/Reuters
A smoker walks past Chinese national flags in front of a restaurant in Beijing in May.

The Chinese capital introduced sweeping new rules against smoking indoors in an effort to further cut down on cigarette consumption in the world’s most tobacco-addicted country.

Many harbor doubts here about how strictly the new ban will be enforced in local settings. 

Yet there is another, stronger reason to expect only slow progress on anti-smoking in China: the government agency charged with dissuading people from smoking cigarettes also runs the company that has a monopoly on making and selling cigarettes. 

“This is a conflict of interest… that it is impossible to reconcile,” says Jin Jiyong, who teaches health policy at Shanghai International Studies University.

“It is a challenge” for the State Tobacco Monopoly Administration (STMA) to both run the Chinese cigarette industry and regulate it at the same time, acknowledges Li Baojiang, deputy head of the agency’s think tank.

Critics say the STMA puts profits ahead of health at the behest of the government. Last year the tobacco industry in China earned US$149 billion – in tax revenue. That adds up to a whopping 6.5 percent of the national budget, according to state figures.

“Today the economy is the prevalent priority in government,” says Yang Gonghuan, a former deputy chief of the Chinese Center for Disease Control. “They [officials] don’t risk the economy.”

The tobacco industry’s economic importance gives it tremendous clout, and it also enjoys top level political connections. Until last February, for example, Prime Minister Li Keqiang’s younger brother Li Keming was the No. 2 man at the STMA.

Still, Beijing’s new municipal rules, which set high fines for smoking in enclosed public spaces such as bars, and offices and restaurants, are the toughest ordinances anywhere in China.

Softer regulations in other cities have met with mixed success, though they have not been seriously enforced.

Who smokes out the smokers?

Smoking in China is still common, especially in the countryside. More than 300 million people smoke, including 53 percent of adult men according to the World Health Organization. The state-owned China National Tobacco Corporation, working under the STMA, manufactured more than 2.5 trillion cigarettes last year – 43 percent of total world production – and over 20 million people are employed, directly or indirectly, in the business.

The Chinese government signed up to the WHO’s Framework Convention on Tobacco Control ten years ago. But it has not met all its obligations.

A nationwide ban on indoor smoking in public places, which should have become law in 2011, is still held up in the State Council, China’s cabinet office.

The government has shared responsibility for tobacco control among several ministries, including Health, Finance, and Industry. When the CDC evaluated government action in 2011, “We gave them a failing grade” of just 37 out of 100, says Dr. Yang. 

The authorities fell down on key tasks such as banning indoor smoking, raising cigarette prices, putting health warnings on packages, and helping smokers quit. The STMA’s role in tobacco control, as a major player in the Ministry of Industry, “explains why our progress is so slow,” says Yang.

The STMA, which runs the China National Tobacco Corporation, has been tasked with designing graphic health warnings and ensuring they appear on cigarette packages. Seven years after it was given the job, no such warnings have yet appeared.

“Tobacco control is a process,” says Mr. Li in explanation, adding that the WHO convention only “encourages” governments to use graphic health warnings, rather than obliging them to do so.

That, argues Professor Jin, is a weak excuse. “Graphic warnings are the most effective way to bring down smoking rates in China,” he says, “and the government should take peoples’ health into consideration."

To be sure, the STMA is not trying to expand its customer base by encouraging young people to take up smoking, Li insists. Advertising for cigarettes was banned last month. “But we have to protect the normal consumption interests and rights of those who do smoke,” he says. “If there is a demand it is our responsibility to meet it.”

Slowly bringing change

That leaves active anti-smoking campaigns to non-governmental organizations. Studies show they have had some success in explaining the dangers of smoking: 20 years ago, 65 percent of smokers said they did not want to give up the habit. By 2010 that number had dropped to 45 percent.

Unofficial campaigns have recruited some big names in China such as NBA basketball star Yao Ming and Peng Liyuan, wife of President Xi Jinping who used to be a popular singing star.

President Xi, who is thought to have given up smoking himself a couple of decades ago, is giving senior officials the impression he is serious about curbing smoking in China – despite the short-term financial implications. One of Xi's rationales is the long-term health costs of smoking, says Yang. She points to last month’s complete ban on tobacco advertising as well as a recent hike in the price of cigarettes as evidence of a new mood.

But “the government is half hearted and hesitant about committing itself” to an anti-smoking crusade, worries Jin, because “it does not want to give up a cash cow.”

Still, he says, China’s permissive smoking culture is changing, albeit slowly, especially in the cities. Not all business meetings begin any more with a ritual exchange of cigarettes. Nor is a showy display of expensive packs of cigarettes at banqueting table any longer a hallmark of a successful wedding.

“Things are improving,” Jin says, “but there is still a long, long way to go."

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