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China’s anti-smoking activists try a new argument: that it’s bad for the economy

By William Wan, Monday, June 27, 9:42 AM

YUXI, China — When China issued its first national ban on public smoking last month, health advocates cheered but didn’t hold their breath. Like many anti-smoking regulations in China, this one seemed hollow, and for good reason.

A month later, the ban has had little, if any, effect. Smoking remains rampant in spaces where it has been prohibited, such as restaurants, schools and hospitals.

The main reason so few take China’s campaign against cigarettes seriously: The very government promising to crack down on tobacco use is the owner and chief beneficiary of the $93 billion industry.

For decades, that simple fact has blessed the state-run monopoly with custom-designed loopholes and stalled anti-smoking legislation.

As a result, China is tobacco’s biggest stronghold, the world’s largest producer and consumer. According to World Health Organization estimates, more than half of the men in China smoke, compared with roughly 20 percent in the United States. And cigarettes contribute to four of the top five causes of death in China, with 1.2 million tobacco-related fatalities a year.

In many ways, China’s struggle over smoking embodies a key dilemma facing its government: balancing the state’s obsession with economic growth with the appearance of looking out for the public interest.

So far, the public interest has been on the losing end. While tobacco users are dying in increasing numbers, tobacco farmers say they are sometimes forced to grow the low-earning crop by local officials eager to protect their key source of tax revenue.

Now, after years of working in vain, anti-smoking activists say they must move their fight away from simplistic arguments over health and morality and into the arena that matters most in modern China: economics.

A company town

Perhaps nowhere does the economic argument against smoking face a greater challenge than in the small city of Yuxi in Yunnan province, home of the Hongta Group, one of China’s biggest cigarette companies.

Residents work at the sprawling Hongta cigarette factory. Visitors stay at the Hongta Hotel. The rich play at Hongta golf courses. The poor toil in tobacco fields in surrounding villages.

For decades, Yuxi and the regional government of Yunnan have depended on the economic engine of tobacco. Yunnan, a relatively undeveloped region with many poor counties, receives almost half its tax revenue from tobacco.

As a result, the very idea of an anti-smoking movement remains foreign — an effort funded almost completely by international grants and often considered unwelcome.

“They call us crazy sometimes,” said Li Xiaoliang, who heads one of the few anti-smoking nonprofit groups in Yunnan. “People tell us, ‘The rice you eat, the clothes you wear come from the tobacco fields. Opposing tobacco is like opposing our right to a life.’ ”

Tobacco executives and local government officials declined requests for interviews, but workers for Hongta confirmed privately that their company and others in Yunnan have worked with local officials for decades to counter anti-smoking efforts.

When Li and other health advocates got cigarette billboards banned from some cities in Yunnan, tobacco companies responded by sponsoring events that allowed them to plaster their logos around town to promote auto races, charities and even marathons.

When activists appealed to local media, the companies poured money into newspapers for pro-tobacco fluff pieces and sidestepped TV advertising laws by sponsoring soap operas.

But the most frustrating setbacks for health advocates, Li said, have been in their work with schools. It took her years, she said, to persuade a small number of schools to declare themselves tobacco-free. At the same time, however, the companies expanded their presence in other schools through teacher awards and student scholarships.

In the poorest regions, schools built by tobacco companies include the cigarette brand in their names and adorn their halls with corporate slogans.

“Despite all our work, I don’t know if the tobacco companies even take us seriously,” Li said. “We are just a small gnat in comparison.”

Powerful partners

The power of the tobacco lobby is only magnified at the national level, where the government and the industry are deeply entwined.

Working together, they have jealously protected their monopoly and have largely fended off powerful foreign companies salivating over the Chinese market.

The same top administrators work overlapping positions at the National Tobacco Corp. — which produces China’s cigarettes — and the State Tobacco Monopoly Administration, which is supposed to regulate the industry.

And the Tobacco Control Office, created to reduce smoking nationwide, reports not to the Ministry of Health but to the Ministry of Industry and Information Technology, which runs the tobacco industry.

As head of the Tobacco Control Office, Yang Gonghuan works in a dimly lighted Beijing building with a staff of two dozen.

An epidemiologist who studied at Harvard, Yang in the 1990s helped organize the government’s first attempt to gather mortality statistics. When she realized most of China’s top causes of death could be tied to smoking, she began pushing officials to tackle the problem.

Her influence these days stems from a World Health Organization treaty China signed a few years ago that specifies actions and deadlines aimed at reducing smoking.

Chinese leaders, however, have largely been able to skirt those requirements. In 2008, when tobacco companies were ordered to add warning labels covering 30 percent of cigarette packs, they created a mostly blank box with a vague warning in minuscule print. They filled leftover space with English text, incomprehensible to most in the country.

In 2009, when the treaty required an increase in the cigarette tax, the government and the industry worked together to switch many brands to lower tax categories, thereby negating the effect.

“In some cases, the cigarettes actually got cheaper instead,” Yang said.

For the past decade, Yang’s opponents within the government have trumped her efforts with a single, powerful argument: Tobacco is indispensable to China’s economy, and the economy is key to social stability — the one thing China’s leadership worries about most.

While the government has dismantled other state-owned enterprises, it has clung to its lucrative tobacco trade. Last year, China’s tobacco industry generated $93 billion in total revenue and contributed $77 billion in taxes, almost 7 percent of China’s total tax revenue. And the number of cigarettes it produces continues to grow, rising 40 percent during the past decade.

In response, health advocates in China are trying to craft economic arguments.

This year, Yang’s office teamed with some of China’s most prominent economists as well as international experts to produce an attention-grabbing study on the social cost of tobacco. Factoring in the cost of health-care and lost productivity from dying smokers, the report argued that the long-term expenses of tobacco outweigh its short-term gains.

“As long as they continue to believe there is profit there, we will never get the government to change,” Yang said.

Meanwhile, health advocates in Yunnan have begun making a similar pitch to local leaders and say they have seen glimmers of hope. This year, Zhao Yaqiao, an economics professor at Yunnan Agricultural University, launched a pilot project to find alternative industries, including vegetable farming and tourism.

“You can’t just tell people not to smoke, just like you can’t tell farmers to stop planting,” he said. “You need to show them a different way.”

One of Zhao’s first moves was to reach out to the tobacco companies, a crucial step, he said, because of their vast political and economic influence. Many in the anti-smoking movement questioned his motives, and tobacco executives avoided him for six months.

A surprising response

When he finally landed a meeting, what they said surprised him.

“In their hearts, they also believe that someday tobacco will die and that there is a need for transition,” he said. “They said they’ve seen what happened in the U.S., Japan, Singapore.”

One manager at Hongta, declining to speak on the record for fear of losing his job, said that his company and others have recently begun exploring alternatives, investing in hydroelectric projects, real estate and hotels. “But we were stopped by the government and told to keep our focus on tobacco,” he said.

Tobacco executives, however, see the writing on the wall, the Hongta manager said.

“The industry may not collapse within the next 10 or 20 years, but for the next generation here, it’s hard to say what their prospects are,” he said. “It doesn’t look promising.”

Researcher Wang Juan contributed to this report.

© The Washington Post Company

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