A new Chinese internet video called Under the Dome is suddenly making huge waves. The film is by journalist Chai Jing and covers China’s incredible pollution problems in the style of Al Gore’s Inconvenient Truth:
The video has been viewed by 160 million Chinese and via BeyondBrics comes Deutsche Bank:
We believe this video may have macro implications…
The video addresses a sensitive issue which the official media seldom covers. The video has triggered an intensive discussion on the internet. To our knowledge, this is the first time a video by an independent journalist has been allowed to cause such social impact…
This suggests to us that the government will likely take environmental protection more seriously, rebalancing the economy from merely concentrating on an investment-intensive model.
Macquarie adds:
It’s very likely that for the coming weeks and during the NPC, environmental issues will be among the top issues for discussion. We are not experts on this topic. But the surging public consciousness on environment issues will likely make it harder for Beijing to deliver this year’s growth target
And Jefferies:
We believe the campaign to clean up China’s environment could become as intense as the anti-corruption campaign. Obvious beneficiaries are wind, solar, gas distributors, nuclear and environment services sector.
PetroChina is somewhat problematic. The documentary specifically calls out CNPC for being an inefficient, un-innovative and corrupt monopoly, starving China of natural gas supply. That headline does not sound good but the solution is higher natural gas prices and unlocking PetroChina’s value by breaking it up. And coal… forget about it.
This sure won’t help Australia in the short term given steel is one of the worst polluters and coal for power is as well. Longer term, there’s gas and nuclear to provide some offset.
The carbon mitigation implications aren’t very rosy either, given this will motivate China to push harder, which will only serve to leave Australia more isolated.
These trends are already set but add some accelerant.
