Air quality in China is notoriously poor. Ambient concentrations of Total Suspended Particulates (TSP) 1981–1993 were more than double China’s National Annual Mean Ambient Air Quality Standard of 200 mg/m3 (Xiaohui Bi et al. 2007) and five times the level that prevailed in the United States before passage of the Clean Air Act in 1970. Further, it is frequently claimed that air quality is especially poor in northern Chinese cites. For example, following a career in the southern city of Shanghai, Prime Minister Zhu Rongji quipped: “If I work in your Beijing [in northern China], I would shorten my life at least five years.”1 This paper assesses the role of a procrustean Chinese policy in generating stark differences in air quality within China. During the 1950–1980 central planning period, the Chinese government established free winter heating of homes and offices as a basic right via the provision of free coal fuel for boilers. The combustion of coal in boilers is associated with the release of air pollutants, especially TSP. Due to budgetary limitations, however, this right was extended only to areas located in northern China. The line formed by the Huai River and Qinling Mountains denotes the border between northern and southern China. Matching air pollution and weather data for 76 Chinese cities, we find the heating policy led to dramatically higher TSP levels in the north. This result holds both in a cross-sectional regression discontinuity-style estimation approach and in a panel data setting that compares the marginal effect of winter temperature on TSP in northern and southern China, after controlling for all permanent city-level determinants of TSP concentrations and transitory ones common to all Chinese cities. In contrast, we fail to find evidence that the heating policy leads to increases in sulfur dioxide (SO2) and nitrogen oxide (NOx) concentrations.
China’s heating system was established during the three decades of the planned regime, 1950–1980. In this period, heating was considered a basic right and the government provided free heating for homes and offices, either directly or through state-owned enterprises. Commercial heating did not arrive in China until the mid-1990s, i.e., after the analysis period. The legacy of this system remains today as many homes and offices continue to receive free heat. Due to budgetary limitations, the Chinese government limited the heating entitlement to areas located in northern China. The border between northern and southern China is defined by the Huai River and Qinling Mountains. The average January temperature is roughly 0° Celsius along this line.