Ariella Rotenberg is a research associate for U.S. foreign policy at the Council on Foreign Relations.
In mid-December, Chinese state media reported that the Legislative Affairs Office of the State Council (China’s cabinet) was weighing a new anti-smoking regulation that would curb tobacco use and advertising nationally. A draft of the regulation appeared on the website of the People’s Daily in order to solicit public feedback on the ordinance.
The regulation includes three types of limitations (in Chinese): a ban on smoking in indoor places and public outdoor space; outlawing tobacco use by doctors, public officials, and teachers; and protecting the public from overt glorification of tobacco use through advertisement limitations and enlargements of warning labels.
Many observers wonder whether the tough regulation will be approved without significant compromise, given the entrenched nature of tobacco use and the tobacco industry in China. For example, some elementary schools in the country are called “tobacco elementaries” for accepting sponsorship from tobacco companies. These schools post slogans over their entrances such as “Tobacco Makes You Accomplished and Smart.” One reason for optimism was the enactment of anti-smoking legislation by some sub-national governments, such as the one recently adopted by the Beijing municipality. Similar to the draft regulation at the national level, the Beijing municipality adopted legislation that will ban smoking in all indoor places, workplaces, and public transport vehicles. It is set to take effect on June 1, 2015.
However, Beijing is just one of fourteen Chinese cities that will have bans on all indoor smoking in public places; many such bans have been completely ignored. Chinese state media reports that even government officials, who already are prohibited from smoking in public, have flouted the prohibition and are often seen “engulfed in smoke.” Although China ratified the World Health Organization (WHO) Framework Convention on Tobacco Control in 2005, it failed to carry out many of the important measures by the 2011 deadline. Furthermore, the Chinese Ministry of Health published guidelines that resemble the current regulation in question in 2011 but such rules were too vague and ignored by most Chinese smokers.
Currently, there are an estimated 300 million smokers in China and 1 million smoking-related illness deaths each year. An additional several hundred million—some estimate as high as 700 million people—are exposed to second hand smoke. Health problems from tobacco use have cost the country nearly $500 billion over the last decade.
While the health risks of smoking and second-hand smoke are well-known, there are also considerable financial considerations that are often forgotten. On the one hand, 7 percent of Chinese government revenue each year is generated from taxes on tobacco products. This substantial amount of tax revenue generated by tobacco sales would possibly cause the Chinese government pause in enforcing anti-tobacco legislation—especially because the largest tobacco company in China is state-owned. The China National Tobacco Corporation (CNTC) manufactured 2.5 trillion cigarettes in 2013. Philip Morris International, China National’s biggest competitor, produced just 880 billion. That makes CNTC larger than the next five competitors worldwide, combined.
On the other hand, the WHO offered a reason for the government’s finance minister to be excited about curbing tobacco control. Higher tobacco taxes lead to lower tobacco use. That makes it a win-win. The WHO recommends an excise taxes on cigarettes should represent at least 70 percent of the retail price. In China, the rate is much lower, at approximately 40 percent.
In China, the government no doubt has an uphill battle should it choose to implement and enforce the proposed regulation. If it is successful in doing so, it will certainly have profound positive effects not only on the overall health of hundreds of millions of citizens but also on the long-term economic robustness of China’s economy.