"I'm a subscriber and a public health physician and today I ran across an article in Medscape that has relevance to the article in today's commentary on China's shutting down 90% of it lead-acid manufacturing.

"Thanks to you and David for a wonderful educational service."

Eoin Treacy's view Thank you for this interesting article focusing on the public health and agriculture implications of China's lead smelting industry. The 10% estimate of heavy metal polluted farm land is alarming for a country such as China with a limited amount of arable land, a large population and rising per capita calorie consumption.

Depending on how successful China is in shuttering the lead smelting industry, other countries may move to avail of the opportunity. This would necessitate a preference for economic growth over environmental concerns, which has long been unpalatable in many more developed countries. China's announcement that it wants to exit the sector confirms it has reached a point where it has more to gain from preserving the environment than from destroying it.

An important IMF paper by Steve Barnett and Ray Brooks dated January 2010 suggests:

"A 1 yuan increase in government health spending was associated with a 2 yuan increase in household consumption. Total (household plus government) consumption could thus increase by as much as 3 yuan depending on the extent that government health spending takes the form of consumption instead of transfers."

Viewed in this light, China's incentive to reform its attitude to polluting industries is primarily of what offers the most economic benefit. China is working towards migrating its economy to higher margin, more technologically advanced sectors. It will therefore need to rely less on inefficient, highly polluting industry which will increasingly be viewed as a liability rather than an advantage.

A concurrent aim is to grow the consumer economy in an effort to counterbalance the export sector which is reliant on the global market. One of the main impediments to a more dynamic consumer sector is the need to save for future healthcare costs. Many people have elderly parents and just about everyone Mrs. Treacy and I know in China is worried about their children's health. Air pollution is a particular concern but so is food contamination. Heavy metal poisoning is more isolated to rural areas. Nevertheless, a vibrant consumer economy is based on confidence. China needs to continue to work towards improving its environmental record if it is to achieve its long-term developmental goals.

An additional consideration from a markets perspective is that if 10% of China's agricultural land is polluted with heavy metals, it will need to get its food from somewhere. Meat, particularly beef, is a sector where China is unlikely to ever be self sufficient. Live Cattle and Feeder Cattle continue to extend their breakouts from multi-year ranges. China has one of the largest pig industries in the world but has nevertheless had to combat rampant price inflation. Lean Hogs found support in the region of the upper side of its 5-year range and have bounced.