China to ban cigarette factories, ruling out joint ventures

China will not allow any new cigarette factories, including joint ventures, as it works to cut back on tobacco use among its 350 million smokers, reports said Thursday.

Among other measures aimed at cutting tobacco consumption, Beijing plans to control cigarette sales through taxes, reorganize the government-owned industry and eliminate cigarette advertising within five years, the reports in the China Daily and other state-run newspapers said.

The reports cited comments made Tuesday by Sha Zukang , China 's ambassador to the United Nations in Geneva at a World Health Organization meeting on tobacco control.

The news is bound to be unwelcome to British American Tobacco PLC and other international cigarette companies that had hoped to set up joint ventures in the Chinese mainland.

According to the State Tobacco Monopoly Administration, 1.95 trillion cigarettes were sold in China last year, netting more than 159 billion yuan (US$20 billion; 16.74 billion euros) in tax revenues.

China accounts for more than one-quarter of the world's 1.3 billion smokers. But it joined a global treaty on cutting tobacco use, the Framework Convention on Tobacco Control, in 2003 and is gradually beginning to work toward compliance. The treaty came into effect following its ratification by the national legislature in August.

"The Chinese Government will follow the relevant stipulations of the convention to improve its related laws and regulations, strictly control smoking in public spaces and strengthen regulation of tobacco production and business activities," Sha said.

The government had earlier said it would not approve joint ventures because its market was saturated, with excess production capacity, despite a claim by British American Tobacco that it had approval to make cigarettes on the Chinese mainland.

Several dozen cigarette factories have been closed down, many of them small workshops.

Tobacco-related diseases kill about 1 million people in China every year _ a key factor behind the government's growing willingness to cut back despite its profitable monopoly.

The government has in recent years begun to restrict tobacco advertising and to enforce a ban on selling cigarettes to children. It also bans the use of cigarette vending machines. But like almost all laws here, such regulations are haphazardly enforced.

Sha told the conference that China aims for the Beijing Olympic Games in 2008 to be "tobacco free" in terms of rejecting sponsorships from makers of tobacco.

But he also noted that tobacco use was a "long-term, difficult and complicated" problem.

China 's tobacco growers are concentrated in some of its poorest, most remote provinces, where local authorities are likely to resist efforts to close down a crucial local industry.

The reports Thursday suggested resistance within the central government as well.

Cartons of cigarettes, and bottles of alcohol are customarily given as gifts to officials and others in positions of power by those hoping for their help, noted an official at the government's planning agency in an interview with the newspaper China Business News.

"Raising prices would just make cigarettes an even more desirable gift," it cited Xiong Bilin, deputy chief of the Industrial Division at the agency, the National Development and Reform Commission, as saying, reports the AP.

D.M.