Smoking All the Profits

Forget the Marlboro man: China is the world’s cigarette king. The mainland produces—and consumes—more tobacco products than any other country in the world. The China National Tobacco Corporation (CNTC), the state-run cash cow that holds an effective monopoly on the industry, is a source of good business for the party: in 2010, Big Tobacco paid 498.85 billion yuan (around $75 billion) in taxes to the Chinese government, according to the State Tobacco Monopoly Administration. More than 300 million Chinese adults smoke—among them more than half of all Chinese men. In 2009, the CNTC says, it produced a whopping 2.3 trillion cigarettes.

China's government has failed to curb smoking in a country with the world's largest number of smokers

China's government has failed to curb smoking in a country with the world's largest number of smokers

But all this puffing is sparking serious public-health questions, and experts are now questioning if short-term profits will soon be outweighed by long-term health costs to the state. The World Lung Foundation (WLF) estimates a million people will die from tobacco-related illness in China this year, a toll that’s expected to double by 2020. So far there’s been little oversight of the industry: the Monopoly is, in essence, responsible for tobacco-control efforts. As the WLF’s Dr. Judith Mackay says, it’s been “a bit like putting a fox in charge of a chicken coop.”

No longer. Along with a team of researchers, Yang Gonghuan, the deputy director-general of China’s Center for Disease Control, has published a new report laying out how tobacco is a big drag on the country. Profits from producing cigarettes will fall far short of the eventual health costs of smoking-related illnesses, says Gonghuan. By the report’s estimation, cigarette-industry revenue accounts for some 6.7 percent of Beijing’s income. By contrast, the report states that tobacco “overall poses a loss rather than a benefit to China,” and other research puts estimated costs from tobacco at about 25 percent more than the revenue generated by the industry.

Experts say the report falls in line with a fledgling awareness of the dangers of tobacco across the country. But for now, deterrents like putting pictorial warnings on cigarette packs—which is working to curb smoking in Latin America—are a long way off. The public-health question for Beijing, then, is whether cashing in on tobacco now will bankroll the hospital beds that will have to be bought later.


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