China's millennium-old fireworks hub grapples with bans and shifting traditions

LIUYANG, China - From the concrete bunkers carved into the hillside, where workers gingerly handle piles of explosive black powder, to the shopfronts selling colourful boxes of pyrotechnics, time may be catching up with Liuyang's millennium-old fireworks industry.

Government efforts to curb pollution have led to bans on fireworks in 444 cities across China since last year. With the fast approach of Lunar New Year - when the sound of fireworks usually echoes across Chinese towns and cities - authorities have extended the bans further, including Beijing, neighbouring Tianjin and the provincial capitals Hefei and Changsha.

The sweeping bans have hit fireworks manufacturers already scrambling to adapt to shifting demographics and consumer trends. This year, the traditionally cacophonous celebrations for China's most important holiday are likely to be much more subdued.

During a recent visit to a fireworks wholesale market in Liuyang, a city of 1.3 million in southern Hunan province, business was slow, with shop owners and staff mostly idle.

Some sat around tables playing mahjong, while others stared listlessly into their mobile phones. Numerous shopfronts were shuttered.

"There really isn't much business, we're sitting here playing cards," said one business owner, who said sales were down around 60 per cent.

"Look outside - there isn't a single customer on the street, not even a ghost." The shop owner declined to be named.

Chinese New Year fireworks and firecrackers are set off by families and revellers in the street well into the early hours during the 15 days of the spring festival.

The noise they generate is believed to drive away bad spirits and usher in an auspicious start to the year.

Liuyang has been China's pyrotechnics capital ever since fireworks were said to be invented here nearly 1,400 years ago during the Tang dynasty. The city's hundreds of fireworks companies produce two-thirds of China's fireworks, according to Liuyang government data.

"For the national economy it may not be important, it's a drop in the ocean," said Chen Jiarong, 48, who made bottle rockets on an assembly line as a 15-year-old, and now employs 120 staff at his fireworks business.

"But most of Liuyang's ordinary people depend on the fireworks industry, on the factories."

While there is some automation, much of the production is still by hand. Liuyang's factories are located high up in the hills, where workers, in individual bunkers with metre-thick blast-proof concrete walls, scoop a combustible compound of black powder into fireworks canisters.

New safety measures require the installation of surveillance cameras which transmit live feeds to local police.

Deadly accidents involving fireworks are common in China.

In January last year, five people were killed in explosions at a store selling fireworks, while an explosion at a factory killed 12 and injured 33 in 2014. Both incidents occurred in other cities in Hunan province.

The ban on fireworks adds to an already difficult business climate, according to around a dozen fireworks sellers interviewed by Reuters.

Fireworks remain popular in rural villages and smaller cities, where they are frequently used to mark occasions like funerals, weddings and other celebrations, they said.

But demand had already been on the wane in larger cities, where there are restrictions on letting off fireworks outside the Lunar New Year period.

Younger consumers in the cities also see fireworks as old-fashioned, they said, and were less inclined to let their children play with them due to a lack of space and safety concerns.

President Xi Jinping's anti-corruption drive also prompted government departments and state-owned enterprises to tighten the spending of public money, including lavish celebrations and the gifting of fireworks to employees for Chinese New Year.

Tighter safety standards and government regulations have also increased compliance costs.

That has all led to rapid consolidation in the industry in the past two years - from the 946 fireworks companies in Liuyang as of late 2015, 558 remain today, according to the city government's Firecrackers and Fireworks Management Bureau.

The bureau did not respond to a request for comment from Reuters.

China is the world's largest exporter of fireworks, and Liuyang's larger, more dexterous factories have been mostly insulated from the fireworks ban by pushing their products overseas. China exported US$681 million in fireworks and firecrackers in the 11 months to November 2017, customs data showed.

But even fireworks sellers still able to make a healthy profit from overseas demand lament that local bans will make for a subdued atmosphere over Chinese New Year.

"China has had fireworks for more than a thousand years," said Chi Yuewen, the co-owner of Liuyang Standard Fireworks which exports 90 per cent of its product overseas.

"If they're letting off fireworks overseas but not in China, that's just not right."