>> A dirty reality check for China. Local officials in Northern Hubei province confessing this week they're falling behind in the war on pollution. And that Beijing's policies aren't being enforce. Hubei province is the country's steel heartland and surrounds the capital city, Beijing. And as Reuters' David Stanway explains it has an outsized impact on the economy and air.
>> So Hubei produces about 200 millions tones of steel, every year. That's about a quarter of China's total capacity, and is more than the entire European union.>> In fact, experts says the industry is too big for its own good and although Hubei is suppose to cut capacity by around 30% by 2020, steel production actually increased last year.
>> Critics say that the big issue is that it's not actually cutting production. It's cutting dead capacity, it's cutting plants that have already gone out of business. And so the campaign that it's undergoing right now isn't really having a big impact on the market. And it's not really having a big impact on curbing pollution.
>> Experts say about a third of Beijing's notorious smog comes from Hubei, which has made it a target of the government's crackdown. But some of Hubei's industries have found ways around the rules.>> They continue to try to manipulate pollution readings, or they will implement the rules in form and not in substance.
So they will be pretending to comply with central government regulations. But they won't be really implementing the spirit of this regulation. And that's something that Beijing is been trying to change this year in particular.>> Meanwhile, Beijing continues its crusade on dirty industries. Local media reporting Friday that the government is suspending any approvals for new coal-fired power plants in all but three of its 32 provinces and regions.