Action needed to rein in offshore corporate push

PUBLISHED : Friday, 09 July, 2010, 12:00am
UPDATED : Friday, 09 July, 2010, 12:00am

Environmental groups have called on the central government to take firm action against reckless overseas investment activities by mainland companies, which they say have compromised environmental standards and attracted international concern.

The aggressive overseas push by companies hungry for natural resources was mostly to blame, mainland environmentalists said at a book launch in Beijing yesterday, but the government had also failed to impose strict environmental policies.

The book, which takes a close look at mainland environmental policies as they relate to business practices overseas, says Beijing's attempts to encourage companies to expand offshore have been hampered by the lack of supervision.

'The Chinese government does take the environmental factor into consideration in making foreign aid policies, but they are not binding and lack implementation specifics,' the book says.

Many small and medium-sized mainland companies failed to abide by laws and minimum environmental standards when investing overseas, Commerce Ministry official Zhang Lihua said.

The ministry, which is in charge of overseas investment, did not even have an overall environmental strategy, he added.

A green overseas investment policy proposal was handed to the government a year ago by a group of environmental researchers and experts but they had not received any feedback, according to Ge Chazhong , a co-author of the book - Environmental Policy on China's Overseas Investment.

Jin Jiaman , executive director of the Beijing-based Global Environmental Institute, which helped launch the book, said the Ministry of Environmental Protection had initially backed the proposal, with the support of deputy minister Pan Yue . But the ministry later retreated from that support.

'They said the proposal may need further discussion, because of the national need to support exports amid the financial crisis and lift the economy in general,' she said.

But Jin warned that the country's image was at stake because of the international criticism of mainland companies' lack of environmental standards.

Citing a recent scandal involving Industrial and Commercial Bank of China (ICBC), Ge, who is also a researcher at the Chinese Academy for Environmental Planning, said the government should learn to take environmental issues seriously.

ICBC, one of the mainland's big four state banks, has been under fire for helping to finance the 1,870 megawatt Gibe 3 dam project in Ethiopia, widely described as the most environmentally destructive dam in Sub-Saharan Africa in recent years.

Yang Chaofei, director of the environment ministry's laws and regulations department, said China's growing international clout and the sheer scale of its overseas investment had made it an easy target for all sorts of criticism.

He said China was particularly prone to criticism because over 90 per cent of its overseas aid and investment was concentrated in underdeveloped and politically unstable regions in Africa and Southeast Asia.

Dr Li Yao, principal investment officer at International Finance Corporation's East Asia and Pacific department, said it was time for China to overcome narrow-mindedness and embrace internationally accepted environmental standards.