China air pollution

Polluters to face more business, financing restrictions as China cracks down on wayward firms

PUBLISHED : Thursday, 28 July, 2016, 12:45pm
UPDATED : Thursday, 28 July, 2016, 10:28pm

Chinese firms guilty of exceeding emissions limits or building plants without environmental permits will face tougher punishments including credit bans and land use restrictions, the environmental ministry said on Wednesday.

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China has been cracking down on polluting enterprises, raising fines and threatening criminal action against persistent offenders, but regulators have long struggled to impose rules on powerful industrial enterprises and local governments anxious to protect revenue and jobs.

The country is beefing up its traditionally underpowered environment ministry and spreading the burden of enforcement to other agencies, including dedicated courts, police authorities and financial regulators.

The Ministry of Environmental Protection said in a notice published on its website that it has signed a cooperation agreement with 30 government departments, including the central bank, to broaden the range of punishments for offenders as well as improve information sharing.

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The 31 government departments will draw up a blacklist of offenders to create a “unified punishment mechanism”, the ministry’s official publication, China Environmental News, said.

Businesses or individuals that have seriously violated environmental rules will not be able to apply for new land, safety or business permits, and will not be able to get their products certified by customs.

Preferential tax policies may be cancelled, and firms will also face restrictions when issuing bonds or making use of other financing tools. Some may also be restricted or banned from entering the market.

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This month, the China Securities Regulatory Commission said it would allow only companies with a clean bill of environmental health for three full years to issue shares on local stock exchanges.

“Environmental enforcement needs to be enhanced, but if they can be assisted by other stakeholders and other powerful departments, especially investors, banks and stock market regulators, it can provide a big help,” said Ma Jun, director of the Institute for Public and Environmental Affairs, which campaigns against pollution.