From: Reuters
Published August 16, 2007 11:10 AM

China Environment Watchdog Wants More Economic Bite

BEIJING - China must use more economic muscle to fight polluters blighting air and water, a senior environment official said on Monday as he released a blacklist of companies he wants barred from borrowing from banks.


China's State Environmental Protection Administration (SEPA) and bank authorities have joined forces to name companies that fail pollution checks or bypass environmental assessments for new projects -- and to restrict their access to fresh credit.


But when naming 30 chemical plants, pulp mills, smelters and other violators, even deputy SEPA chief Pan Yue said the action was unlikely to seriously dent pollution. He urged tougher measures.


The credit blacklist was the most forceful measure the environment watchdog could impose to clean up ailing rivers, Pan said in comments issued on SEPA's Web site (www.sepa.gov.cn).


But, he added: "It cannot fundamentally contain the trend of worsening pollution, and we need the force of even more combined economic levers."


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The World Bank has estimated that about 460,000 Chinese die prematurely each year from water and air pollution and about 300,000 more die from indoor toxins.


"The severe state of China's environment shows that the emissions reduction measures of a few specialized agencies are limited and we must unite with more macro-economic departments," Pan said.


One of the factories named was among those that dumped vile, ink-black runoff into a river, the official Xinhua news agency reported earlier this month.


The agricultural chemical plant in Bengbu, Anhui province, was part of an industrial cluster that villagers blamed for a burst of cancers and strange illnesses among even young people and children, the report said.


Pan, an ambitious advocate of tougher environmental controls, has seized upon broader government efforts to cool economic growth to enlist bureaucratic allies to punish errant factories.


But local banks and many officials, eager to stoke growth, appear unlikely to embrace his plea for "green credit."


This month the People's Bank of China, the nation's central bank, told commercial banks to stop lending to polluting producers and to call in loans to projects banned by the government.


But major Chinese banks had 1.5 trillion yuan ($198 billion) of outstanding medium- to long-term loans on their books extended to highly energy-intensive and polluting sectors at the end of May, up 21.8 percent from a year earlier.


Pan said he expected the People's Bank of China and the China Banking Regulatory Commission to restrict credit to the companies named. He promised more measures to come.


"Green credit is just a start," Pan said in an earlier version of his comments e-mailed to reporters.


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