SUN WUKONG Green whirlwind
sweeps China By Wu Zhong, China
Editor
HONG KONG - The annual session of
the National People's Congress (NPC), which
convenes on Wednesday, is likely to endorse the
upgrading of the State Environmental Protection
Administration (SEPA) into a mega-sized Ministry
of Environment.
This is to highlight the
greater importance the Chinese government attaches
to environment protection. It is also a gesture to
toe the new party line of "scientific development"
based on President Hu Jintao's concepts.
As if to boost its authority ahead of the
anticipated upgrading, SEPA has been gearing up to
launch one after another of what the Chinese media
call "green whirlwinds". So much so that
the
word
"green" has become very fashionable in the country
recently. On February 25, SEPA unveiled a
"green securities" policy. Pan Yue, vice director
of SEPA, said the agency had issued a regulation
stipulating that highly polluting companies must
pass environmental inspections when applying for
initial public offerings (IPO). Listed companies
with high pollution emissions and energy are
required to make environmental disclosures and
pass environmental inspections for refinancing.
Pan said most domestically listed
companies either do not report their environmental
performance or submit "only qualitative
descriptions" and "scantily useful facts",
according to a China Daily report. The regulation
is designed to make environmental disclosure a key
criterion for companies raising funds from the
Chinese capital markets, according to Pan.
The regulation targeted companies engaged
in power generation, steel, cement and aluminum
production, and provincial companies classified as
energy-intensive or highly polluting. That latter
category covers 13 industries, including
metallurgy, coal, textiles and paper.
Making environmental reporting compulsory
is a joint program of SEPA and the China
Securities Regulatory Commission (CSRC), China
Daily said. The two agencies worked together in
reviewing the information submitted by 37
companies applying for IPO last year.
The
next day, SEPA blacklisted 141 products as being
"highly polluting and environmentally dangerous".
It suggested that 39 such items should be
ineligible for tax refunds, as well as processing
and trading. The blacklist would protect public
health and be a tangible step toward honoring
China's international commitments to safeguard the
environment, Pan said.
Earlier, on
February 18, SEPA issued a "green insurance"
policy. The policy, supported by the China
Insurance Regulatory Commission (CIRC) and aimed
at insuring enterprises with pollution risks, will
be implemented nationwide by 2015 after a trial
period, state-run Xinhua News Agency reported. The
goal would be to have insurers compensate victims
of environmental accidents, avoid bankruptcy by
the polluting company and lessen the government's
financial burden.
According to Pan, SEPA
handled 108 emergency environmental pollution
incidents across the country, one per two working
days on average. Many polluting enterprises did
not have funds to deal with the aftermath, victims
could not be compensated and cleaning up could not
be done in time. In the end, the government had to
take up the responsibility, which is against the
principle of "he who pollutes is held
responsible". This problem could be solved if
enterprises were insured.
In July, 2007,
with the support of China Banking Regulatory
Commission (CBRC), SEPA launched the so-called
"green credit" policy. It demands banks to
restrict their loans to energy-intensive,
polluting industries. Under this policy, companies
with violations could be barred from getting loans
and those with outstanding loans could have their
loans called in.
Under this "green credit"
policy, so far some 3.93 billion yuan (US$554
million) worth of credit has been called in from
companies that failed to meet environment
standards, a Xinhua report last week said quoting
CBRC. CBRC also said that some 30
energy-intensive, high-polluting enterprises were
denied credit from the top five banks last year
after they were blacklisted by the environmental
authorities. CBRC statistics showed major
commercial banks have provided 1.7 trillion yuan
in loans for energy-intensive, polluting
industries including chemicals, iron and steel and
thermal power generation.
On the other
hand, China's top five banks - the Industrial and
Commercial Bank of China (ICBC), China
Construction Bank (CCB), Bank of China (BOC),
Agricultural Bank of China (ABC), and Bank of
Communications (BoCom) - offered loans of more
than 100 billion yuan last year to support
companies' environmental plans, the top banking
regulator said.
Meanwhile, China will get
tough on corporate executives responsible for
causing severe pollution by imposing hefty fines
on them. Heads of Chinese enterprises which cause
severe pollution incidents may face fines
equivalent to half of their annual income,
according to an amended law on water pollution,
Xinhua said.
The NPC Standing Committee on
February 29 passed an amendment to the Water
Pollution Prevention and Control Law, which will
take effect from June 1. "Enterprise heads
directly responsible for causing severe water
pollution incidents and others with direct
responsibility will be fined up to half of their
income in the previous year," the revised law
says. Previous punishment of responsible company
heads stopped at administrative penalties.
All these are signs suggesting the new
environment body will be empowered with greater
authority, no longer remaining a "toothless tiger"
as SEPA used to be called.
Nevertheless,
as powerful as the new Ministry of Environment may
be, it is still a ministry under the State
Council, China's cabinet. And under China's
administrative hierarchy, it is at the same
ranking as other ministries or provinces or large
state-owned enterprises such as PetroChina,
Sinopec, or the State Grid. As such, it cannot
really order the others to do as it says.
Therefore, whether the new environment
authority can effectively exercise its function
still largely depends on whether other government
departments or provinces are willing to cooperate
and coordinate. In the three "green" policies, for
example, SEPA has the full support of the three
financial regulators.
However, as
departmentalism and regionalism run rampant in
China, it remains uncertain whether other
government departments and provinces will be as
fully cooperative as the financial regulators,
particularly when their own interests are
infringed.
From the long-term perspective,
therefore, China must build up a sounder rule of
law if it wants to push for environment-friendly
development. Empowering the environment watchdog
with greater capacities, after all, is only an
administrative measure. Its power can be properly
exercised only when it is armed with proper laws
and regulations.
(Copyright 2008 Asia
Times Online Ltd. All rights reserved. Please
contact us about sales, syndication and republishing .)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
