China Polluters Still Get Loans


China has failed to implement a key program that could cut pollution from industrial plants, a top regulator said this month.

Officials announced the policy known as “green credit” last July, pledging to block bank loans to the worst environmental violators. The rule marked a new level of cooperation between the State Environmental Protection Administration (SEPA) and China’s banking authorities.

Under the green credit policy, SEPA compiled a blacklist of China’s 30 worst polluters and handed it over to the People’s Bank of China and the China Banking Regulatory Commission.

If they don’t see an immediate economic incentive, it’s very difficult to bring about enforcement and compliance.

Most of the factories listed were in the paper-making, coke production, pharmaceutical, steel, and brewing industries, the official China Daily newspaper reported.

But on Feb. 14, SEPA deputy minister Pan Yue said the green credit program “has not fared well.” Although it yielded “initial achievements,” the policy “still falls far behind our expectations,” Pan said, China Daily said.

The problem, Pan said, has been in cutting off loans at the local level, where profits come into conflict with pollution concerns.

“Many of the high energy-consuming and polluting industries are at the same time the most lucrative industries in some areas, and some local governments refuse to order a cutoff of loans,” said Pan.

Enforcement ‘an enormous problem’

In interviews with Radio Free Asia, environmental experts praised Pan Yue for publicizing the local resistance but voiced concern about the setback to the cleanup campaign.

Elizabeth Economy, director of Asia studies at the New York-based Council on Foreign Relations, said: “It is indeed disappointing to see that, even with the powerful institution of the banks, enforcement still remains an enormous problem.”

While China’s central government is often seen as powerful, it has relatively little control at the provincial and local levels when it tries to implement change, Economy said. Local economic interests and corruption have also frustrated efforts to stop the manufacturing of counterfeit goods and hazardous products, she added.

“If they don’t see an immediate economic incentive, it’s very difficult to bring about enforcement and compliance,” Economy said.

Daniella Salaverry, co-director of the China program at the California-based nongovernmental organization Pacific Environment, said that the number of new central government initiatives may be less important than how well they are enforced.

“Pan Yue has been wonderfully outspoken, but we’ve continued to see poor follow-through in the provinces and in other regions of China,” Salaverry said.

The poor implementation has raised particular concern this year because China’s anti-pollution efforts were supposed to bear fruit in time for the Summer Olympic Games.

“Now’s the chance for that enforcement to really take effect, and with the Beijing Olympics just a few months away and more attention paid to a lot of these issues, hopefully they can deliver,” Salaverry said.

But Economy said that corruption among local officials has been a long-term problem that has not responded to central government campaigns.

“I don’t think they’re going to get that improvement until there’s some form of political reform,” Economy said.

Original reporting by Michael Lelyveld. Edited for the Web by Richard Finney.


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