China cuts credit lines to non-environmentally friendly projects

China's central bank this month ordered financial institutions to cut credit lines to environmentally unfriendly projects.

The bank's instruction to lending houses to suspend support to high energy or resource using or heavily polluting projects was issued last Friday, July 6, the state-owned news agency Xinhua reported.

The move is intended to pull the financial sector into line and demonstrate the country's determination to meet energy efficiency and pollutant reduction targets.

Chinese Premier Wen Jiabao said earlier this year: "The current macro-control policy must focus on energy conservation and emission reduction in order to develop the economy while protecting the environment."

The central bank also wants commercial institutions to simplify lending procedures and offer preferential terms for environmentally-friendly projects.

It says banks should channel credit to projects using technologies that save energy and protect the environment or which innovate in those areas.

And it called on lending houses to include environmental protection information in a company's credit record.

China is finding the challenge of cutting energy consumption and greenhouse gas emissions arduous.

Its economy grew around 11% in the first quarter but power consumption surged almost 15% suggesting little change in its overall emissions trend.

It has set a target of reducing energy consumption by 20% for every 10,000 Yuan (£650) by 2010 and pollutant discharges by ten percent.

But last year energy consumption fell one and a quarter percent - well short of the annual four percent goal.

The government has vowed to take action and reform the pricing of natural gas, water and other resources and raise taxes on the discharge of pollutants.

It has also pledged to establish a "polluter pays" system and severely punish those violating environmental protection laws.

Lawmakers have begun drafting an amendment to energy legislation, including measures to avoid energy waste in the construction and transportation sectors and from government buildings.

David Gibbs



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