China Tightens Credit and Environmental Laws
Source: Globecot Date: 2007-08-07
China is attempting to rein in excess economic growth and to curtail pollution. The Chinese Central Bank has raised the reserve requirement .50 to 12 percent of deposits, which will take effect August 15 and follows an increase in the base interest rate to 6.84 percent. A stronger set of controls is being implemented to slow the growth of high-energy consuming, high-polluting companies, with a release of the country's first "black list" of high-polluting businesses. To address this issue, the State Environmental Protection Administration has issued a new set of rules for the banking sector that could deny the 30 "black listed" companies new bank loans due to their pollution records. Banks are also being told to restrict credit to companies that did not follow government guidelines for pollution emission standards.
In an attempt to enforce these measures, the central government has said it would restrict the available credit to a region if the local government failed to enforce the guidelines. So far, paper, steel and chemical manufacturers appear to be the enterprises most affected, but the man-made fiber sector will ultimately be impacted by the Chinese government's expansive effort to reduce pollution.
