China Environmental Law

The Labor Day holiday begins today in China and runs through Saturday; Sunday is an official workday (to make up for the holiday on Friday). Unfortunately, I must continue to labor during this festive period on matters unrelated to this blog, but it will be a slow news period anyway.

There is one interesting article released today from Xinhua entitled “Exporters Confront Rising Environmental Costs.”  It reports that

Chinese manufacturers have seen their costs for environmental protection rise, in many ways, since the government raised the standards over the past year. . . .

China has conducted special campaigns against polluting companies since last year. And violators have lost more than just export opportunities: blacklisted firms find it difficult to get loans. The State Environmental Protection Administration, now the Ministry of Environmental Protection, along with the central bank and the Banking Regulatory Commission, jointly issued a “green loan” policy in July that banned loans to blacklisted companies.

In addition, the government stated that the worst violators would face shutdowns of up to three years.

A senior official with the National Development and Reform Commission, the country’s top economic planner, said that “all these measures made it clear that companies must establish pollution-treatment facilities. Only paying fines for degrading the environment is definitely not enough.”

As supervision strengthened, some companies had to shut down.

Fuan Textile Mill, a Hong Kong-listed company, shut down last March as it was found to be discharging wastewater directly into underground pipes. The company was fined 11.55 million yuan (1.65 million U.S. dollars).

A couple of comments: the government hasn’t significantly “raised the standards” over the past years; I assume what the writer means is that enforcement efforts have increased over the past year. This reading jibes with the second quoted paragraph which mentions “blacklisted firms.”  These are firms which end up on the list we mentioned yesterday of those “enterprises with severe pollution and whose emission of pollutants is greater than the national or local emission standard or whose total emission of pollutants is greater than the quota of total controlled emission determined by local people’s government.” It is encouraging to see it acknowledged that “paying fines” is no longer deemed sufficient (at least to a “senior official” with the NDRC), but that the installation of “pollution-treatment facilities” will be required.

The Fuan Textile Mill mentioned in the quotes is the same company profiled in this August 2007 Wall Street Journal article. Although the Xinhua article implies that the company’s closing of, what I presume to be, its Dongguan (Guangdong Province) facility was the result of the environmental infractions, this article from China Labor Watch suggests the closure was the result of the new Labor Contract Law:

According to workers, the layoff was primarily due to the labor law established just this year. In order to cut down expenses, Fuan has prepared to relocate its production in other parts of China and cut down the number of its workers in Dongguan.

In addition, and perhaps most significantly, the Xinhua article reports that

During the spring session of this year’s Canton Fair, which concluded on Wednesday, Minister of Commerce Chen Deming said China would maintain strict controls on polluting and energy-wasting companies, despite a tougher export situation.

Some national leaders are apparently willing to bite the bullet for environmental improvement.

In support of this effort, blacklisted firms “were barred from the Canton Fair, or the China Import and Export Fair.”

The Canton Fair is the most important channel for Chinese exporters to expand overseas, so a ban means big losses. . . .

This creative penalty is an encouraging bit of news. So is the fact that some Chinese companies are discovering that “green” sells:

Appliance giant Haier introduced a “green strategy” at the fair. It showed off more than 100 new products, such as washing machines that don’t require laundry powder. The company won orders worth 850 million U.S. dollars.

Sales manager Yang Hong said that a Spanish customer had decided to buy more than 10 million U.S. dollars worth of environmentally-friendly products in less than 15 minutes. “It was a surprise to us,” said Yang.

Other products at the fair, such as furniture, decorations and toys, also emphasized an environmentally-friendly trend. Products using recycled materials were especially popular.

Liu Zhenyi, president of Shandong Luyi Wooden Product Co., Ltd., said their wood and woven-grass products all used recycled materials.

“Our products were made to European standards, although the cost was much higher,” he said. “They do not contain any lead or toxic chemical materials. We are confident about our products.”

Xu said Chinese companies were following stricter rules in designing, manufacturing, recycling and selling their products. “To promote energy-efficient products is to save resources for the world,” he said.

Ah, all my labors have not been in vain! I have renewed strength to labor on.