China: Environmental Controls Toughen

The strengthening of China's environmental controls is causing economic ripple effects, as government officials have rejected billions of dollars of new factories and investment projects for failing to meet the new environmental standards being enforced in the country, according to an article in the Wall Street Journal.

The article quotes an official from China's environmental regulatory agency SEPA as stating that between 1995 and 2005, only two projects were not approved by the agency. In 2006, SEPA rejected about 110 projects submitted for review. Through October 2007, 187 had been rejected, representing approximately US $91 billion in investment spending.

However, the control measures are still finding their way, the article states. Many projects are not subject to national-level approval in the past only those projects that receive funding from the central government or certain industry sectors were subject to national approval, with the remainder needing only to pass through local approvals. However, SEPA has expanded its influence through several means, including publicly shaming offenders and working with banks to deny loan access to companies in violation of environmental standards.

The agency estimated that around 30% of the proposed projects passing through its approval project were being rejected, and most that clear the process have been forced to make changes to comply with SEPA's demands.