New and wide-ranging guidelines which will affect foreign investment become effective on December 1. In the guidelines, issued by the National Development and Reform Commission and the Ministry of Commerce, the central government clarifies which industries are no-go areas for foreign capital and which are encouraged.

China’s emerging golf courses, as seen in our illustration, gaming services and ammunitions manufacturing, for example, are banned.

Authorities will restrict foreign capital flowing into the development of large-scale land lots and the construction and operation of high-end hotels, villas, office towers and exhibition malls.
Authorities will also restrict foreign capital being funneled into housing agents, brokerages and the second-tier real-estate market.

Overseas capital has been blamed by some for soaring housing prices on China’s mainland in recent years.

The National Statistics Bureau states that in the first nine months of this year, developers put RMB2.54 trillion (US$341 billion) into housing projects in China. Of the figure, RMB42.3 billion was from foreign investors, a rise of 60% year on year.

In the first nine months, total foreign direct investment in China expanded 10.9% from a year earlier to US$47.2 billion.

Authorities will also cap the ratio of foreign funds at 50% for a life-insurance company, a third for a securities company and 49% for a funds-management business specializing in stocks.

China will prohibit foreign capital in prospecting and mining its rare and non-renewable mineral resources. It will also embargo foreign-invested projects that are polluters and high users of energy and resources.

In contrast, investment in energy-efficient and ecology-friendly areas will be encouraged.
Source: China Daily

In pollution first have to understand the concept of credit as it was set up through the Kyoto Protocol. There is a Clean Development Mechanism (CDM) Fund and you earn points by cutting down on emissions; the more noxious, the more points.

This, as it were, puts China in the catbird seat.

First it is the factory of the world and, almost by definition, must therefore produce more pollutants than anyone else.

Second China is deadly serious in cutting down on these pollutants, Kyoto Protocol or not.

There is no doubt that China has a dominant position in the CDM market — good points for cutting down on bad pollutants — which the World Bank estimates was worth about $5.5 billion in 2006.

If some of that money is released, and this seems possible, China could have as much as $3 billion coming to a state-owned fund that supports emissions-reducing ventures. The Finance Ministry these projects need approval from the U.N. but, given that, 885 projects will go ahead, which would prevent emissions equivalent to 1.5 billion metric tons of carbon dioxide.

(Coincidentally you then find yourself in the odd position of creating more credits worth $15 billion. Beijing has said it will use the cash to support activities to tackle climate change, from raising public awareness to mitigation and adaptation projects.)

Clearing up, because there is a lot of pollution in the factory of the world, may be a monster job but relatively small efforts bring big dividends.

The International Energy Agency has said China is set to overtake the United States as the top emitter of carbon dioxide as early this year which is true but is the gross way of looking at it.

Compute it on a per capita basis and it is positively squeaky clean compared to most Western countries.

Beijing has tended to reject binding caps on emissions, which it fears could dent growth, and instead has been touting greater efficiency and more renewable energy. China’s position, which it has repeated yet again, is that rich countries responsible for most of the greenhouse gases already in the atmosphere must do more.

Vice Foreign Minister Zhang Yesui is quoted as saying, ‘Only if developed countries continue to take the lead to practically fulfill their emissions obligations can the Clean Development Mechanism gradually mature and continuously develop.’

Chinese firms guilty of poor environmental records may be banned from the stock markets. This could send a strong message as the benchmark Shanghai share index has just recorded its third straight record high — closing just short of 5,000.

But if you are a dirty company you cannot have a share of the bikkies.

China’s State Environmental Protection Association (SEPA) is tightening rules on the listings of companies involved in heavy industries or, if you prefer, the big time polluters.

China was embarrassed earlier by an admission from members of the International Olympic Committee that some endurance events could be delayed if Beijing’s notoriously poor air quality prevents athletes from competing at optimal levels.

Now the SEPA will co-operate with the China Securities Regulatory Commission to decide on initial public offerings for companies with questionable track records on green issues.

The move reflects the huge demand among mainland Chinese companies to raise money on the public markets at a time when the valuations of quoted companies continue to defy gravity.
Source: Daily Telegraph

The Wall Street Journal has a long, and well worth reading, article on the moves of the central administration take authority away from China’s powerful local governments.

Provincial and city governments in China have for decades had broad freedom to run their own affairs, as long as they delivered economic expansion and kept social conflict in check. They have often proved entrepreneurial, business-friendly and flexible — and especially adept at drawing investment to create jobs and increase the nation’s more-than-10% annual-expansion rates.

Yet too often, critics say, that focus on growth has led local authorities to turn a blind eye to violations of safety, labor and environmental standards. Local governments are blamed for the downsides of China’s rapid economic expansion, such as rising inequality, a disintegrating social safety net and pollution. (Our illustration giving a particularly nasty example.)

The drive to rein in local governments has been given extra impetus this year by scandals such as the brick kilns and the coal mines.

And lax local enforcement of safety regulations has also been blamed for permitting numerous shoddy and unsafe products to reach Chinese and overseas consumers.

The central government is focusing its efforts on a number of areas, including land use, environmental controls, agriculture and social services. Having made sweeping public commitments to China’s 1.3 billion people to improve living standards and equality, the government needs to make sure it can keep its word.

‘This is a major test of our strength and credibility,’ said Xu Shaoshi, China’s minister of land and resources. ‘It is imperative that enforcement of land regulations be tougher and stricter.’

If you want to read the whole article you have to be a bit devious as although Rupert Murdoch, the new owner, says the Internet Wall Street Journal will be free it has not happened yet.

Here is a sneaky way to get around this. First go to Milano Finanza at http://www.milanofinanza.it/ then scroll down to Global News and click on ‘China tightens local oversight’ and then you can get the very full story without having to register with the Wall Street Journal or pay money for a service we are assured will be free.
Source: Wall Street Journal

Bank loans to China’s energy-consuming and high-polluting sectors slowed down in the first five months of this year as the government worked to save energy and reduce greenhouse gas emissions.

The China Banking Regulatory Commission (CBRC) said in a statement that outstanding loans from major Chinese banks to these sectors rose by RMB104 billion ($13.7 billion) in the first five months to RMB1.5 trillion ($198 billion). Notice carefully the word is trillion as in a thousand billion.

The increase was RMB52.7 billion (roughly $7 billion) less than the rise in the same period last year.

The energy-consuming and high-polluting sectors in China are those involving oil processing and coking, chemicals, construction materials, iron and steel, non-ferrous metals, and power generation.

Most new loans were granted to large firms with advanced production methods and environmentally friendly techniques, while financing was cut to small plants with high energy consumption and pollutant discharges.

Liu Chengxiang, a statistics official with the CBRC, said, ‘Banks have tightened control on lending to these sectors, but with their production still surging, the task of reducing energy consumption and emissions remains arduous.’ The CBRC, China’s banking watchdog, vowed to carefully check the banks where outstanding loans to the restricted sectors continue to soar.
Source: China View