China pulls bank loans to 12 major polluters

BEIJING (Reuters) - Twelve polluting enterprises have had crucial bank loans recalled, suspended or rejected as China's new "green-credit policy" kicks into action, Friday's China Youth Daily said.

Decades of heavy industrialization have made water from some of China's lakes and rivers so polluted it is no longer usable, with untreated waste from factories and other enterprises pumped directly into water sources.

The report did not name the companies but outlined several cases of which one involved a brewery in east China's Anhui province, whose application for a 10 million yuan ($1.35 million) bank loan was rejected due to continued violations in waste-water discharge.

In another case, a power company in Chengdu, capital of Sichuan province, had its bank loans recalled after it failed to pass an environmental assessment, Xinhua news agency said.

The 12 companies were among the 30 the State Environmental Protection Administration (SEPA) reported to the People's Bank of China and the China Banking Regulatory Commission in July this year.

"The purpose of this move is to force enterprises to pay the price for environmental violations," the newspaper quoted an SEPA official as saying.

China's enterprises are only subject to a maximum 100,000 yuan fine for environmental violations, according to Chinese law.

"Compared with the economic benefits of illegally discharging pollutants, this kind of financial punishment is just a drop in the bucket for these enterprises," the official was quoted as saying.

China has vowed to step up its efforts to curb emissions of pollutants by temporarily suspending the approval of some investment projects, after falling short of its goal for 2006.

(Reporting by Nick Macfie; Editing by David Fox)