China drafts environment rules for outbound investment-report

BEIJING, May 29 (Reuters) - Chinese companies investing abroad will be asked to improve their environmental standards under guidelines draf,ted by the government, the China Daily reported on Friday.

Rules drafted by the Ministry of Environmental Protection and Ministry of Commerce will ask investors with projects abroad to carry out environmental impact studies, and include sewage and waste treatment facilities when needed, said the report, citing a researcher from the Chinese Academy for Environmental Planning.

The researcher, Ge Chazhong, told the newspaper that the rules may take effect in a couple of months. The report did not say whether the rules would be mandatory or how they would be enforced.

If enforced, they may affect growing Chinese investments in Africa, Asia and Latin America, where Chinese companies have opened factories, mines and plants.

Zhi Yingbiao of the Global Environmental Institute, an organisation helping to draft the guidelines, said they could require companies to pay compensation for any environmental damage.

"In cases where China's environmental standards are higher than the host country's, Chinese investors will follow our standards," said Zhi.

The report said Chinese overseas investment in non-financial businesses reached $40.7 billion in 2008, an increase of 63.6 percent over the previous year.

(Editing by Chris Lewis)