February 12, 2014 / 12:51 PM / 6 years ago

UPDATE 1-China to set up $1.6 bln fund to help fight smog

(Adds Beijing city to shut down polluting factories)

BEIJING, Feb 12 (Reuters) - China said on Wednesday it would set up a 10 billion yuan ($1.65 billion) fund to fight air pollution, offering rewards for companies that clean up operations.

Pollution increasingly worries China’s stability-obsessed leaders, anxious to douse potential unrest as more affluent city dwellers turn against a growth-at-all-costs economic model that has poisoned much of the country’s air, water and soil.

The capital, Beijing, will shut 300 polluting factories this year and publish a list of industrial projects to be halted or suspended by the end of April, state news agency Xinhua said.

Authorities have issued innumerable orders and policies to try and clean up China, investing in projects to fight pollution and empowering courts to hand down the death penalty in serious cases.

But enforcement of rules has been patchy at the local level, where authorities often rely on taxes paid by polluting industries.

Premier Li Keqiang told a cabinet meeting the central government would set up the 10 billion yuan fund to “use rewards to replace subsidies to fight air pollution in key areas”, the government said in a statement.

Companies which were considered leaders in their field at cleaning up their emissions would be given “incentives”, it added, without providing details.

The government said China had already made progress towards tackling smog.

“But the issue of air pollution has been forming for a long time, and we must recognise the serious nature of tackling this and must persevere unremittingly,” it said.

The government will continue to push energy efficiency and clean energy schemes, including better gasoline standards for vehicles, and replacing outdated gear and factories, it added.

The government would toughen the oversight role of environmental protection bodies and work to standardise the release of information about pollution.

Many Chinese cities have once again been choked by smog this winter, with the problem unusually acute in the cosmopolitan commercial hub of Shanghai.

China could grant its undersized environment ministry new powers over resources, possibly allowing it to veto projects, and more muscle to punish polluters as part of a government shake-up next month, sources told Reuters. ($1=6.0606 Chinese yuan) (Reporting by Ben Blanchard; Editing by Robert Birsel and Clarence Fernandez)

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