Do not forget environmental laws

The environmental laws of China have been improving throughout the last years. Today, it has become a major element to take into account, and no foreign investor should underestimate the importance to comply with them when conducting their operations. Let us have a look at the major elements one should bear in mind.

The most important notion in the construction sector is the system of prior environmental impact assessments (EIAs). It is international, and as such applied also in China. The preparation of EIAs reports is required before the construction can begin, estimating the pollution that will be generated and the impact on the environment.

After the approval of the EIA, the “three simultaneities” system must be observed : basically, the steps taken to reduce pollution must be designed, built and go live simultaneously with the main works. The project can only start after the approval of the environmental protection authority.

As for pollutant emissions, Chinese authorities have two sets of standards: state standards and local standards (for most of the cases, state standards will apply, but it is worth checking). If a company fails to meet those standards, it can be subject to “pollution charges”, regular fines, deadline to treat the pollution, loss compensation etc. But under grave circumstances, the shutdown of the activities can be ordered.

The last but not least notion to have in mind is the mandatory cleaner production audits. These audits are required by authorities for companies as follow : “those whose emissions may not exceed state or local emission standards but exceed the targets for controlling emissions of key pollutants; those that are deemed high energy consuming ; and those that use toxic or hazardous raw materials to carry out production, or that emit toxic or hazardous substances in the course of production” 1.

Failing to comply with this audit will prevent the targeted companies from seeking financing in the Mainland China.

1 Source : LexisNexis