China probes bank loans to enforce environmental rules

Updated: 2007-07-13 13:39

BEIJING - Chinese regulators are stepping up scrutiny of bank lending to enforce rules meant to deny credit to companies that violate energy efficiency and pollution standards, the government said Friday.

The probe will focus on such energy-intensive industries as power generation, steel, coal, coke and electrolytic aluminum, the China Banking Regulatory Commission said in a written statement.

The announcement comes amid a government campaign to improve energy efficiency and rein in environmental damage from China's 28-year-old economic boom. Measures have included repealing rebates of value-added taxes for exports considered dirty or energy-intensive.

The government announced last week that violators of energy or pollution standards would be denied bank credit.

Financial institutions also are ordered to withdraw loans to companies deemed to be running obsolete equipment and causing too much pollution, the agency said.

Banks are expected to increase their own scrutiny of lending to polluting and energy-intensive industry, the agency said.

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