Saturday, 25 July 2009

Chinese companies to be held liable for environmental damage caused overseas
July 23, 2009

Chinese companies operating overseas may soon be held responsible for damage caused in their host countries, reports China state media.

The Ministry of Environmental Protection (MEP) and the Ministry of Commerce (MOFCOM) have drafted a set of regulations that will apply to all Chinese companies operating abroad. Chinese companies will be required to comply with environmental laws of China and the host country. In cases where Chinese standards are higher than those of the host country, the stronger regulations would apply, according to Zhi Yingbiao, a program officer from the Global Environmental Institution (GEI), a non-governmental organization and co-designer of the guidelines.

The regulations include safeguards against pollution and require Chinese companies to provide compensation for environmental damages caused by projects. China Daily did not indicate how compensation would be determined.

The environment code is now awaiting approval from authorities, which could come shortly, according to Ge Chazong, a researcher with the Chinese Academy for Environmental Planning who helped design the rules.

The new regulations—provided they are enforced—could boost the reputation of Chinese firms as they seek opportunities to develop projects overseas. Direct foreign investment by China rose from $3.6 billion in 2004 to 40.7 billion last year. Much of the money is going into energy, infrastructure, forestry, and agriculture projects in poor countries but green groups say Chinese companies currently have a poor environmental record in developing projects in ecologically sensitive areas.

It is not the first time China has issued such guidelines. Threes years ago China announced a draft sustainable forestry handbook for Chinese companies operating overseas. The guidelines called for a ban on illegal logging and clearing of natural forests for plantations. The manual was distributed in 2007 distributed to China's 31 provinces, its forestry department, and various industry groups, but it is unclear whether the rules were ever put into force.

Li Jing. Green rules eye Chinese firms abroad. China Daily. 2009-05-29