What are environmental penalties against Chinese companies?
What: Historically China’s environmental policies in industry and manufacturing have been lax at best, favoring progress at the expense of environmental controls and protections. Things are changing rapidly with new laws and regulations that increasingly monitor and punish offenders.
Why: Understanding the basics of China’s new environmental policies can help you make more informed decisions around various aspects of your relationship with a Chinese company, especially when considering import and export regulations with countries with strict environmental laws.
In addition to the administrative penalties that many Chinese companies now face due to breaches in corporate compliance and other business laws, many Chinese companies also potentially face a range of additional penalties for failing to adhere to Chinese government-issued environmental regulations. China’s rapid economic expansion over the last two decades, especially within the manufacturing and industrial sectors, has caused an exponential rise in threats to the environment, especially in waste disposal, emissions, air and water pollution, and other hazardous by-products of those sectors.
In response to growing concerns from environmentalists both within and outside China, the Chinese government introduced new environmental protection laws in 2015, with additional amendments issued in early 2018. These updated laws sought to address China’s historically lax approach toward the environment and its protection. The Ministry of Ecology and Environment (MEE), formerly the Ministry of Environmental Protection (MEP), oversees and enforces these laws, although some critics cite that the laws and their application are inadequate to address the enormity of the problem. Proponents argue that these new laws are a step in the right direction and are helping to curb the profligate environmental infractions in the name of economic progress.
China has established a zero tolerance for companies guilty of some offenses (disposing of waste illegally, exceeding mandatory emission caps, tampering with monitoring equipment) and can levy strict penalties such as temporary factory closings, fines, and even criminal punishment. Some enforcements can reach draconian levels, with authorities enabled to fine lawbreaking persons or companies daily until the issues are rectified. Authorities are empowered to proceed with criminal charges in extreme cases.
Recent studies have cited that the volume of citations and fines is on the rise, indicating (at least on the surface) that China takes enforcing environmental laws and standards very seriously. As China continues to expand its economic and geopolitical reach and becomes a leading actor on the world stage, it grapples with balancing its own progress with growing global concerns over the elements of that progress that are contributing to global warming, climate change, and increased pollutants that threaten humans and other species, especially from nations and trading partners that continue to demand and require higher environmental standards.
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