Green crackdown to spark increase in cost of Chinese products

Plans to ban exports from companies that fail to meet environmental standards could lead to 10 per cent increase in production costs, official claims

Production costs for Chinese exporters could rise by five to 10 per cent due to new environmental legislation, Chinese newspaper Xinhua has this week reported.

Under new regulations proposed by China's Ministry of Commerce (MOC), exporters would be banned from trading abroad for one to three years if they are found to be breaking environmental laws.

The MOC said that it would be targeting the metal processing, chemicals, cements, textiles and light industry – which together account for 80 per cent of Chinese energy consumption – and would stop approving export-related applications, as well as applications to attend trade fairs, if companies were found to be violating environmental regulations.

According to Chen Guanglong, an official at the MOC, the measures could force exporters to invest more in waste disposal and environmental best practices and as a result production costs could rise by up to 10 per cent. He added that small and medium-sized companies could face closure as a result of the crackdown, which is also likely to lead to increase prices for western importers of Chinese goods.

The move is the latest in a long line of measures from the Chinese government designed to boost its green credentials and is likely to increase pressure on western firms that source goods from Chinese exporters to assist with their efforts to limit their environmental impact.

Last week, new research from the Tyndall Centre revealed that almost a quarter of China's footprint is as a direct result of exports and urged western businesses and governments to do more to address carbon emissions for which it is largely responsible.