Shock Waves In China: Part 2

by Taotao Yue 23 Oct. 2018

Shock Waves In China was originally published December 2017 and discussed the compliance regulations China implemented during 2017 as the country prioritized environmental law.

In 2018, we have seen some new movements demonstrating the Chinese central government’s determination to fight against environmental pollution.

As a follow-up to last year’s environmental law enforcement inspections, the Ministry of Ecology and Environment has waged several rounds of inspections in various regions to verify the correction of non-compliance.

Stricter regulation has been built for emissions of air and water pollutants, solid waste import, soil pollution prevention and remediation, use of hazardous substances in electrical and electronic equipment, take-back of electric car batteries, manufacture and use of ozone-depleting substances and more.

From these regulatory movements, one could observe the government’s efforts to strengthen supervision during and after administrative licensing or approval for environmental protection and health and safety regulation. For instance, with the repealing of the pollutant discharge fee and integrating different types of pollutant discharge permit, companies are required to regularly monitor, record, report and disclose their pollutant discharge information. As part of the ‘corporate safety responsibility’ (安全生产主体责任) policy, companies manufacturing operating, handling or storing hazardous chemicals—such as explosive, toxic, or carcinogenic substances—must analyze and identify safety risks (安全风险研判) and announce daily safety promises.

Meanwhile, the legal liabilities and sanctions for non-compliance with EHS regulations have increased. For example, companies discharging pollutants without holding a valid permit may be ordered to reduce or stop production for rectification with a fine up to ¥1 million CNY ($14,4321 USD). Soil polluters are liable for paying for soil pollution investigation, assessment, control or remediation. The government has emphasized that the main responsible person of a company—such as the legal representative, actual controller or general manager—takes the primary responsibility (which may lead to administrative fines, custody or even criminal sanctions) for environmental and safety law compliance of that company.

In view of the trend, companies with operations in China may need to change the mindset and integrate EHS compliance in the corporate strategy as well as daily management.