Hebei cuts loans to polluters

Banks in North China's Hebei Province last year turned down loan applications worth 12.3 billion yuan ($2 billion) in order to comply with new "green credit" policies designed to cut funding to polluting industries, the Ministry of Environmental Protection said Wednesday.

Banks in smog-hit Hebei have been instructed to deny credit to projects that will add capacity in restricted industries like steel, cement and -glassmaking, according to an article published on the ministry's website.

Banking sources told Reuters earlier this month that banks have cut lending to bloated, polluting industries like steel and cement by as much as 20 percent.

Citing figures from Hebei's banking regulators, the report also said banks in the province lent a total of 18.26 billion yuan to energy-saving projects over 2013, and another 42.64 billion yuan on technological upgrades.

Banking regulators have issued blacklists to lenders in the province to make sure firms that violate environmental rules are not granted credit, it said.

Tighter lending rules have added to the credit crunch affecting Hebei's steel mills, many of which have been struggling to find the cash to buy raw materials and pay wages.

At least 16 out of 148 steel enterprises in the province have now stopped production as a result of "operating problems" brought about by a credit crunch as well as a decline in demand, Zhang Qingwei, governor of Hebei, said on the sidelines of the national legislative session earlier this month.

"The performances of these enterprises have been poor and because their ability to survive is in question, and because of severe pollution, the government doesn't allow the banks to lend to them," Zhang Wuzong, president of private steel maker Shandong Shiheng Special Steel Group, said earlier this month.

The province produced 32.636 million tons of crude steel in the first two months of 2014, down 5.7 percent compared to the previous year, data from the local statistics bureau showed.