The Chinese government will advance reforms in the pricing of natural gas, water and
other resources, raise the tax levied on pollutant discharge, establish a “polluter pays”
system and severely punish those who violate the environmental protection laws. To
insure that fees charged on pollutants are higher than abatement costs and to strengthen
existing laws, the government is considering the imposition of large fines on pollutant
emissions. Future Chinese environmental initiatives also may include formulating a tax
structure beneficial to environmental protection, and granting preferential loans and
subsidies to enterprises that construct and operate pollution treatment facilities. The
government will also provide incentives to companies that use more energy efficient
production facilities and techniques.