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Gov't Reaffirms Pollution Crackdown in Linyi, Accepts Effects on Financial Situation

| Jul 04, 2015 06:28 AM EDT

The current strategy of land allocation has been constantly criticized for not taking into account other aspects such as industrial structure and demographics.

The Chinese environmental ministry has reaffirmed its crackdown on polluting firms in Linyi, an industrial city in Shandong Province, despite its controversial effects on the city’s financial situation and social stability.

"The city is a microcosm of all cities that sacrifice the environment in the process of economic transition, and has to pay its historical debts to the environment now," the environmental ministry said on its WeChat account on July 2, Thursday.

Thepaper.cn reported that 57 companies were ordered to halt production, cutting PM2.5 by a quarter but also threatening financial and social stability.

Since March, the production of the 57 companies in Linyi, which are mostly steel, coal and glass plants, has been suspended after the environment ministry summoned the city mayor for failing to supervise polluting firms.

Although Linyi's levels of PM2.5 pollution have dropped to 24.3 percent from January to May, the crackdown has caused financial problems for companies which find it difficult to pay back their loans, while some 60,000 people lost their jobs.

The report said that the environment ministry has not decided yet when the companies can resume production.

According to the local banking sector, the city has 300 billion yuan in loans, one-third of them from the companies that were closed down. The banks said that the potential loan defaults of the said companies may result in a regional financial crisis.

Linyi's government investment platform said that it has injected 70 million yuan into the city's largest private company, Huasheng Jiangquan Group, last month to pay back the interest on its loans.

The report said that the loss of jobs of some 60,000 residents had resulted in rising cases of theft and robbery in the city in recent months.

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