China to Charge Resource Users More to Protect the Environment

China will do more to make industry pay for rights to use natural resources and to compensate the community for environmental costs, the nation’s leaders said at the conclusion of a Communist Party meeting yesterday.

Changes flagged for the commodities industry came in a communique after President Xi Jinping, Premier Li Keqiang and the party’s Central Committee gathered for a four-day meeting known as the third plenum to determine policy shifts for the coming decade.

The pollution and environmental damage accompanying China’s economic growth featured in government and media commentary in the lead up to the meeting. Overcapacity in industries ranging from steel making and aluminum smelting to cement production were also debated before the plenum.

“China will push through changes in the resources and commodities sector that will help balance the environment and the economic growth,” said Helen Lau, an analyst at UOB Kay Hian Ltd. in Hong Kong. “While the full results may take months or years to become clear, they’ve laid out the principals which will be hallmarks of the Xi administration in the next decade.”

Detailed policies such as aiming to increase energy efficiency, rein in overcapacity and ease carbon emissions may be released in the future, Lau said.

’Environment Protection’

“China should facilitate a management system to oversee the ownership and use of natural resources by setting a cost of environment protection,” the official Xinhua News Agency reported, citing the communique. China will also give markets a “decisive” role in allocating resources in the economy, it said.

Iron-making capacity will be cut by a further 15 million tons by 2015, steel-making capacity by another 15 million tons and cement capacity by an additional 100 million tons, according to a State Council statement posted on the central government website on Oct. 15.

Aluminum overcapacity in China will worsen, Julian Zhu, an analyst at Goldman Sachs Group Inc., said on Sept. 12. China is expected to add 11.8 million tons per year of capacity in 2013-2014, lifting total capacity to 38.8 million tons a year, Zhu said.

China won’t give new land quotas to industries with overcapacity including steel, cement, aluminum, flat glass and shipbuilding, the Ministry of Land and Resources said on its website on Nov. 11.

Premier Li Keqiang promised to clean up pollution as part of his top priorities in a briefing in March. The environment shouldn’t be sacrificed for the sake of growth, Li said at that time, after record smog blanketed Beijing in January.

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net; Sarah Chen in Beijing at schen514@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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