China is drafting environmental guidelines for companies investing in or providing economic aid to overseas countries.

The work is being undertaken by the Chinese Academy for Environmental Planning (CAEP), in cooperation with the Global Environmental Institute (GEI) and the University of International Business and Economics.

The first draft is now being discussed, the GEI said.

A report released by the CAEP last week said the country lacked comprehensive environmental protection policies in its overseas projects, although investment had been expanding.

Statistics show that between 2002 and 2006, China's overseas non-financial direct investment grew by 60 percent annually. By the end of 2006, 5,000 Chinese companies had set up nearly 10,000 directly invested firms and invested US$90.6 billion in 172 countries.

"China should consider and take action as globalization has produced new environmental challenges," Ge Chazhong, an official from the CAEP, was quoted as saying by China Business News yesterday.

China's overseas investment and aid mainly focuses on exploring oil and other resources, processing, manufacturing, and construction in African and Southeast Asian countries.

Without proper management, such projects are likely to cause environmental problems, the report said.

In April, several companies, including China Mobile, Haier Group, and China International Marine Containers, joined "Caring for Climate", a voluntary UN initiative to combat global climate change.

Liu Meng, director of UN Global Compact China Office, told China Daily earlier that these companies' participation suggests that China's business sector is catching up with its international counterparts on climate issues.

China National Petroleum Corporation, the country's largest oil producer, has pledged to stick to stringent environmental requirements before deciding on overseas projects.

However, the report said there are still some environmental concerns over China's overseas projects.

Although China's banking industry has seen rapid development it its overseas credit business in recent years, most banks have failed to take environmental concerns into account.

Currently, only four banks in China have either formulated independent environmental standards for financing, or have joined the United Nations Environment Program Finance Initiative to reduce environmental risks.

(China Daily September 12, 2008)