China Policy Journal Volume 1, Number 1, Fall 2018

China Policy Journal the polluting firms which would make noncompliance costly and therefore compel them toward compliance in the future. The second type activates civil criminal laws and addresses the personal interests of the decision makers or managers of the polluting firms. Criminal prosecution could possibly result in the imprisonment of the managers, and such a consequence could deter their intentions of noncompliance. In China, environmental regulators have traditionally been more reliant on administrative penalties to deter and punish violations of environmental standards committed by the polluting firms. The forms of administrative penalties, which have degrees of coerciveness from low to high, mainly include orders requiring correction within a time limit, fines, suspension of operation, closure, relocation, and detention. The most frequent form of administrative penalties against environmental violations is pollution fine. But, scholars have long criticized this form of penalty for being too weak to inflict sufficient financial hardship on the polluting firms and to thereby deter noncompliance with environmental regulations. China used to adopt a “per event” fine system, under which the financial penalties had a maximum limit and, according to China’s Administrative Penalty Law, polluting firms were fined only once even if they violated the same environmental standards over an extended period. For both large polluters (such as SOEs) and smaller private companies, the monetary penalties caused by the traditional pollution fines were so small that it made economic sense for the polluters to continue their illegal discharges rather than to invest in pollution abatement. Alarmed by the unacceptable environmental pollution and widespread ecological deterioration, the Chinese government began to strengthen its environmental law enforcement in the 11 th Five-Year-Plan (2006–2010) by adopting more stringent standards and applying more intrusive policy instruments, which did lead to tougher sanctions. The official statistics of Guangzhou show that the value of pollution fines has increased significantly since 2007 (Figure 2). More progress in China’s environmental law enforcement has taken place since 2014, when the National People’s Congress (NPC) introduced important amendments to the Environmental Protection Law and significantly increased the financial penalties for environmental infringements. The updated legislation, coming into force in January 2015, canceled the cap on pollution fines and allowed the environmental regulators to fine infringers on a daily basis. The modified EPL also gave enforcement officers more coercive power by allowing them to seize and confiscate production equipment and even detain the owners of the polluting firms. Although it is still too early to make any judgment about the impacts of the new environmental legislation on pollution control, the new legal measures have begun to inflict greater hardship on the polluting firms which breach the environmental standards. In 2015, the first year of the implementation of the new EPL, the Guangzhou 150

China Policy Journal Volume 1, Number 1, Fall 2018 | Page 153