China Policy Journal Volume 1, Number 1, Fall 2018 | Page 154

Chronic Noncompliance and Ineffective Enforcement in Guangzhou
Figure 2. Annual total value of pollution fines (2007–2015)
(Guangzhou EPB 2008–2016)
EPB levied continuing fines on four polluting
firms. In 2016, the Yuehua power
station, an SOE and a major electricity
generator in the city, became the first
large polluting firm to have continued
fines imposed upon it; these fines for illegal
air pollution had record-breaking
value totaling 5.4 million yuan, which is
the largest ever in China.
In recent years, the Chinese environmental
authorities have also established
a set of innovative policy instruments,
such as interagency supervisions,
to supplement the formal environmental
laws and regulations by adding extra
costs on the chronic noncompliant
behavior of polluting firms. The PEPA
is essentially an environmental information
disclosure and rating system
promoted in the early 2000s by the then
Department of Science and Technology
(DoST) and the State Environmental
Protection Agency (SEPA) with direct
assistance from an expert team from the
World Bank. After several years’ pivotal
experiments in two cities in Zhejiang
and Inner Mongolia, the project began to
be implemented nationwide by the end
of the 11 th Five-Year-Plan (2006–2010)
(Li 2012; Wang et al. 2003). In this incentive-based
pollution control project,
the environmental performance of firms
is rated by local EPBs from best to worst
by using five colors—green, blue, yellow,
red, and black—and the rating results
would be disclosed via mass media
and the Internet. Guangzhou adopted
the PEPA system in 2007 and adopted
a four-color rating system (green, blue,
yellow, and red). Polluting firms coded
in red would be subjected to more intense
supervisions and sanctions jointly
conducted by the local EPBs and BO-
DIs and barred from deposit-refunds,
performance bonds, and various green
loans. As a complement to the PEPA
system mainly covering the big polluting
sources, the Guangzhou EPB also
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