The Beijing Hongyuan Energy and Environmental Protection Technology Co Ltd has been established to help township and village enterprises reduce energy consumption and greenhouse gas emissions.

In another initiative, a Revolving Capital Fund has been jointly set up by Global Environment Facilities (GEF), the Ministry of Agriculture of China (MOA) and the Agricultural Bank of China with a total of US$4 million to assist such enterprises in gaining easier access to financing.

The target enterprises have become an important part of the national economy and employ a large number of laborers.

Especially, township and village companies in four sectors - foundries, cement, coking and brick making - produced more than half of China's total output over the past 20 years, documents from MOA show.

However, most such enterprises generate air and water pollution and pose a threat to the health of workers and local residents. At the same time they face obstacles in seeking to reduce emissions, said Wang Guiling, who is in charge of MOA's office for the project.

For example, banks have many restrictions on offering loans to such enterprises and few local governments offer preferential tax policies for those which use environmentally friendly techniques.

The new company will link township and village enterprises with the technical support and market information they need, Wang said, adding that the fund will offer easier access to financing for them.

Funded by GEF, the project was implemented by the United Nations Development Program and executed by the United Nations Industrial Development Organization and MOA.

The first phase was carried out in 1998-99 and the second started in February 2001 and will last four years.

Eight township and village enterprises in foundries, cement, coking and brick making have been selected as pilot projects.

According to Wang, by next year about 100 township and village enterprises in 20 counties across the country will benefit from the ideas generated by the initiative.

After the project is completed in 2005, the Hongyuan company and the fund will keep operating.

By then, the company will offer its service to more sectors and State-owned enterprises.

(China Daily August 20, 2003)