On May 28, 2010, the People's Bank of China
("PBOC") and the China Banking Regulatory Commission
("CBRC") jointly issued a circular, titled Opinions on
Providing Financial Services to Further Support Energy Saving and
Emission Reduction and Closing-down of Backward Production
Capacities (the "Circular"). The Circular requires
commercial banks to curb lending to enterprises which consume high
amounts of energy, those with high emissions, and industries with
backward production facilities and over-capacity problems. This
move is in line with the PRC State Council's efforts to enhance
energy saving, reduce emissions and close down backward production
facilities. However, it remains to be seen whether commercial banks
will implement the Circular in a strict manner, especially when
they face problems generating revenue due to the Government
crackdown on the real estate property bubble in China, which in the
past has contributed a large portion of banks' revenue.
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