The Chinese environmental agency is working with the banking authorities to identify companies that fail pollution checks or bypass environmental assessments for new projects and to restrict their access to fresh credit.

A man collects dead fish from a river in Haikou, South China's Hainan Province July 23, 2007.[Newsphoto]

Pan Yue, the deputy chief of SEPA, the State Environmental Protection Administration, said the country should use more economic muscle to fight air and water polluters as he listed some polluting companies that would be barred from borrowing money from banks.

The credit blacklist was the most forceful measure the environment agency could impose to clean up rivers in China, Pan said in comments posted on the SEPA Web site.

But, he added: "It cannot fundamentally contain the trend of worsening pollution, and we need the force of even more combined economic levers."

The World Bank estimates that about 460,000 Chinese die prematurely each year from ailments related to water and air pollution and that about 300,000 others die from indoor toxins.

"The severe state of China's environment shows that the emissions-reduction measures of a few specialized agencies are limited and we must unite with more macroeconomic departments," Pan said.

One of the factories on the blacklist, an agricultural chemical plant in Bengbu, Anhui Province, dumped ink-black waste into a river, the Xinhua news agency reported. The plant was part of an industrial cluster that villagers said had contributed to a sudden increase in cancer and other illnesses in the area, the report said.

Pan, an ambitious advocate of tougher environmental controls, has seized an opportunity opened by broader government efforts to punish errant factories, even if punishment leads to slower economic growth.

But local banks and many officials who are eager to encourage economic growth appear unlikely to embrace Pan's plea for "green credit."

The central bank, the People's Bank of China, recently asked commercial banks to stop lending to those who pollute and to call in loans to projects banned by the government. But at the end of May, the major Chinese banks had 1.5 trillion yuan, or US$198 billion, in medium- and long-term loans outstanding to energy-intensive and polluting sectors, up 21.8 percent from a year earlier.

Pan said that he expected the People's Bank of China and the China Banking Regulatory Commission to restrict credit to the companies identified on the blacklist. And he promised additional measures to come.

"Green credit is just a start," Pan said in an earlier version of his comments sent to reporters in an e-mail message.

Officials will also consider incorporating environmental standards in tax, insurance and stock market regulations, he said.