Soft regulations

But the existing environmental regulations are not tough enough to deter the polluters, according to Ma.

When Fu'an Textile Printing and Dyeing Co in Dongguan, Guangdong, was found to have illegally discharged 27,000 metric tons of waste water directly into a nearby river through hidden channels in 2006, it received a fine of only 217,000 yuan, the highest punishment the province has handed out for a violation of its environmental regulations, Ma said.

"Obviously, the punishments for violating the regulations are much lower than the cost of compliance, a common reason for the rampant pollution levels in China," he said.

A more worrying phenomenon, he said, is that as provinces tighten their supervision of the laws, some companies are simply moving their operations to regions where the regulations remain lax.

For instance, in the wake of the fine levied on Fu'an Textiles, its parent, Fountain Set (Holdings) Ltd, which is headquartered in Hong Kong, is moving its production base to Yancheng in Jiangsu.

Without strengthened supervision, the relocation of polluters simply means that they will take the pollution along with them, further increasing the environmental damage," said Ma.