China has taken new action to restrict exporters who violate environmental regulations from trading overseas.

Trade suspensions from one year to three years will be used to punish companies that discharge excessive pollutants or seize environmental resources illegally, according to a notice issued jointly by the Ministry of Commerce and the State Environmental Protection Administration.

Some exporters have ignored the country's regulations on environmental protection in an effort to cut costs, the notice said.

It urged local environmental watchdogs to strengthen supervision over export companies, especially those that consume large amounts of energy and other resources. The watchdogs were also told to report violations to local commerce administrations.

The ministry, using reports from grassroots environmental watchdogs, will authorize local departments to punish violators by withholding approval of export-related applications, including those for export quotas and licenses, processing contracts and bids to participate in national and regional trade fairs.

Such applications will be approved only when local environmental watchdogs confirm that corrective action has been taken by the offending companies, according to the notice.

The government is struggling to reduce the impact of its expanding economy on the environment and combat charges that its exports are kept cheap by lax environmental and labor standards. China said yesterday the gap between exports and imports jumped 56 percent in September to US$23.9 billion.

"It's the government's belief that China's trade surplus is not really due to the exchange rate, it's due to structural problems - the cost of production is much lower than it should be because environmental standards aren't strong enough," said Paul Cavey, an economist at Macquarie Securities Ltd in Hong Kong. "The idea is to try and enforce pollution standards and labor standards."

China has "very serious" pollution problems and has paid a "large environmental price" to industrialize and urbanize, Vice Premier Zeng Peiyan said last month as he urged stronger enforcement of environmental regulations.