China - Changes to calculation of pollution fines from 15 August 2026
On 12 March 2026, the National People’s Congress formally adopted the Ecological and Environmental Protection Code (the “Code”), marking a significant milestone in the continued development and consolidation of environmental legislation. The Code is scheduled to come into effect on 15 August 2026.
The Code represents a comprehensive effort to integrate and harmonise a range of existing environmental laws and regulations into a unified legislative framework. Notably, this includes the incorporation of the fines elements in the Marine Environmental Protection Law (MEPL), alongside other sector-specific statutes.
Article 1236 introduces a fixed fine structure, replacing the previous approach under the MEPL whereby fines were calculated as a percentage of losses caused. This shift is a significant and welcome development. The adoption of fixed penalties provides greater predictability and transparency in enforcement.
Key aspects of Article 1236 of the Code include:
- Where a party causes pollution or ecological damage to the environment, in addition to usual liability at law, fines will be imposed.
- Environmental and ecological incidents can give rise to fines that increase dependent upon seriousness.
- Base level: Not less than RMB 300,000, but not more than RMB 1,000,000
- Large Incident: Not less than RMB 1,000,000 but not more than RMB 2,000,000
- Major incident: Not less than RMB 2,000,000 but not more than RMB 10,000,000
- Extraordinary incident: Not less than RMB 10,000,000 but not more than RMB 20,000,000
- Where the incident and damage involve particularly serious circumstances or particularly egregious impact, the departments or agencies responsible for ecological and environmental protection supervision and administration may impose on the liable enterprise, institution, or other business operator a fine of not less than two times but not more than five times the amount of the fine specified above.
- The terms used to describe the level and seriousness of incidents are not defined.
- Directly responsible managers or persons can also be fined not more than 50% of their annual income from the preceding year. Dependent upon the seriousness of the incident, the government also has authority to suspend or close the business.