BEIJING: China will force heavily polluting industries to participate in a compulsory insurance programme to ensure they can adequately provide compensation for damage, the government said on Thursday.

Pollution has become a core concern for the stability-obsessed ruling Communist Party because of the public anger and protests it generates and because the issue cannot easily be hidden from view.

Companies that must participate in the scheme include mining and smelting industries, lead battery manufacturers, leather goods firms and chemical factories, the Environment Ministry and China Insurance Regulatory Commission said in a joint statement.

Petrochemical companies and firms that make hazardous chemicals and hazardous waste would also be encouraged to participate, it added.

Special environmental protection funds would be allocated to companies taking out the insurance, and they would be given priority for bank lending, the statement said.

Companies which don't apply for the insurance may face negative environmental impact assessments and credit downgrades, which could hamper their development, it added.

A pilot insurance programme currently covered more than 2,000 companies across a dozen provinces and had underwritten some 20 billion yuan ($3.21 billion) in risk, the government departments said.

"Using the tool of insurance ... is conducive towards pushing companies to raise their environmental risk management and reduce incidents of polluting accidents," it added.

The insurance scheme follows a spate of rules aimed at cleaning up the country's notoriously filthy environment.

The issue has sprung back in focus during a particularly smoggy winter that has renewed widespread concern over China's environmental problems.

Air quality levels in Beijing and other northern Chinese cites have regularly been labelled as unhealthy or hazardous in recent weeks. ($1 = 6.2376 yuan)