City officials stopped about 1,300 companies from entering the heart of this booming southern city's manufacturing sector in the first 10 months of this year because of the environmental and energy problems they would have caused.

Shenzhen has been struggling to overcome shortages of land, water and energy resources, as well as problems associated with an expanding population and worsening environmental conditions, said Li Wenlong, director of Baoan District.

Shenzhen is also in the process of restructuring its industrial sector in a bid to attract more high-tech companies. As a result, some 1,260 companies failed to get licenses or moved out of Baoan district during the January-October period, he said.

Li's district is home to more than half of the city's manufacturers and contributes about a third of its industrial output.

Baoan District's industrial output increased by 29.5 percent in the first 10 months of this year compared with the same period last year, while its fiscal income grew by 37.6 percent during the period, according to official figures.

To speed the transformation of its industrial sector, Shenzhen is in the process of weeding out certain types of enterprises to make room for high technology and other value-adding firms.

Specifically, the government is targeting illegally operating, unlicensed companies; companies with safety problems; companies that violate the Labor Law and social insurance policy; companies that heavily pollute the environment; and energy-intensive processing firms that rely on cheap labor.

Companies that fall into these categories will be shut down if they do not make improvements.

A spokesman for the Shenzhen Labor Bureau told China Daily that the government would resettle and compensate any laid-off workers, though he declined to provide any further details.

For its part, the Baoan District government has focused more on regulating the enterprises operating there in the past year, allowing only qualified companies to receive operating licenses and build new facilities, Li said.

The district government has worked out policies to help those companies that are willing to relocate, Li said.

(Xinhua News Agency November 29, 2006)