The Asian Development Bank (ADB) has approved a $100 million (£64m) loan to help China cut its energy consumption.
It will also help phase out mercury use and cut greenhouse gas and toxic emissions in the country’s chemical industry.
The funds will be lent through China Construction Bank to industrial plants which are part of the China National Chemical Corporation.
They will use the cash to boost energy efficiency and emission reductions.
Annika Seiler, a Finance Specialist for Energy at ADB, said: “The government puts a high priority in reducing the threat to the environment and public health posed by the use of toxic substances, including mercury and coal in the chemical industry.
“To date, however technical limitations and a lack of financing have held back large scale adoption of processes that could lead to new, cleaner and more energy efficient production methods.
“The goal of ADB’s assistance is to overcome current barriers and demonstrate the viability of these technologies on a commercial scale.”