The notice asked the ministry's branches at all levels to examine the quality of pollution controls, energy saving, employment, equipment and other factors when evaluating their operational conditions and production capability.

Any enterprise that fails to reach environment and energy standards will be prohibited from doing business in processing trade. Those employing workers without standard contracts or failing to meet local minimum wages rates will not be allowed to enter the industry, according to the notice.

It also said that enterprises using equipment and technologies that have been officially listed as "obsolete" will be kept out of the processing trade industry.

China's processing trade has been developing fairly fast, with the annual volume rising from 2.5 billion U.S. dollars in 1981 to 831.9 billion U.S. dollars in 2006, and the proportion of processing trade in total foreign trade rising from 5.7 percent to48.6 percent.

Processing trade involves a Chinese company that is hired to process or assemble components of a product that is often imported from another country and then usually re-exported to another market.