'The move is to stimulate the replacement of high-pollution industries with environmentally friendly economies,' the official Xinhua news agency cited the Finance Bureau of Beijing as saying.

'Companies such as small cement and paper producers will be on the top of our list,' the department said.

The amount of money handed out would depend on how much pollution was cut, or how much water and energy were saved, Xinhua added.

'The policy was the latest effort of the capital to cut pollutant emissions and save energy,' it said.

Beijing has already put in place traffic restrictions modeled on a scheme carried out during the summer Olympics in a bid to raise the number of 'blue sky days'.

Beijing's pollution had been a major concern for organisers and athletes in the run-up to the Olympics in Aug. -- REUTERS