The central government has approved Beijing Shougang Group, China's leading steel maker, to move all its polluting plants to neighboring Hebei province by 2010, sources from the company confirmed Monday.

Sources said the National Development and Reform commission officially ratified Shougang's plan on Feb. 18.

According to the plan, Shougang has cut steel output in the past few years and will further reduce annual output of Beijing factories to four million tons by 2007. Steel production will completely end in the capital by 2010, while the headquarters, research and development section, sales department and logistical center will stay in Beijing.

Founded in 1919, Shougang is widely considered the flagship of China's industry. But, in the past decade, its name has become more closely associated with air pollution.

According to sources from the Beijing Environmental Protection Monitor Center, air quality of the Chinese capital has steadily improved in recent years. In 2004, 62.5 percent of days were ranked "fine" or "better."

But experts have said if Shougang is not moved out of the city, Beijing's air quality will not meet the standard the government promised in its bid to host the summer 2008 Olympic games.

"The move is not a duplication in a another city and Shougang will not transfer pollution to Hebei province," said Zhu Jimin, Shougang's board chairman.

Shougang will also upgrade equipment, innovate technologies and reduce the environmental impact in the new base, said the sources.The new steel plant will operate in an environmental-friendly way with new equipment and techniques to improve efficiency and cut waste, Zhu said.

The new base covering about 20 square kilometers will be located in Caofeidian, an island 80 km south of Tangshan, a scenic coastal city in Hebei.

The current Shougang base is located in Beijing's western suburbs, which has long been blamed as the capital's worst polluter with chimneys belching out thick clouds of smoke.