The Chinese environmental ministry has reaffirmed its crack down on polluting firms in Linyi, an industrial city in East China's Shandong province, despite the controversial effects on the local financial situation and the social stability.

"The city is a microcosm of all cities that sacrifice the environment in the process of economic transition, and has to pay its historical debts to the environment now,"said the ministry on its WeChat moments, a social networking site, on Thursday night.

The pollution crackdown has halted production at 57 companies, cutting PM2.5 by a quarter but also threatening financial and social stability, news website Thepaper.cn reported.

Production at 57 companies in Linyi, mostly steel, coal and glass plants, has been suspended since March, after the city's mayor was summoned by the environment ministry for failing to supervise polluting firms.

Although Linyi's levels of PM2.5 pollution - the tiny particulates that are most damaging to public health - dropped 24.3 percent from January to May, the crackdown has caused financial problems and social instability, with companies struggling to pay back hefty loans and 60,000 jobs lost.

With the leaders vowing not to be singled out again by the environment ministry, there's no schedule in sight for the companies to resume production. Halting production has caused the enterprises' capital chain to break, making them unable to pay their debts.

According to statistics from the local banking sector, the city has 300 billion yuan in loans, one third of them from the shuttered companies. Potential loan defaults by these companies may cause a regional financial crisis .

Linyi's government investment platform injected 70 million yuan into the city's largest private company, Huasheng Jiangquan Group, last month to pay back the interest on its loans.

About 60,000 residents had lost their jobs at the 57 shuttered companies. Local police said cases of theft and robbery in the city had increased in recent months.

Companies complained that the local government's sudden order to shut down factories had damaged equipment and left them no time to minimize their losses.

A company that produces glass panes had its electricity cut off when there were still 2,000 tonnes of molten glass and molten tin in the furnace.

"If we resume production, we need to blast off the cooled, solid tin and glass waste, a process which will take four to five months. And the furnace is almost ruined," said one of its workers.

A coal plant leader, whose furnace was also shut down immediately under the order, has asked a professional association to evaluate his losses, which "stand at at least 10 million", according to his estimates.

"Even if I can't stop the order, I must show the government how much it cost me, " he said.

Most of the plants had not been through environmental impact reviews before they opened, as Linyi officials had invited them to invest in the city and promised to handle all "procedural paperwork", the reports said.

A reform group led by President Xi Jinping issued three documents on Wednesday vowing to improve environmental inspection, and to hold officials who fail to properly supervise environmental damage responsible.