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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium Institutional Issues

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium Environmental Institutions in China HUA WANG Development Research Group World Bank CHANGHUA WU Green Development Institute Air pollution in China is a very serious problem. While national pollution survey data show that total emissions of major air pollutants, such as sulfur dioxide (SO2), soot, and industrial fugitive dust, peaked in the mid-1990s and have been falling off ever since, concentrations of fine particulates and SO2 in many Chinese cities remain among the highest in the world. Although metropolitan areas, with a total population of 100 to 200 million, have the most serious air pollution,1 hundreds of millions of people in rural areas are affected by indoor air pollution from solid fuels used for cooking and heating. Acid rain and acid deposition have also had detrimental effects on regions all over the country. In 2002, acid rain was recorded in more than 90 percent of the cities in acid rain control areas. Energy, heavy industry, and heating and cooking have been the traditional sources of air pollution in China. The large-scale, inefficient consumption of poor quality and poorly prepared coal in the industrial and energy sectors led to large emissions of pollutants. Pollution from small-scale heating and cooking used to fill the streets of Chinese cities and towns with thick, sticky smoke saturated with soot and a mixture of other pollutants. Recently, however, there has been a distinct shift in the sources of air pollution. The number of vehicles in China has been growing at a rate of 20 percent per year in many urban areas, and vehicular emissions are fast becoming the primary 1   In 2002, barely one-third of China’s 343 monitored cities were in compliance with the nation’s residential ambient air quality criteria.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium source of air pollution in cities.2 In addition, construction, which is widespread and poorly regulated in China, is the source of huge emissions of total suspended particulates (TSP), and in some localities, more dangerous pollutants—although there are few data to describe this phenomenon. Ecological destruction is another main contributor to high levels of TSP in much of northern China, where sand-storms have become more frequent in Beijing and other cities. China has done many things right in the environmental arena over the past decade. However, much more remains to be done to address the growing environmental challenges. This paper reviews the institutional aspects of environmental protection in China and offers recommendations for improving those institutions. Major recommendations include: (1) putting the quality of life, including environmental quality, at the top of the political agenda in China; (2) developing a national environmental network, with the State Environmental Protection Administration (SEPA) as its anchor, and expanding SEPA’s environmental coordination function; and (3) enacting laws requiring the disclosure of environmental information and ensuring public participation in environmental management and the promotion of environmental nongovernmental organizations (NGOs). The next section of this paper describes the responsibilities of major actors in environmental protection in China. This is followed by sections on regulation, institutional progress, and the future of pollution control in China. MAJOR ACTORS AND RESPONSIBILITIES The Legal Foundation Constitutionally, the National People’s Congress (NPC) and its Standing Committee exercise the leading power of the state in China. All administrative, judicial, and procuratorial organs of the state are created by the NPC, to which they are responsible and under whose supervision they operate. China has four major categories of governing institutions—the NPC, the State Council, the People’s Court (judicial), and the People’s Procuratorates (legal). According to the Constitution, the state is responsible for protecting and improving the living conditions of the people and the ecological environment. The state also prevents and controls pollution and other public hazards (Article 26), ensures the rational use of natural resources, and protects rare animals and plants. Appropriating or damaging natural resources by any organization or individual by whatever means is prohibited (Article 9). The Law of Environmental Protection further stipulates that “the plans for 2   Estimates show that by 2010 in Shanghai, 75 percent of total oxides of nitrogen (NOx) emissions, 94 percent of total carbon monoxide (CO) emissions, and 98 percent of total hydrocarbon emissions will be from vehicles.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium environmental protection formulated by the state must be incorporated into national economic and social development plans; the state [must] adopt economic and technological policies and measures favorable for environmental protection so as to coordinate the work of environmental protection with economic construction and social development” (Article 4). Article 5 states that “the state shall encourage the development of education in the science of environmental protection, strengthen the study and development of the science and technology of environmental protection, raise the scientific and technological level of environmental protection and popularize scientific knowledge of environmental protection.” According to the law, the competent department of environmental protection administration (i.e., SEPA) under the State Council shall conduct unified supervision and management of environmental protection throughout the country. The competent departments of environmental protection administration (environmental protection bureaus, or EPBs) of local people’s governments at or above the county level are responsible for unified supervision and management of environmental protection activities in areas under their jurisdiction. The state administrative department of marine affairs, the harbor superintendency administration, the fisheries administration and fishing harbor superintendency agencies, the environmental protection department of the armed forces, and the administrative departments of public security, transportation, railways, and civil aviation at various levels shall, in accordance with the provisions of relevant laws, supervise and manage the prevention and control of environmental pollution. The competent administrative departments of land, minerals, forestry, agriculture, and water conservancy of the people’s governments at or above county level shall, in accordance with the provisions of relevant laws, “conduct supervision and management of the protection of natural resources” (Article 7). The 1996 Decision of the State Council on Several Issues Concerning Environmental Protection affirms the importance of public participation and the development of NGOs. The decision states that “a mechanism for public involvement shall be established. Social organizations shall play their role. The public shall be encouraged to [become] involve[d] in environmental protection and to charge against or disclose any kind of illegal activities of violating environmental laws and regulations.” Major Players Government continues to play the leading role in protecting the environment in China, although participation by an emerging civil society is increasing, and decision makers are working more with the private sector and organizations outside the government.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium TABLE 1 Government Agencies with Environmental Responsibilities under State Council Responsibilities Actors Examples Macro-coordination and control State Development and Reform Commission   state land use and protection water resources and environment planning nation-wide ecological/ environmental construction plan coordinate all economic sectors’ development   Ministry of Finance   fiscal policy, control of state-owned capitals Specialized public agency State Environmental Protection Administration (SEPA)   pollution control ecosystem protection natural resource management urban environmental management Pollution control SEPA     Ministry of Construction   solid waste management, wastewater treatment   Ministry of Railways   railway industrial pollution control   Ministry of Communications   marine (shipping) pollution control   Ministry of Water Resources   water quality, water body sink capacity total water pollutant control   Ministry of Health   drinking water quality Government Players Government has three major responsibilities: legislative, administrative, and judiciary. The NPC Environment and Resources Protection Committee drafts new environmental legislation and revises existing legislation; local people’s congresses are responsible for local legislation. The Supreme People’s Court and local people’s courts at different levels exercise judicial powers in accordance with law, independently and not subject to interference by administrative organs, public organizations, or individuals. The Supreme People’s Procuratorate and local people’s procuratorates exercise power independently. The responsibilities of the State Council (or the Central Government) are distributed among different ministries and agencies (Table 1). Areas of

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium Responsibilities Actors Examples Ecosystem protection SEPA     Ministry of Agriculture   grassland, wetlands, agricultural biodiversity aquatic wildlife protection   State Forestry Administration   terrestrial biodiversity, land use, forest eco-construction forest resource protection, land greening   Ministry of Land and Resources   land, mineral and marine resources Natural resource SEPA   management Ministry of Land and Resources   mineral and marine resource management   Ministry of Water Resources   water supply   Ministry of Agriculture   fishery, renewable energy, land use   State Forestry Administration   timber and forest products terrestrial wildlife resource use, forest farms, plantations Others Ministry of Science and Technology   R&D   Ministry of Education   environmental education   General Auditing Agency General Customs Agency Taxation   environmental auditing responsibility include macro adjustment, coordination, and control (e.g., the State Development and Reform Commission, SDRC) and specialized management areas (e.g., Ministry of Construction, Ministry of Water Resources, Ministry of Land and Resources, etc.) Some agencies are directly affiliated with the State Council, such as SEPA and the State Forestry Administration. Nongovernmental Organizations Although China’s legal framework does not promote the creation of NGOs in the Western sense, environmentally oriented NGOs are beginning to provide a vehicle for public expressions of environmental concerns and for effecting change, although on a limited scale. Many Chinese NGOs have official

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium governmental sponsors to guide them through the registration process and provide support for their work, political and otherwise. There are two kinds of environmental NGOs in China: (1) fairly independent NGOs and (2) government-organized NGOs. The activities of many fairly independent NGOs are directed toward environmental education and community development. Friends of Nature, for example, focuses primarily on raising environmental awareness among the public; the group also promotes wildlife and habitat conservation. Green Earth Volunteers is an example of a volunteer organization. Global Village, although registered as a company, focuses on two main areas: (1) production of a series of TV programs; and (2) promotion of residential reuse and recycling in Beijing. In addition, many grassroots and community-level NGOs scattered around the country are working on specific issues in their communities. A number of international NGOs have also established their presence in China. They include the World Wildlife Foundation-China, Ford Foundation, Oxfam, Leadership for Environment and Development (LEAD) International, and the Nature Conservancy. Government-organized NGOs are usually state sponsored and are often established by state agencies or well known Chinese leaders or retired officials. Often large, national-level organizations that receive a large part of their funding from the government (although increasingly from other sources as well), government-organized NGOs are not grassroots organizations. They are focused on an elite audience of scholars, policy makers, and government officials. The clear advantage of these organizations is their ability to bring together scholars and officials from a wide range of institutions that normally find it difficult to interact in China’s highly vertical bureaucratic structure. Institutes and Think Tanks The explosive increase in international academic exchanges and the involvement of Chinese experts in cooperative environmental development projects have created an atmosphere of more independent, critical thinking among research institutes and think tanks. For instance, the Rural Development Institute of the People’s University of China in Beijing is one of many educational institutions that combine academic research and rural development projects in China’s interior. The Beijing Environment and Development Institute (BEDI) conducts applied research on environmental issues and encourages market-based solutions to environmental problems. Regionally based institutions, such as the Chinese Academy of Sciences Institute of Geography and the Northern Normal University Institute of Environmental Sciences, have developed impressive research and training programs to address specific regional needs. The Beijing-based South-North Institute for Sustainable Development has

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium conducted some very successful small demonstration projects on biogas energy for small farmers in the Baima Snow Mountain nature reserve in Sichuan Province. The prestigious Energy Research Institute, which is under the SDRC umbrella and is supported by the dynamic Center for Renewable Energy Development, is an example of a think tank that has had a good deal of influence over China’s energy policies. A number of institutions have also been actively involved in the development and expansion of environmental management systems in industry. The China National Cleaner Production Center, under SEPA, is an example of an institution that advises businesses on environmental auditing, cleaner production, and setting up ISO 14000 systems. International Actors Global changes in ecology, economics, and politics have led to a shift of some power and authority away from nation states and toward supranational, regional, and local levels of governance. International environmental conventions and agreements and multilateral, bilateral, and regional cooperation are a few examples. China has been actively involved in the preparation and implementation of international environmental conventions and now has obligations under more than 80 bilateral and multilateral environmental treaties (see Table 2). Former Premier Zhu Rongji reinforced China’s commitment to reducing greenhouse gases at the World Summit on Sustainable Development in September 2003, when he announced that China was moving forward with ratification of the Kyoto Protocol of the Framework Convention on Climate Change. China is committed to continue taking steps to protect environmental resources. These steps have included: current state assessments; sharing of information; participation in international cooperative activities; preparation of national action plans; and integration of environmental protection and general development plans and programs. Because China is held accountable to the international bodies (such as the United Nations Environment Program, UNEP) in charge of implementing these agreements, the ratification and implementation of global conventions has provided a strong incentive for placing environmental issues high on the national political and development agenda. In addition, these accords often provide financial and other support for the development and implementation of environmental laws by domestic institutions. China is also involved in multilateral, bilateral, and regional cooperative projects, as well as projects with NGOs. The World Bank and the Asian Development Bank have been important in promoting China’s environmental protection and sustainable development activities.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium TABLE 2 Major International Environmental Conventions Ratified by China Convention Date of Ratification Leading Government Agencies UN Framework Convention on Climate Change 2002 Ministry of Foreign Affairs, SDRC, MOST, Agriculture, Finance, SEPA, Forestry, Land/Resources, etc. Stockholm Convention on Persistent Organic Pollutants 2001 SEPA, Foreign Affairs, Agriculture, SDRC, Health UN Convention to Combat Desertification 1997 Foreign Affairs, Forestry UN Convention on Biological Diversity 1992 SEPA, Foreign Affairs, Finance, Agriculture, Forestry Montreal Protocol on Ozone Depleting Substances 1991 SEPA, Foreign Affairs, Agriculture, Finance Convention on Preventing Ocean Pollution by Dumping Wastes and Other Materials 1985 State Oceanic Agency, Communications, Foreign Affairs Convention on Internationally Important Wetlands Especially As Water Fowl Habitats   Foreign Affairs, Water Resources, SEPA, Forestry Framework Convention on Tobacco Control   SDRC, Health, Foreign Affairs, Finance Convention on International Trade of Endangered Wildlife Species 1981 Forestry, Foreign Affairs, Agriculture Protocol on Environmental Protection to the Antarctic Treaty 1991   Basel Convention on Transportation of Hazardous Wastes 1995   Administrative Oversight After the major administrative reforms of 1998, the State Council issued the Three-Determinations Program—emphasizing functions, staff, and personnel. Through this program, each government agency has been required to establish clearly defined functions, responsibilities, and powers and to specify the number of staff members to be responsible for each function. State Environmental Protection Administration SEPA is authorized to conduct “unified supervision and management of

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium environmental protection throughout the country.” Under the Three-Determinations Program, SEPA has responsibilities in the following areas: Policy and regulatory functions: drafting guidelines, policies, laws, regulations and administrative regulations; providing environmental assessments for economic and technological policies; economic and development planning, with the endorsement of the State Council; drafting a national plan for environmental protection; and drafting and supervising implementation of plans in specific areas such as pollution prevention and control and ecological protection for key regions and basins identified by the state. Enforcement and supervision: organizing the enforcement of various pollution-prevention and control laws and regulations; guiding, coordinating, and supervising marine environmental protection activities; overseeing the use of natural resources that effect the ecological environment; overseeing the environmental protection of natural reservation zones, scenic and historic sights, and forestry parks; supervising efforts to protect biodiversity and manage natural resources (e.g., prevention and control of desertification); making suggestions for the establishment of new national natural reservation areas; and supervising national natural reservation areas. Cross-cutting and regional issue coordination: directing efforts to deal with interdepartmental and interprovincial issues; investigating and dealing with major pollution accidents and ecological damage; resolving interprovincial disputes; organizing and coordinating efforts to prevent and control water pollution in national key basins; taking charge of the environmental supervision and administrative examination; and organizing the examination on the enforcement of environmental protection laws. Environmental standards: formulating national standards for environmental quality and discharges; documenting local standards; reviewing comprehensive urban plans for environmental protection; and publishing annual environmental protection reports and related documents (e.g., a national sustainable development profile). Environmental management and environmental impact assessment (EIA): formulating and organizing the implementation of regulations for management of environmental protection; examining and approving the EIA of major new construction; directing the comprehensive control of urban and rural environmental protection; and directing efforts for rural environmental protection and the construction of national ecological pilot areas; and promoting eco-agriculture. Research and development (R&D), certification, and environmental industry: coordinating environmental science and technology,

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium In 1982, the government passed legislation that devolved fiscal and economic decision-making responsibilities from the central and provincial levels to the county, township, and even village levels. Under the Fiscal Responsibility System, each level of government became financially independent, that is, responsible for raising and managing its own revenues. (Before 1980, local governments remitted tax revenues directly to the central government and awaited partial returns based on the central government’s discretion.) Fiscal decentralization meant new responsibilities for township governments. In 1988, a new round of government restructuring focused on promoting changes in government responsibilities and functions. Since that time, economic management departments that had directly managed the economy have changed to indirect management to improve administrative efficiency and speed up administrative legislation. Another round of restructuring took place in 1993 and was focused on separating government from business, separating rule-making from implementation, strengthening supervision, and reducing the direct government management of enterprises. In 1998, the State Council established a government administrative system that would support China’s socialist economic system. The government was restructured on the basis of “streamlining, unification, and efficiency,” and assignments and divisions of responsibilities were modified in accordance with the principle of “consistency of power and responsibilities.” The legal administrative system was strengthened to ensure that the country is ruled by law and governed by law. Similar reforms were carried out at the provincial, municipal, and county levels in the following years. The 1998 reform is regarded as the most dramatic in terms of government restructuring. The most recent reforms, in 2003, go one step further by instituting a much better developed administrative management system that is standardized, coordinated, transparent, clean, and highly efficient. The most important motivation for this set of reforms was China’s accession to the World Trade Organization. A major feature of the 2003 reforms is the separation of decision making, enforcement, and supervisory responsibilities. Along with the internal supervision of administrative departments, the reforms strengthen outside oversight by society, the media, people’s congresses, and political consultants. Compared with many other countries in the world, China has made little progress toward political democratization. Six rounds of government restructuring, however, have led to many achievements. For example, the number of government agencies has declined, and the functions of government agencies at different levels have changed dramatically. The government has gradually given up control over materials allocation, prices, and enterprise operation and management. Today, many state-owned enterprises are characterized by shareholder ownership, market operation, and enterprise-level management. In addition, the private sector has grown rapidly and is now a strong pillar of national economic development. In short, China has moved closer to a market economy.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium Dramatic changes have also occurred in the way the government operates. Legal forces are at play in all economic sectors. Rule by law and administration by law have become basic requirements of government operation. In the meantime, government powers continue to devolve, and public participation in government services continues to increase. A transparent government with limited powers, multiple power centers, under the rule of law will provide favorable conditions for China to move further toward political democratization, at least theoretically. Implications for the Environment Reforms and decentralization in the last three decades have brought about changes in the way China deals with its daunting environmental challenges. First, responsibilities for the environment and natural resource decision making are being shifted to lower levels of government. Local governments now have not only the authority necessary to reform local industries, but also the power to control financial resources at the local level. Second, the streamlining of environmental management has become a major feature of the delegation of environmental jurisdiction. Authorities with cross-cutting responsibilities in the environment and sustainable development were greatly strengthened after the 1998 government reforms, when SEPA was promoted to its present ministerial status and SDRC was given a clear mandate to lead China’s sustainable development efforts in close collaboration with a number of ministries and agencies. Third, as the market becomes increasingly decentralized, market forces are gradually assisting command-and-control mechanisms to protect the environment and ecosystem. The government has been experimenting with market-oriented tools in environmental management. Regulators have learned how to price drinking water and utilities based on market values, how to trade SO2 pollution rights, and how to use taxation to regulate pollution-heavy industries. And fourth, the concept of environmental governance has become part of the national discourse to encourage information disclosure and public participation. The burgeoning government structure in the environmental arena is reflected by increasing media coverage of environmental issues, and public participation is reflected in the remarkably independent grassroots and citizens’ organizations that have been formed in the last several years. Environmental Institutions China’s environmental awakening happened around 1972 when the first United Nations (UN) Conference on the Human Environment was held in Stockholm, Sweden. Even though at that time China was still a closed society in the middle of the Cultural Revolution, China sent a delegation to the conference.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium Thirty years later, the Chinese government has recognized the value of using the market to make environmental protection profitable and to motivate a knowledgeable population to demand compliance and environmental quality. “Environment” as defined by the Environmental Protection Law of People’s Republic of China, refers to the totality of all natural elements and artificially transformed natural elements that affect human existence and development. The environment includes the atmosphere, water, seas, land, minerals, forests, grasslands, wildlife, natural and human remains, nature reserves, historic sites and scenic spots, and urban and rural areas. According to the Environmental Protection Law, environmental responsibility includes protecting and improving both people’s living environment and the ecological environment, preventing and controlling pollution and other public hazards, and safeguarding human health. As a result of the 1972 UN conference, the Chinese delegation realized that China shares the problems of environmental degradation with the rest of the world. The conference was followed a year later by the first National Conference on Environmental Protection in Beijing, and in 1974, by the establishment by the State Council of the Group on Environmental Protection. These events were followed by a series of legislative efforts in the late 1970s, marking the beginning of government efforts to put environmental protection on the national agenda. In 1984, the group on Environmental Protection was disbanded, and the National Environmental Protection Bureau (NEPB) was set up in the Ministry of Urban and Rural Construction. In 1988, the NEPB was reclassified as an agency, the National Environmental Protection Agency (NEPA), with a bureaucratic rank slightly below a ministry and resumed reporting directly to the State Council. In 1993–1994, the Committee for Natural Resources and Environmental Protection was set up under the NPC to take responsibility for revising and drafting environmental laws, ensuring their rapid promulgation, and supervising their enforcement. And in 1998, NEPA was upgraded to ministerial status and renamed the State Environmental Protection Administration (SEPA). SEPA underwent dramatic institutional changes in the 1990s. The most notable developments included: (1) elevation to the status of a ministry, clarifying SEPA’s position as the agency with overall responsibility for environmental management and protection in China; and (2) efforts to address the so-called “horizontal-vertical” issue, in which lower level EPBs report to higher level EPBs, and ultimately SEPA, but receive their funding from local governments. The heads of local EPBs must now be endorsed by a higher ranked environmental agency. Lower level EPBs were strengthened, either by raising their bureaucratic status or by giving them independent bureaucratic status. As of 2000, all 31 provincial EPBs were independent agencies, and 30 of them were first-tier institutions; all city-level EPBs were independent agencies, and most were firsttier institutions; about 70 percent of county EPBs were independent; and about

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium 1,422 environmental protection units were established at the township level (World Bank, 2001).4 Political Agenda The Chinese government has clear environmental policy goals that were most recently articulated in former President Jiang Zemin’s report to the 16th Communist Party Congress. Sustainable development was identified as one of the three pillars of the strategy to build a “well-off society in an all-round way.” An essential element of that strategy is to address “the growing contradiction between the ecological environment and natural resources on the one hand and economic and social development on the other.” Over the last two decades, the environment has been given increasing priority. In the Tenth Five-Year Plan (2001–2005), sustainable development is designated as the “guiding principle and strategy” for the country’s economic and social development. The Five-Year Plan also identifies environmental protection as a national priority, but not quite on the same level as economic growth or the alleviation of poverty. This has been one of the major reasons some environmental regulations have not been effectively enforced. Legal System The effectiveness of the environmental legal system, which is at an early stage of development, is hampered by a variety of factors. There is a deeply ingrained problem-solving culture on the part of all parties—EPBs, other government agencies, and industrial enterprises—based on negotiating and bargaining outside of the court system. This tradition militates against turning to the courts for recourse and will have to be overcome. This is compounded by the lack of a tradition of drafting laws to limit ambiguity and define the rights and responsibilities of all relevant parties. To strengthen environmental law enforcement, the government has revised criminal laws a few times to include punishment for violators of laws and regulations to protect the environment and resources and regulations of those causing damage to the environment, property, or public health. The current Section 6 of Chapter VI specifically designated “Crimes of Undermining Protection of Environmental Resources,” specifies three- to seven-year prison terms and monetary penalties for violations of the legal restrictions on the discharge, dumping, or disposal of radioactive waste, hazardous waste, and other dangerous substances to the environment. Violators of laws or regulations on protecting aquatic 4   The World Bank, China Air, Land and Water: Environmental Priorities for A New Millennium, August 2001, pp. 99-100.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium resources, the hunting and killing of protected species, the occupation of or serious damage to forestland or cultivated land, logging and mining, etc., are also subject to punishment. Although law enforcement agencies have the power to enforce environmental laws, the facts show that a tremendous burden still falls on the shoulders of victims, who must collect proof to make a case against violators. So far, the enforcement of environmental laws and regulations has been spotty. Interagency Coordination With sustainable development and the environment high on the national agenda, one would expect that a mechanism would be in place for integrating and coordinating environmental and economic policies. However, this is not the case. The State Council used to have an Environmental Protection Commission, set up in 1984, to aid in cross-sectoral coordination. The commission was disbanded in 1998 when SEPA was elevated to the ministerial level and the commission’s coordinating role was transferred to SEPA. With the dissolution of the commission, China lost a potentially important forum for encouraging collaborative, cross-cutting approaches to environmental issues and for resolving jurisdictional disputes. Experience in other countries suggests that SEPA, a second-rank (non-cabinet) ministry, will not be able to carry out this role effectively because it is below the ministerial level in many respects and because it is considered somewhat of a newcomer. Moreover, many enterprises, local governments, and production-oriented ministries view SEPA as an environmental policeman trying to limit economic growth. In response to these reactions, SEPA tends to adopt a defensive attitude and stick to the issues it feels most comfortable with—issues that can be addressed without collaboration with other agencies. On paper, all major economic development policies in China must go through an environmental impact assessment to ensure that they do not entail negative impacts on the environment. But in reality, the questions of who should perform the assessment, how it should be done, how the assessment will impact economic policies, and so forth, have not been answered. The lack of coordination can be illustrated by the example of ecological conservation. This is an area in which many government agencies and departments have responsibilities (e.g., SEPA, SFA, MOA, MOWR) and even conflicting interests. Without the State Council’s Environmental Protection Commission or a similar group, there is no linkage or connection among the plans made by those agencies. In addition, some agencies have internally conflicting mandates; SFA, for example, is in charge of both the conservation and exploitation of forests.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium Contractual Arrangements SEPA holds local decision makers accountable for the environmental quality in their localities. The performance of governors and mayors is evaluated partly by the environmental quality and improvements in their jurisdictions. With this kind of contractual power, SEPA should be able to ensure that many environmental policies are implemented at the local level. However, no penalty mechanisms have been designed or implemented for contracts that are not fulfilled. However, public disclosures of local government environmental performance can provide incentives for local governments to enforce regulations enacted by the central government. Nongovernmental Organizations and Research Institutes Authoritative advice from independent, reliable sources is crucial to sound decision making, especially for the complex issues involved in sustainable development. In the past, technical and academic institutes were part of, or under the supervision of, government ministries or agencies for which they gathered information. Not surprisingly, these institutes provided advice that was carefully attuned to “the master’s voice” (any notion of potentially adverse effects was routinely brushed under the carpet). As a result of recent government restructuring and reform, many of these organizations are now more independent. Combined with their improved capacities, they are now in a position to give objective, even challenging advice to decision makers. In addition, there is a growing, competitive market for environmental knowledge and services, mostly government agencies contracting for decision support, such as studies, investigations, and feasibility studies. Finally, increasing pluralism in the technical and academic sectors has created more opportunities for institutes to network and collaborate with research institutes and consulting agencies around the world; Chinese institutes have begun bidding for overseas consulting jobs, as well as international research assignments. The major concern is that NGOs and think tanks are not allowed to operate independent of official government policy. Economic Globalization and International Cooperation Trade and commerce are also general stimuli to environmental protection. With globalization and opening markets, China is interacting more and more with its neighbors and with the rest of the world. Trade and commerce are growing at an unprecedented rate. All of these interactions are driving environmental and social change in China, and laws and regulations have been developed specifically to ensure environmental protection in imports and exports and general trade (see Tables 4, 5, and 6).

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium TABLE 4 Import and Export of Environment-Related Goods Items Specifically Listed Agency Prohibited imported goods Ministry of Foreign Trade and Economic Cooperation (MOFTEC) Wastes used as raw materials and restricted in importation MOFTEC, General Administration of Customs, State Administration of Quality Supervision, Inspection and Quarantine, SEPA Waste used as raw materials under automatic import license category SEPA, MOFTEC, etc. Machinery and electronic products subject to automatic import license MOFTEC, etc. Goods subject to import license MOFTEC, etc. Goods for which quota, license and specific import administration measure are eliminated MOFTEC Prohibited exported goods MOFTEC Prohibiting export of black moss MOFTEC TABLE 5 Import and Export of Hazardous Chemicals Topics Agency Circular on strengthening the management of hazardous chemicals SEPA, MOFTEC, Ministry of Public Security, etc. Provisions on environmental management of the first import of chemicals and the import and export of toxic chemicals SEPA, MOFTEC Standards of registration fee for environmental management of chemical export and import SEPA Circular on renewal of registration of environmental management of first import of chemicals SEPA Through environment-related provisions in the legal agreements for China’s accession into the WTO, China is obligated to abide by various requirements. The goal of WTO is to establish global international competition under equal conditions. To be competitive in this market, Chinese industry must become more efficient, which, at least in the long run, may lead to better use of resources, better conservation, and the importation of cleaner, more efficient technology.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium TABLE 6 Trade Provisions in Multilateral Environmental Agreements Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and Their Disposal Amendment to the Basel Convention Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade Stockholm Convention on Persistent Organic Pollutants Framework Convention on Climate Change Kyoto Protocol to the UN Framework Convention on Climate Change Montreal Protocol on Substances that Deplete the Ozone Layer Convention on Biological Diversity Cartagena Protocol on Biosafety Convention on International Trade in Endangered Species of Wild Fauna and Flora Agreement on Fish Stocks International Tropical Timber Agreement Convention on the Ownership of Cultural Property Rio Declaration on Environment and Development Agenda 21 Statement of Principles on Forests The economic activities of China and Chinese enterprises have an impact on both regional and global environments. Although no detailed studies of China’s ecological footprint have been undertaken, there are five relevant areas for study: (1) greenhouse gas emissions; (2) biodiversity; (3) transboundary pollution; (4) domestic consumption; and (5) overseas investment. For instance, severe dust storms, resulting in large part from desertification throughout China, have played havoc with air quality and transportation in China and neighboring countries, such as Korea and Japan. Dust plumes from these storms have even been identified in the United States, reportedly transported via the jet stream. One positive aspect of regional and global environmental developments is that they have led to meetings between high-level government officials in the affected countries to discuss solutions to China’s growing environmental problems. In April 2002, the environmental ministers of China, South Korea, and Japan met in Seoul for the 4th Tripartite Environment Ministers Meeting. Most of the discussions in 2002 were focused on the problems of “yellow dust” emanating from China. South Korea initiated the meeting in 1999 to address

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium transboundary pollution originating in China. Since then, the meetings have addressed many environmental issues of mutual concern. China has worked with other countries bilaterally and multilaterally to protect the environment in border areas. For example, the Mekong River Watershed Management Committee is a regional organization with members from Southeast Asia along the Mekong River. Although China has not become an official member of the committee, China is involved along the upper reaches of the Mekong, which originates in the Tibet-Qinghai Plateau. Thus, what China does along the watershed and how China plans to use the water resources of the upper reaches of the Mekong have a major effect on the river itself and the development of countries along the middle and lower reaches of the river. The committee brings the stakeholders together to discuss how the watershed can be protected while economic growth is pursued. Other examples include the China-Russia collaborative program to protect the Usuri River and China/Myanmar/Laos cooperative efforts to control trafficking in endangered species. However, projects like these have many problems, such as lack of financial support, weak enforcement powers, and corruption in many countries. THE FUTURE OF POLLUTION CONTROL IN CHINA There is no doubt that China faces major environmental challenges. If GDP continues to grow at (or near) a rate of 8 percent in the short term or medium term, urbanization continues and possibly even accelerates, and industrialization continues to evolve toward the production of finished products, the scope and dimensions of China’s environmental problems will increase and become more complex. Therefore, China must continue to improve its environmental institutions. The decentralization reform process has generally had a positive impact on the environment. Despite uneven progress in economic, public administration, and governance reforms, there have been large environmental payoffs. The greatest impact on the environment has been the result of a more efficient economy, which has included more efficient use of resources, decreased industrial and domestic wastes, and a system of incentives that encourages further environmental improvements. However, the reactive approaches of the past will not be sufficient to address the challenges China faces. The government must become more proactive in addressing environmental problems. Given the substantial and growing tension between economic development and environmental protection, the government must ensure that environmental factors are considered in policy decisions, and there must be comprehensive environmental supervision of all government activities. And government should maintain its strong commitment to the

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium environmental agenda, which includes improving the quality of life rather than promoting economic development at the expense of the environment. Continued reform of public administration toward good governance for sustainable development is essential to stimulating economic reform and a necessary basis for reinforcing the environmental legislative framework and ensuring the implementation of environmental laws and regulations. The growing cadre of more efficient public officials at the national level and across China, with increasingly clear duties and responsibilities and a commitment to the rule of law, bodes well for the protection of the environment. Further clarifications and separations of responsibilities, from national to local levels and among agencies at the same level, will yield similarly impressive results. Efforts to strengthen SEPA and EPBs should be continued, and SEPA should be elevated to membership in the State Council to ensure that the government’s environmental concerns are taken into account in all aspects of development policy. SEPA’s institutional capacity, including staffing levels, should be significantly increased to bring it more into line with comparable international agencies. The lack of cross-sectoral coordination is commonly considered to be at the heart of the critical problems related to water resources management, urban planning, forest management, product-related environmental measures, and many other areas. To improve cross-sectoral coordination, a national environmental network, with SEPA as its anchor, should be developed; in addition, SEPA’s environmental coordination function should be enhanced. In the meantime, limited experiments in governance reforms have shown that empowering and liberalizing people, within a regulated and monitored framework, can produce a strong, positive force for environmental change that complements, rather than threatens, government objectives and actions. Experience in China and other countries suggests that the media and NGOs will be strong advocates for the environment in the future. A law ensuring the disclosure of environmental information and public participation in environmental management decisions should be enacted, and the development of environmental NGOs should be promoted. BIBLIOGRAPHY AND REFERENCES Dupar, M., and N. Badenoch. 2002. Environment, Livelihoods, and Local Institutions: Decentralization in Mainland Southeast Asia. Washington, D.C.: World Resources Institute. Fengzhong, C., D. Guo, G. Zhou, and H. Wang. 2002. Industrial Pollution Control Policies in China: Evaluations and Recommendations. A working paper for the World Bank, April 2002. Washington, D.C.: The World Bank. Jahiel, A.R. 1998. The organization of environmental protection in China. China Quarterly 156(Special Issue on China’s Environment): 757–787. Qiao, M., ed. 2003. Interpreting the New Government: Policy Direction of the Crucial Issues Related to National Economy and the People’s Livelihood. Beijing: Chinese Communist Party History Press.

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Urbanization, Energy, and Air Pollution in China: The Challenges Ahead - Proceedings of a Symposium SEPA (State Environmental Protection Administration). 2003. Environmental Laws and Regulations in China and Rules of WTO, Policy and Laws. Beijing: Guangming Daily Press. SEPA. 2003. State of the Environment Report, 2003. Beijing: State Environmental Protection Administration. Stockholm Environment Institute and the United Nations Development Program. 2002. Making Green Development a Choice. China Human Development Report. Oxford, U.K.: Oxford University Press. Wang, H., and D. Wheeler. In press. Financial incentives and endogenous enforcement of China’s pollution levy system. Journal of Environmental Economics and Management. Wang, H., and C. Wu. 2004. Public Access to Environmental Information in China. Washington, D.C.: World Bank Development Research Group. Wang, H., N. Manmingi, B. Laplante, and S. Dasgupta. 2003. Incomplete enforcement of pollution regulation: bargaining power of Chinese factories. Environmental and Resource Economics 24(3): 245–262. Wang, H., J. Bi, D. Wheeler, J. Wang, D. Cao, G. Lu, and Y. Wang. 2004. Environmental performance rating and disclosure: China’s GreenWatch program. Journal of Environmental Management 71(2): 123–133. World Bank. 2001. China Air, Land, and Water: Environmental Priorities for a New Millennium. Washington, D.C.: The World Bank. Wu, F. 2002. New Partners or Old Brothers?: GONGOs in Transnational Environmental Advocacy in China. China Environment Series 5. Washington, D.C.: Woodrow Wilson International Center for Scholars. Xu, J., E. Katsigris, and T.A. White, eds. 2002. Implementing the Natural Forest Protection Program and the Sloping Land Conversion Program: Lessons and Policy Recommendations. Beijing: China Council for International Cooperation on Environment and Development. Also available online at: http://www.harbour.sfu.ca/dlam/Taskforce/grassfindingindex.html. Zhao, L. 1998. Reform of Government Administration: China Perspectives toward the 21st Century. Jinan, China: Shandong People’s Press.