CCICED MEETS TO ADDRESS NEW CHALLENGES

　　The second meeting of CCICED's second phase was convened in Beijing on November 16 to 18. Present at the meeting were 93 council members, expert working groups' co-chairs, and special guests and observers. China's Vice-Premier Wen Jiabao, the newly-appointed chairman of CCICED, opened the meeting.

　　The meeting acclaimed two new vice-chairs, the new secretary-general, and 12 new Chinese members. The two new vice-chairs are Mr. Liu Jiang, Vice-Chairman of the State Development Planning Commission, and Mr. Xie Zhenhua, Minister of the State Environmental Protection Administration (SEPA). The new secretary-general is Professor Zhang Kunming, former deputy administrator of SEPA. These changes were made after the new Chinese government took office last March.

　　In a review of China's environmental strategies at the meeting, Wen noted that as a developing country with a huge population and scarce resources, China is pursuing sustainable development goals and implementing a basic environmental policy. A number of projects have been carried out to protect the ecological environment, such as the construction of green belts in the north, afforestation in the middle and upper stream areas of the Yangtze River and coastal areas, comprehensive treatment for soil erosion of seven major river basins, and other measures to combat desertification.

　　More recently, in order to meet its targets set for 2010, a number of key pollution control projects have been fully implemented. These target pollution control of major rivers and lakes, sulphur dioxide and acid rain control zones, and urban environmental problems in Beijing. Following this summer's disastrous floods, a greater emphasis is being placed on environmental protection, with increased government spending on afforestation, water conservancy and waste treatment.

　　Wen emphasized that economic development will remain the government's central task over the long-term and that long-term interests should not be sacrificed for short-term or local interests. The government also puts emphasis on sustainable development.

　　Vice-Chair Dr. Labelle noted that the Council was meeting at a historic time when China was facing new challenges in its economic reform, the worst floods in years, and the Asian financial crisis. Such a circumstance challenges the Council to respond with strategic recommendations for the environment and development.

　　Xie Zhenhua, the new vice-chairman, reported in his capacity as former secretary-general on the work of the CCICED Secretariat in 1998. He updated the adjustments made to Chinese members following the government's re-organization. Chinese members now consist of 16 vice-ministers and five scientists. The new Working Group on Transportation and Environmental was formally established.

　　The Council's work, including the work of each working group, had been re-directed towards more practical uses including policy and project demonstrations, said Xie. Geographic and sectoral areas have been selected for pilot projects. It was noted that the recommendation drafting process had also been changed to prioritize recommendations dealing with economic feasibility considerations.

　　The CCICED Secretariat headquarters in Beijing has now been enhanced. It is now headed by a new full-time secretary-general and is supported by several full-time staff members.

　　Participants debated on China's economic reforms and CCICED's role at the meeting. Many thoughtful insights and suggestions were brought forward.

　　The meeting reviewed the reports by eight expert working groups and one task force. Presentations were made by relevant ministries, governmental agencies and local authorities on progress made in China on environmental protection and economic development, the implementation of China's Agenda 21 and international environmental conventions. Local authorities that made presentations at the meeting included the governments of Beijing, Jilin Province, Jiangsu Province and Sichuan Province.

　　The meeting also debated and approved the Council's recommendations to the Chinese government. The final recommendations cover economic planning and sustainable development, environmental protection and structural transformation, biodiversity and grasslands, ecological protection, cleaner production, energy and transport and environmental economics. Chinese participation in climate change and world trade, foreign direct investment, environmental legislation as well as education and training were also included.

　　At the end of the meeting, Chinese Premier Zhu Rongji met the Council in the Great Hall of the People, where he listened to CCICED's recommendations* and made important statements.

　　* The full text of recommendations is available on CCICED website.

　　CCICED's ROLE IN ECONOMIC REFORM 

　　The second meeting of the China Council on Environment and Development's second phase was presided over by Chairman Wen Jiabao and Vice-Chair Qu Geping. On the first morning of its meeting, CCICED debated its role in China's economic reforms. The debate was initiated by keynote speaker Ian Johnson, vice-president of the World Bank and a new member of CCICED.

　　It was noted that China has maintained a steady economic course during the Asian crisis. The leadership of the State Council-which took office in March-is committed to maintaining 8% growth and to keeping inflation down to 3%. It has not devalued its currency and has played a crucial role in maintaining stability and recovery in the region. The new government has started to implement important structural and policy reforms in grain distribution, residential housing, social security, finance and banking, budgetary management, corporate restructuring, infrastructure development and the management of natural resources. These reforms will lay the foundation for sustainable long-term growth.

　　Strong economic performance and stability have brought immense benefits to Chinese people. However, this progress has come at a high cost environmentally-speaking and this is now starting to affect growth.

　　It was suggested that there is a solution to the conflict between environment and development. The suggestion was to first steer the market to work for the environment. Second, leverage institutional capacity for the environment. Third, use China's high economic growth as incentive to promote investment with the highest environmental benefits. While these steps may be costly, the expenditure is small compared to the future price to pay if China continues with the status quo.

　　It was pointed out that China's need to stimulate economic growth at a time of slow exports, weak consumer demand and rising unemployment is not necessarily incompatible with environmental conservation and poverty reduction. Additional funding equivalent to 1% of GDP annually will be needed to achieve China's environmental objectives. Most of these funds will have to come from non-state sources.

　　In examining financial reform, it was noted that financial sector reforms could lead to greater environmental sustainability. Enterprise reform is good for the financial system as well as for the environment. Fiscal incentives can promote clean production techniques and greater efficiency. Banks could also play a role by training loan officers to assess not only financial risk but also environmental risk. Environmental improvement are often associated with productivity improvements that justify higher up-front capital costs.

　　Some members stressed that the work of the economic working group is a key ingredient. Proper costing is the first step toward more rational resource use.

　　On the reform of State-Owned Enterprises, some members noted that despite SOEs' massive negative environmental impact, there are new opportunities arising now that the reform process has started. With rising unemployment, there is a need for new economic activities. The environment industry could become a source of new employment. China will double its GDP over the next 10 years, which means a whole new economy will be created during this time. If China's productive activities are environmentally sound, the economy could be transformed, noted some participants.

　　It is imperative for China to use direct and indirect means to control land and energy use, especially in the high-population density areas of east and southeast China, emphasized some members.

　　The debate also pointed out that a key challenge for China's natural resources management is governance and administrative reform. There is a need for increasing transparency, increasing participation at all levels, increasing accountability and integrity in decision-making, improving existing laws, regulations and economic instruments, and institutional reform.

　　It was noted that it is difficult to coordinate economic and environmental policies. A sustainable development strategy needs to be integrated into all aspects of social life, as well as into the economic realm. Industrial policies and regional planning should incorporate the principles of sustainable development. Environmental protection should be a key element in guiding regional economic development. It is time to consider the need to improve environmental legislation in China, to take it from a model of command and control to a model using taxation and other economic incentives and disincentives.

　　Reform of China's foreign investment policies and market liberalization could lead to better technology transfer in the environmental sector, stressed some members. A properly managed trade system will benefit sustainable development by generating capital and technology flows.

　　China can learn from the experiences of the West and learn from mistakes of the past. In the West, the ability to develop new technologies far exceeded the ability to deal with the consequences. The West has made minimal progress on ozone levels. China has an opportunity now that the world community is moving to implement the Kyoto Protocol by adopting clean development mechanisms. The private sector needs to be involved since governments have limited resources.

　　In conclusion, the role of the Council is unique in that it assists China to integrate economic, social and environmental decision-making. China can become a world model for sustainable economic growth that is equitable and stable.

　　COORDINATING MEETING IDENTIFIES AREAS FOR COOPERATION 

　　On November 15, a coordinating meeting of eight working groups and one task force took place. The meeting was chaired by Dr. Kees Zoeteman and attended by co-chairs of working groups and the task force as well as several Council members.

　　It has been long recognized that approaches developed or envisaged by one working group often have potential use for others. The meeting focused on sharing the progress made by working groups and identifying areas for future collaboration and cooperation among them.

　　Several areas were identified as requiring cooperation among working groups, including the following:

　　• the use of financial instruments, which are crucial in order to a) promote the use of sustainable energy sources, improve energy efficiency and further the long-term strategy for coal; b) stimulate TVIEs to implement environmental policies; c) create a better environment for large-scale demonstration projects in the energy field; d) promote the marketing of sustainable agriculture products and the use of cleaner production techniques; e) finance nature conservation measures in upstream areas by benefiting downstream users of river water; f) save valuable resources for the economy; and g) push the transport sector in the direction of low emission solutions;

　　• the use of CO2-abatement options in national energy production scenarios in order to identify the optimal pace of switching to more sustainable energy supply options such as large-scale clean coal technologies and small-scale power generation by biomass burning;

　　• the development of requirements for trading clean energy technologies and for all forms of foreign direct investment;

　　• the interaction between sustainable agriculture on grasslands and the protection of biodiversity;

　　• the establishment of demonstration zones where the link between trade and environment, the promotion of cleaner production and the use of new taxation forms can be experimentally stimulated. These demonstration zones can act as laboratories for the nation to introduce and enhance large scale innovations.

　　• the development of working groups' joint projects in order to profit from synergetic effects; and

　　• awareness-building by using demonstration zones and joint projects as vehicles for public interest and centres of innovation;

　　It was also stressed that the collaboration of the eight working groups with the Task Force on Economic Planning and Environmental Protection is crucial for the efficiency of the Council's work. It was recognized that direct participation by potential donors, such as the World Bank and the Asian Development Bank, in the activities of working groups is needed to help ensure the success of the proposed demonstration projects.

　　The chairman of the coordinating meeting reiterated that good communication between working groups-, through the Internet and other forms of publication, remains important to further increase the overall efficiency of the Council's work.

　　PREMIER SPEAKS FRANKLY ABOUT ENVIRONMENTAL CHALLENGES 

　　On November 18, Premier Zhu Rongji met with participants of CCICED's meeting in the Great Hall of the People. Premier Zhu affirmed that protection of the environment is a key priority for the Chinese government. China has always considered environmental protection important but due to historical and economic conditions over the past decades, its environmental efforts have not seemed to yield satisfactory results. These statements were expressed by the Premier in summing up China's past experiences.

　　The "polluter pays principle" has long been practiced in China, but unfortunately it has not been entirely effective. Many State-Owned Enterprises needed to borrow from banks to pay any fines incurred, or defaulted on their fine payments altogether. Either way, S.O.E's were in essence dipping into government pockets. Zhu cited an example to support this point.

　　Zhu told CCICED members that China has gone through a process of evolution over environmental issues. Just after 1949&emdash;during the early years of the new Chinese regime&emdash;the leadership was dealing with a backward country, and to some degree, neglect of the environment. This led to pollution and environmental damage. The Premier noted that China has now reached a level of development which allows it to treat its most polluted rivers and shut down the worst polluters along these rivers. By the end of this year, the worst polluters along these rivers as well as the worst polluters in the whole country will be closed down.

　　Logging was banned effective September 1, 1998 in the upper and middle reaches of China's major rivers and the virgin forests of the northeast. This has forced China to use some of its foreign exchange reserves for lumber imports and to support forest industry workers who were affected by the logging ban. This, according the Premier, is an example of how China is now paying a price for its past decisions.

　　This year's floods taught the whole society an environmental lesson, Zhu noted. The floods were not so much caused by greater volumes of water as by the reduced capacity of rivers due to heavy silting and sedimentation. The worst floods took place around Dongting Lake in the Premier's home region. The capacity of Dongting Lake is now only half of what it used to be because of sedimentation and land reclamation. The lesson learned from this year's floods is that China is more determined to reclaim lakes and restore their water storage capacity.

　　Investment this year by the State in environmental protection and water conservancy is six times more than in the past year. In 1999, water conservancy will be 10 times what it used to be, making it the largest investment in water conservation and environmental protection in China's history. Reclaiming lakes, afforestation, dredging rivers and canals as well as reinforcing dike systems are on the top of the agenda.

　　Municipal leaders are now also tackling urban pollution problems. The Premier told CCICED members that there are signs that pollution is getting better, such as in the model cities of Dalian in the north and Xiamen in the south.

　　Regarding climate change, Premier Zhu emphasized that China agrees with the Kyoto Protocol on cutting greenhouse gas emissions and will be working towards this goal. However, considerations have to be made for a country's level of development. China's main energy source is coal. But China is now starting to reduce coal production, to import nuclear energy plants, and to build hydro power plants. It is doing its utmost to reduce greenhouse gas emission and will continue to do so with the help of CCICED's recommendations.

　　WORKING GROUP UPDATE 

　　The Working Group on Trade and Environment 

　　The sixth meeting of the Working Group on Trade and Environment was convened in Beijing from November 12 to 14, 1998. Three international members and five Chinese members attended the meeting. Dr. Arthur Hanson of the International Institute for Sustainable Development and Mr. Sueo Kojima of the Japan External Trade Organization also participated in the meeting. In addition, seven associates and assistants of working group members attended.

　　The meeting was chaired in rotation by Dr. Ye Ruqiu and Mr. Von Moltke, who was acting on behalf of Dr. Runnalls. Members were informed that GISPRI nominated Mr. Tadashi Omiya as the successor to the late Mr. Katsuo Seiki, and that his nomination was accepted.

　　Dr. Ye made a presentation on recent Chinese governmental institutional reforms focusing on the State Environmental Protection Administration and changes in CCICED's membership. Konrad von Moltke briefed the group on the WTO Appellate Body's decision on the shrimp-turtle case between the United States and four Asian countries-Malaysia, India, Bangladesh and Thailand.

　　The Working Group reviewed and commented on a report, International Investment Rules and Sustainable Development: China's Perspective, and on a preliminary report dealing with China's clean coal technology acquisition.

　　Members also listened to a presentation made by Mr. Von Moltke on the MAI negotiations and its implications for China. Progress reports were given on three other ongoing research projects: a.) Policy research on China's foreign trade and environmental policies, b.) Impacts of selected environmental standards on China's trade in textiles&emdash;A case study of EU's and Japanese standards, and c.) APEC trade liberalization and sustainable development.

　　Five new proposals were put forward by members for consideration. After the meeting, members visited the Beijing Economic and Development area to see how environmental protection had been integrated in the new industrial zone and in utilizing foreign investment.

　　The next meeting of the working group was scheduled for April 26 to 27, 1999.

　　CCICED Backgrounder 

　　1992 

　　CCICED, a high-level international advisory body, was established by the State Council. The inaugural meeting of CCICED was held in Beijing from April 21 to 23. The meeting adopted terms of reference, rules of procedure and reviewed the financial report and budget. Five expert working groups were established covering areas of energy, pollution control, resources accounting and pricing, biodiversity, and science and technology.

　　1993 

　　CCICED's second meeting was convened in Hangzhou, Zhejiang Province from May 3 to 5. CCICED made its first recommendations in several areas including energy, biodiversity, and resources pricing.

　　1994 

　　CCICED's third meeting was held in Beijing from September 20 to 22. The Council submitted to the Chinese government its second set of recommendations. These were based on reports of six working groups. The establishment of the Working Group on Trade and Environment was approved.

　　1995 

　　CCICED's fourth meeting was convened in Beijing on September 18 and 19. It was decided that the focus of the second phase would be on substantive and applicable research. The Council was to concentrate its energy on the major problems of China's environment and development, making more applicable policy recommendations that could be emulated on a wider scale.

　　1996 

　　CCICED's fifth meeting took place in Shanghai on September 23 to 25. The outline for the working direction of the second phase of the Council was submitted and approved at the meeting.

　　1997 

　　CCICED's first meeting of its second phase was held in Beijing on October 3 to 5. The meeting approved the new terms of reference, rules of procedure, and new working groups' co-chairs for the second phase. Eight expert working groups and one task force was approved for the second phase covering areas of energy, environmental economics, biodiversity, trade and environment, pollution control, cleaner production, sustainable agriculture, transportation, and economic and environmental planning.

　　NEWS BRIEF 

　　Tough Measures to tackle Taihu Lake 

　　The campaign to clean up Taihu Lake has so far achieved its targeted goal for the first phase. Up to December 31, 1998, 863 of 1035 targeted major polluters in the lake basin met waste water discharge standards, 29 were installing treatment facilities or stop production temporally, and another 143 had to close down for failing to meet the standards.

　　Taihu Lake, China's third largest freshwater lake, is one of the three most polluted lakes that the Chinese government vows to clean up during its Ninth Five-Year Plan (1996-2000). According to a long-term government plan, it is required that all major polluters in the area meet the waste water discharge standards 1998; that water quality of inflow and outflow of the lake meet the national surface water standards by 2000; and that the eutrophication problem be solved, and the sound ecological system of the lake be restored by 2010.

　　The next phase of pollution control in the Taihu Lake basin remains sophisticated and arduous. The government plans to build 33 urban sewage plants with a daily treatment capacity of more than 1.6 million tons of water in the lake basin. To date, only two have come into operation, 14 still under construction and another 17 in the planning stage. (Sources: Xinhua News Agency, December 31, 1998 and People's Daily, January 1, 1999)

　　Beijing Enforces Stricter Vehicle Emission Standards 

　　Beijing's new vehicle emission standards took effect on January 1, 1998. The Beijing Environmental Protection Bureau and the Beijing Public Security and Transport Administration launched the first city-wide emissions inspection, and found that about 80 of 124 cars randomly checked failed the new emissions standards. Owners of these failing cars had their licenses and plates suspended for a month. During the month, they must install exhaust equipment to correct their exhaust pollution, and have to pass a new inspection before getting their licenses and plates reinstalled. (Source: China Daily, January 5, 1999)

　　Panda Protection plan Implemented 

　　China has begun to implement the Plan for the ex situ Conservation of Chinese Giant Pandas. The plan focuses on the captive breeding of giant pandas, the programme to link the captive and wild giant pandas, the medical treatment of pandas and international collaboration to protect the species.

　　It is now forbidden for zoos to get giant pandas to perform and no giant pandas have been sent to other countries as a gift since the 1980s. In order to keep the captive population growing, China has carried out detailed research on the breeding of pandas and illness prevention and has developed artificial insemination technology. (China Daily, January 5, 1999)

　　Committee to Aid Water Dispute Resolution 

　　A technical committee to appraise serious cases of fishery water pollution was set up by the Ministry of Agriculture to provide authoritative references to courts or punitive departments.

　　There have been an increasing number of pollution cases in fishery waters in recent years. The pollution has depleted aquatic resources, and caused economic losses. In handling the cases, there are sometimes disputes over fines that have to be based on the technical appraisals and are difficult to resolve.

　　The technical appraisal committee is created to give authoritative assistance to courts or local fishery bureaus in resolving water pollution disputes. (Source: China Daily, December 23, 1998)

　　Campaign Launched to Clean up Bohai Sea 

　　The State environmental Protection Administration (SEPA) launched a campaign to control pollution in the Bohai Sea in the northern China, which aims to clean it up over the next three decades.

　　SEPA data indicate that pollution in the Bohai Sea has worsened significantly in recent years. The main pollutants are inorganic nitrogen and phosphorus, chemical oxygen demand COD) and oil.

　　SEPA has drafted an action plan to clean up the sea. According to the draft, industrial enterprises, ships and oil platforms must meet national standards for pollutant discharge by the year 2000. By 2005, water pollution in the coastal areas and damage to the coastal ecosystem must be brought under control, and the quality of groundwater in coastal cities must also be raised to State standards. By 2010, the coastal ecosystem will be improved, the discharge of COD must be brought under control, a coastal forest belt is to be built, and some ecological demonstration zones will be established. (Source: China Daily, December 9, 1998)