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Newsletter (January)



  The third meeting of the second phase of the China Council for International Cooperation on Environment and Development (CCICED) was held in Beijing from October 19 to 21, 1999. The focus of this meeting was on recommendations for China's 10th Five-Year Plan.

  The meeting was attended by council members, co-chairs of working groups and task forces, representatives from government, and special observers. It was chaired in rotation by council chair and vice-premier Wen Jiabao, and by the council's four vice-chairs, Huguette Labelle, president of the Canadian International Development Agency, Qu Geping, chairman of the Environment and Natural Resources Protection Committee of the National People's Congress, Liu Jian, vice-chairman of the State Development Planning Commission, and Xie Zhenhua, minister of the State Environmental Protection Administration.

  In his opening speech, vice-premier Wen noted that China has made great achievements in economic development and environmental protection during its 9th Five-Year Plan. Spending on the environment has gradually increased to 72-billion yuan (approximately US$9 billion), or 0.91% of China's GDP in 1998, a 43% increase from the previous year. This investment has paid off. Now, 65% of industrial wastewater discharges and 66% of gas emissions meet national standards. Other major achievements are in the areas of reforestation and control of soil erosion. Despite this progress, China still faces daunting environmental challenges.

  As we enter a new millennium, China will continue to carry out a sustainable development strategy that sees coordinated development of the economy and the environment. Wen stressed that long-term concerted efforts are required to reverse environmental deterioration. He invited council members to provide advice and suggestions for formulating China's new development plan.

  Vice-chair Huguette Labelle also addressed council members. She noted that the Chinese government embraces the concept of a socialist market economy and sustainable development. This concept will guide the design of the 10th Five-Year Plan. China now realizes environmental degradation hampers economic growth and contributes to poverty. Labelle added that what the council can contribute is to provide China with strategic and relevant policy advice, including focusing on market mechanisms and providing incentives for all sectors of society to use resources in a sustainable manner.

  The role of government is key in terms of implementing a sustainable development strategy, setting a legal framework, enforcing regulations and investing in ecological construction, said vice-chair Qu Geping. The National People's Congress is now in the process of drafting a bill on environmental impact assessment which would apply to all economic plans.

  Another CCICED vice-chair, Liu Jian, remarked that since the 6th Five-Year Plan, environmental protection has been gradually incorporated in China's Five-Year Plans. By the 9th Plan, environmental protection was a major focus. He emphasized that the 10th Plan will aim to fully implement the strategy of sustainable development by better coordinating population growth, national resources development, ecological construction, environmental protection, and economic growth.

  In reviewing China's environmental protection work in the past year, vice-chair Xie Zhenhua noted that industrial pollution sources in the Huai River basin, and Tai and Dianchi Lake basins are up to national standards. Beijing has also taken drastic measures to reduce air pollution by promoting clean fuels and controlling vehicle emissions. In 1998, national spending on environmental protection reached a historic high, 0.91% of GDP. As part of the country's economic reforms, obsolete industrial plants and processes are being phased out. China has also greatly strengthened reforestation and ecological conservation. He expressed his hope that the council would help China ensure that the 10th Five-Year Plan promotes sustainable development.

  General Debate on China's 10th Five-Year Plan

  With chairman Wen Jiabao and vice-chairs Qu Geping and Huguette Labelle presiding in rotation, the council proceeded with general debate on China's 10th Five-Year Plan. The debate was opened with keynote speeches by Maurice Strong, chairman of the Earth Council and senior advisor to the World Bank and the United Nations, and by Zhen Xinli of the State Development and Planning Commission.

  Strong pointed out that the 10th Five-Year Plan is of special importance to China and the world since it will set the direction for China's development into the next millennium. While interdependence among the world's economies and ecologies will accelerate, the gap between rich and poor, and between technologically advanced and deprived nations, is increasing. The challenge for governments is to reap the benefits of globalization while minimizing the loss to sovereignty, local culture, and environmental values.

  Strong stressed that environmental problems can only be effectively addressed through economic management. Many participants pointed out that China's five-year planning cycle is an opportunity to better integrate economic and environmental concerns.

  As the 21st century dawns, China's economy enters a new phase of modernization. It is foreseeable that average per capita income in China will continue to rise, economic and institutional reforms will continue, and urbanization will accelerate. China thus faces significant problems including slack demand, economic deflation, unemployment, inefficient industries, growing gaps between urban and rural residents and between coastal and interior regions, lagging R&D as well as environmental challenges. China needs to re-orient its economy in order to become less energy-intensive and a more service and information-based economy. It needs to control urbanization to sustainable levels, and pursue cleaner technologies, energy efficiency, waste recycling, and environment-friendly transportation, etc.

  During the debate, the following points were emphasized:

  Integration of economy and environment. A major theme of the council's discussion is the need to achieve better integration of environmental considerations into macro-economic and investment decision-making. Members stressed that effective integration mechanisms should be established and coordinated by political bodies at each administrative level.

  Sustainable development principles. Council members emphasized that sustainable development should be a fundamental theme of the 10th Five-Year Plan, and it should be the underlying principle for all aspects of economic activities.

  Specific environmental goals and targets. Environmental goals need to be given more emphasis by the government. They should be stated as concretely and broadly as economic goals are. Specific environmental targets need to be spelled out. For instance, "environmental protection and ecological conservation work will comprise 1.5% of the nation's GDP."

  Financial instruments. Financial reforms should integrate principles of sustainable development. Pricing of resources is a key determinant of pollution. More emphasis should be placed on the use of market instruments and incentives to foster environmental protection and sustainable development. China needs to stabilize the investment climate and remove existing barriers to foreign investment. Perverse subsidies, economic instruments which have outlived their intended purpose, impose heavy costs on an economy. Governments need to reorient their systems of incentives and disincentives in order to promote sustainable development.

  Institutional needs. Environmental policy cannot act as a repair shop for past mistakes that resulted from bad planning. What is required now is better integrated decision-making. It is desirable to establish a cabinet committee, under the supervision of the SDPC, with representation from SEPA and other relevant authorities. The same institutional mechanism should also be in place at the provincial and municipal levels. SEPA's environmental management role should be further strengthened.

  Energy efficiency. In devising its 10th Plan, China should look at placing energy at the heart of its sustainable development paradigm. It needs to emphasize greater energy efficiency in order to mitigate the negative impacts of growth. China already recognizes that changes are needed in energy pricing in order to achieve efficiency gains. China will also need to access state-of-the-art technology, focusing on domestic R&D.

  Climate change. Members pointed out that the international community has a direct stake in China's transition to sustainable development. China is the second largest source of CO2 emissions. Because China is so important to the global environment, the rest of the world has an incentive to help and support China through this transition. This means giving China access to international markets, technologies and expertise. China also has a direct interest in avoiding climate change because its impacts could be felt keenly in China.

  Biodiversity conservation. Biodiversity conservation is a key challenge facing China. As a result of the disastrous floods in the last year, China has paid more attention to the protection of watersheds, forests and wetlands. But rapid economic growth in China is still leaving a heavy footprint on the natural environment. Many endangered species are now on the verge of extinction. This loss is irreversible. Biodiversity conservation work requires governments to adopt longer-range planning than a five-year cycle. Reforestation has to be done carefully in order to avoid monocultures which would lead to a decrease in biodiversity. The logging ban in China can have an impact in other countries which are logging their forests in an unsustainable way. It is also important for China to conduct a biodiverisity assessment in order to find out where it stands.

  Public awareness, education and participation. Council members particularly emphasized the importance of public environmental awareness, education and participation in the process of integrating the economy and the environment. They identified five areas in which public participation and consultation are needed: environmental impact assessment; ecological construction; biodiversity protection; managing urban quality of life; and flood and other environmental disasters.

  Other important issues discussed were water management, ocean and coastal zones, trade and environment, environmental impact assessment, volunteer environmental measures, and cleaner production.

  The Council Recommendations

  With vice-chair Huguette Labelle presiding, the meeting debated the recommendations that council spokesman Martin Lees would present during the council's meeting with Premier Zhu Rongji. During the discussion, many important points were stressed.

  Based on the discussion, a summary for presentation was agreed upon, which mostly focused on the Task Force's report. The summary contains five main points: the integration of economic decision-making and environmental protection; the importance of sustainable development as a guiding principle; the central role of energy; finance and technology; and the central importance of environmental industries and cleaner production.

  The two secretariats were entrusted with the task of combining council's discussions and previous draft recommendations into final written council recommendations to the Chinese government. These final recommendations will be more detailed and specific, including integrated decision-making of environment and development; improving energy structure and raising energy efficiency; mobilizing the participation of the public; developing sustainable agriculture, increasing input for environmental protection; disseminating cleaner production technologies; and paying attention to economic policies, trade, transportation and bio-diversity. (The council's final recommendations will be posted later.)

  During the CCICED meeting, Premier Zhu Rongji received all the attending members and co-chairs of the working groups. After hearing the briefing by vice-chair Labelle and four other member representatives, he expressed gratitude for the council's work. Zhu responded to the council's recommendations positively, and expected council members to continue their efforts to integrate environment and development. (See premier Zhu's response below.)

  Other Agenda Items

  The CCICED meeting also reviewed the work report by the CCICED Secretariat. The Chinese Secretariat has now strengthened its contact with various government departments. It has also strengthened coordination with working groups and the task force by attending their meetings and organizing regular WG liaison meetings. The two secretariats are undertaking a self-assessment of the CCICED. During the last year, both secretariats launched their own Web sites aimed at disseminating CCICED information and strengthening coordination.

  The meeting reviewed the reports by eight working groups and one task force. Since the last meeting, each working group and task force has made substantial efforts to combine research with specific policies and translating policies into actual and operational action. More attention has been paid to policy and project demonstrations.

  The CCICED meeting also listened to discussions on planning for the 10th Five-Year Plan on agriculture, power development and environmental protection. Participants also heard presentations of representatives from local governments of Jiangsu and Jilin provinces, Inner Mongolia, and Shanghai on their integrated decision-making and project demonstrations.

  In his closing speech, environment minister Xie Zhenhua commended the council for the valuable suggestions put forward by the council, some of which have been implemented. The 10th Five-Year Plan period is the critical period for China to establish its socialism market economic system as well as for China to address environmental challenges. He welcomed the council's special concerns on the formulation of the 10th Five-Year Plan, and hoped that the council continue its efforts in assisting China in achieving the new goals and targets set in the 10th Plan.


  A working group co-chairs' meeting was convened on October 18, 1999, one day before the CCICED plenary meeting. All co-chairs from eight working groups and one task force presented, and they discussed the major achievements of last year.

  The co-chairs meeting identified several communication methods to achieve better collaboration among working groups. These include exchange of progress reports electronically, frequent contact between co-chairs, participating in other working groups' meetings, and mutual membership of working groups. Most of these methods have already been used by the Environmental Economics Working Group.

  The meeting also identified areas which would benefit from better collaboration. For example, it was suggested that the Task Force on Environmental Protection and Economic Planning and the working groups on Energy, Pollution Control and Environmental Economics could collaborate better on long-term targets, growth scenarios and pollution mitigating strategies. In addition, the Working Group on Energy and the Working Group on Pollution Control could undertake a joint study on options to mitigate CO2 emissions. Other areas identified for improved collaboration among working groups included the following: the Working Group on Sustainable Agriculture and the Working Group on Pollution Control on CO2 sequestration; the Working Group on Biodiversity and the Working Group on Environmental Economics on preventing floods, improving forest cover, etc.; and the Working Group on Biodiversity and the Working Group on Trade and Environment on exploring rules for exports.

  The meeting emphasized the need for institutional changes to achieve integration of environmental concerns into all aspects of China's economic planning, including proper coordination of the responsibilities of the State Environmental Protection Administration, the State Development Planning Commission and other government bodies. The meeting also discussed the possibility of incorporating environmental targets in the 10th Five-Year Plan, the enforcement of environmental regulations at all administrative levels, and monitoring progress through annual State of the Environment Reports. The meeting also considered next-step policy instruments for China's socio-economic development. These next step policy instruments include the gradual introduction of pricing policies that reflect real costs, closer cooperation with the business community, and preventive action through cleaner production and consumption. The pace of introducing these instruments depends on the nature of China's gradual shift towards a market economy.

  Important issues that need coordination between the council and the Chinese government were also identified at the meeting. These include the development of a long-term sustainable energy strategy; assessment of the cost of environmental damage and the value to the economy of biodiversity and the national ecosystem; the use of various financial instruments as incentives to environmental protection; and the better use of the economic benefits of protecting the biodiversity of the nation (including flood control, CO2 sequestration and eco-tourism, etc.).

  The co-chairs meeting focussed on issues of substance rather than on issues of logistical problems, and this reflects improved coordination among working groups.


  The Chinese government has paid attention to all council visits, and council recommendations will be taken into consideration. Premier Zhu made these remarks after council representatives addressed the premier in his meeting with participants during the CCICED meeting. Council representatives included vice-chair Huguette Labelle, Martin Lees, Kees Zoeteman and Svend Auken. Invited guest Maurice Strong also addressed the premier.

  In reviewing the past year, Zhu attributed last year's devastating floods to environmental degradation. After the floods, the government spent vast sums to shore up and rebuild the flood control infrastructure, and to rebuild peoples' homes. The government realizes that the fundamental cause of these floods was environmental degradation, in particular the logging of forests in the upper reaches of the Yangtze and Yellow River basins.

  At present, one of the most far-reaching plans of the government is to take land out of farming and restore natural vegetation. After visiting several cities in the west of China's mountainous areas, Zhu stated that he was shocked by the fact that trees have been completely logged and farmers are growing crops on a patchwork of small steep plots. This is arduous work for farmers, and also results in poor harvesting. But most of all, it results in environmental damage as water and soil erosion gets exacerbated and the silt clogs up the Yellow and Yangtze Rivers, which results in flooding.

  The premier pointed out that, in the past, when China needed grain, farmers had to develop this marginal hilly land. But since 1977, China has had grain surpluses every year of at least 25-million tons. It is preferable, then, to import grain from countries such as Canada and the US, and to have farmers restore hillside vegetation and plant trees. This new government policy has been welcomed and implemented by provinces such as Sichuan.

  Zhu pledged that he would form an association with many other high officials after retirement for the promotion of afforestation in order to ensure the success of the policy. The goal is to double forest coverage in China. Panda habitats in Sichuan will also be improved with tree planting, which would result in more tourism for China, said the premier.

  There has also been significant progress in the way cities deal with air and water pollution, as well as solid waste management. Premier Zhu particularly praised Beijing for its efforts to clean up the city&emdash;spending US$8 billion on pollution control.

  The premier took special note of what council members said, and told council members that China has experienced first-hand how environmental protection and economic growth are related.

  Zhu agreed that the environmental industry could become a growth engine for China, and hoped that international organizations would help with access to both new technologies and capital. Participation of international organizations such as the World Bank, UNDP and IMF is good because it sends a message to the Chinese public that development and environmental issues are important, added premier Zhu.


  NPC Amends Marine Environmental Protection Law 

  The 13th session of the Standing Committee of the National People's Congress adopted the amended Marine Environmental Protection Law in late December 1999.

  The amended law expands the mandate of the State Oceanic Administration (SOA). The law clearly specifies that the SOA is responsible for investigating, monitoring, and assessing the nation's marine environment. In addition, it is responsible for scientific research, and the control of pollution and marine environmental damage brought about by near-shore construction projects.

  The amendments also makes the Chinese law consistent with international conventions. The amended law aims to better protect and improve the nation's marine environment, conserve and make rational use of marine resources, maintain marine ecological balance and prevent marine environmental pollution and damage.

  The 13th session of China's top legislature also adopted an Amendment of the Criminal Law, the Law of Special Procedures for Maritime Litigation, the Decision of the NPC on Strengthening Supervision of National Budget and the Decision on and Amending the Cooperation Law.

  China Sets Targets for Economic Work for 2000 

  China will intensify its economic reforms in 2000. At a central economic working conference in Beijing in late November 1999, five top tasks were identified to deal with insufficient domestic demand, high unemployment, the slow rise of farmers' incomes and an irrational economic structure. These tasks are as follows:

  1. China will continue to carry out pro-active fiscal policies by issuing additional treasury bonds to finance construction. Attention will be paid to minimizing financial risks, strengthening monetary and credit administration, and safeguarding financial security;

  2. The government will make economic restructuring the focal point of its work for 2000 and beyond. Efforts will be made to adjust industrial structures and develop western China. Key measures include infrastructure development, afforestation and the advance of science, technology and education;

  3. The government will try to accelerate scientific and technological advancement and improve the country's ability to innovate;

  4. As a top priority, the government will undertake a three-year drive to reform state-owned enterprises; and

  5. The government will continue to improve the people's living standards by raising the income of urban and rural residents, especially low-income people. (People's Daily, November 18, 1999)

  Beijing Opens Environment Hotline 

  A Beijing-based non-governmental environmental protection organization, the Centre for Environmental Law, opened the first hotline in the city to offer information and legal advice to victims of environmental pollution.

  Within the first 20 days of the line opening in November 1999, more than 120 residents called for consultation on environmental protection regulations. All staff members of the centre are volunteers, including legal experts and professors, and students from Beijing and Qinghua universities, and the China University of Political Science and Law.

  China Launches Ozone Action 

  In the wake of the 11th Meeting of the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer, China has taken a series of actions to phase out ozone-depleting substances, including a number of regulatory measures and programs.

  The Circular on the Licensing of Ozone-Depleting Substances (ODS) was jointly issued by the State Environmental Protection Administration (SEPA), the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and the General Administration of Customs (GAC). According to the circular, SEPA and MOFTEC are responsible for registering companies engaging in ODS trade, and responsible for annual export and import quotas for all of China as well as individual companies. MOFTEC is also responsible for issuing ODS trade licenses, while GAC is responsible for giving clearance to ODS by licenses issued by MOFTEC. (China Daily, December 5, 1999)

  SEPA and the State Machine-Building Industry Bureau jointly announced a notice to ban chlorofluoracarbons-12 (CFC-12) in all new cars by January 1, 2002. CFC-12 is a common automotive air conditioning chemical that damages the ozone layer. New automobile air conditioners using CFC-12 as refrigerants will not be granted market access after January 1, 2002. The notice urges automakers and automobile air conditioner manufacturers to accelerate phasing out the use of CFC-12. (People's Daily, December 6, 1999)

  China launched a US$40 million efficient refrigerator project to promote widespread use of energy efficient CFC-free refrigerators. The project, 75% of which is funded by China and 25% by GEF, was created to provide technical assistance to compressor and refrigerator manufacturers. It is also designed to remove barriers to consumer and dealer acceptance of energy-efficient refrigerators in China. The project is being implemented by SEPA with technical support from the UN Department of Economic and Social Affairs and the State Light Industry Bureau. It is expected to cut energy consumption by refrigerators in the coming 15 years in China by an average of 20%. (China Daily, December 14, 1999)

  China Certification Committee for Environmental Labelling Products adopted a new set of environmental labelling standards for energy efficient CFC-free refrigerators. The standards took effect January 1, 2000. The release of the new standards means that 218 kinds of refrigerators from 29 manufacturers that were previously given Chinese labelling will have to be reviewed, and their eligibility for the environmental label reconsidered. (Labour News, December 22, 1999)

  Regional and Local News 

  Liaoning Fifty-five industrial plants in China's Liaoning Province have closed, suspended production or changed their product line because they were high energy consumers or bad polluters. Most of these plants were involved in textiles, printing and dyeing, papermaking, and architecture materials. Requirements by the State Council that all industrial plants meet the national emission standards by the year 2000 forced the close-down. (People's Daily, December 6, 1999)

  Shanxi Trees and grass have been planted in over 60,000 hectares of farmland in areas with serious water and soil erosion in China's Shanxi Province. The ongoing project, part of an ambitious drive by the central government to develop the vast western areas, is crucial for the improvement of ecological conditions in the middle reaches of the Yellow River basin. (People's Daily, December 6, 1999)

  Ningxia Northwest China's Ningxia Hui Autonomous Region plans to invest 6.7-billion yuan (US$807.2 million) to protect and add to its forests in the next decade. This efforts is part of a national program to protect the forests at the middle and upper reaches of the Yellow River in order to enhance the area's ecological balance. (People's Daily, November 21, 1999)

  Qingdao Qingdao launched a project to replace coal burning with oil and gas as the main heating resources in urban areas. Sulfur dioxide from coal burning has been the city's main air pollutant. The project will help resolve environmental problems. The city will complete the switch by the end of 1999. (Environment Online, November 2, 1999)

  Xi'an China's ancient city Xi'an announced an ambitious program aimed to ban coal burning in the city in order to reduce air pollution and attract more tourists. The city will shift its main fuel source from coal to natural gas, and it is designed to enable both tourists and local residents to enjoy cleaner air and clear blue skies. As of November 1, 1999, coal burning was banned in the downtown area within the city wall built in the Ming Dynasty (1368-1644), the high-tech industrial development zone, the economic and technological development zone, and the Qujiang tourism zone.

  The city also plans to build an 80-kilometre-long and 200-metre-wide green shelterbelt along the round-the-city expressway. The greenbelt is expected to improve the city's environment, in conjunction with several other afforestation efforts. (Environment Online, October 20, 1999)

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