Environmental Protection
 		(Xinhua) 		 
 		 Updated: 2006-06-05 10:27 		
 		
VII. Economic Policy and Investment Concerning the 
Environment 
The last decade has seen the largest increase ever in China's investment in 
its environmental protection. A pluralistic financing system based on government 
support has taken initial shape after years of efforts.
-- Increasing 
government input into environmental protection. During the Tenth Five-Year Plan 
period, 111.9 billion yuan was earmarked from the central budget for 
environmental protection, of which 108.3 billion yuan from the treasury bonds 
was used mainly to control the duststorm sources threatening the Beijing-Tianjin 
area, to protect natural forests, to turn cultivated farmland back into forests 
or pastures, to control pollution around the Yangtze River's Three Gorges Dam 
area and its upstream, as well as pollution on the Huaihe, Liaohe and Haihe 
rivers, Taihu, Dianchi and Chaohu lakes, to industrialize the reuse and 
recycling of sewage and garbage, and to reclaim waste water. Since 1998, the 
State has focused treasury bond investment on environmental infrastructure 
construction, bringing along a large amount of social investment. Between 1996 
and 2004, China's investment into environmental pollution control reached 952.27 
billion yuan, amounting to one percent of that period's GDP. In 2006, 
expenditure on environmental protection has been formally itemized in the 
State's financial budget. 
-- Improving policies concerning 
environment-related fee collection. The management and collection of discharge 
fees have been strengthened by strict separation of their collection and use, 
and channeling the fees exclusively into the prevention and control of 
environmental pollution. The collection of sulfur dioxide discharge fees has 
been expanded to include all related enterprises, public institutions and 
private businesses, and the rate of such fees per kg has been raised from 0.2 to 
0.63 yuan. The treatment of urban sewage, garbage and hazardous wastes is also 
charged, so as to channel social capital in a variety of ways into the 
environmental protection infrastructure construction and operation, and to 
promote the marketization and industrialization of pollution control. A 
concession operation system has been established and implemented for the 
operation of urban sewage and garbage treatment. In some places, the operation 
of sewage treatment plants and garbage treatment establishments set up by the 
government has been transferred to enterprises through public bidding/tendering 
and contracting. In this way, the government has strengthened its role of 
supervision while the economic returns of the investment in environmental 
protection have also been augmented. 
-- Formulating price and tax policies favorable to environmental protection. 
A mechanism to share fees for renewable energy resources has been established. 
The part of the price of grid electricity generated by renewable energy higher 
than that of the electricity generated by local desulfurized coal-burning 
generators, the difference between the expenses for maintaining the independent 
power system using renewable energy subsidized or funded by the government and 
the average power price of local provincial power grids, as well as the expenses 
involved in renewable-energy-generated electricity to be incorporated in power 
grids, will be resolved by collecting extra fees from electricity consumers. The 
tax rebate policies for exported products, including iron and steel, 
electrolytic aluminum and iron alloy, have been annulled or reduced in group 
form. Taxation policy has been formulated in favor of auto industry upgrading 
and auto pollution alleviation. The consumption tax will be reduced by 30 
percent for auto producers if they reach the low-pollution emission standard 
ahead of schedule. Tax reduction or exemption are extended to enterprises 
engaged in reclaiming renewable resources, making comprehensive use of resources 
and producing equipment for environmental protection, as well as enterprises 
using waste water, gas and residues as the main materials of production. The 
policy of collecting tax on the occupation of cultivated land is observed 
strictly, so as to promote the rational use of land resources, strengthen land 
management and protect arable land. The standards of tax collected on the 
production of coal, crude oil, and natural gas will be raised in steps in the 
future in order to protect mineral resources and promote the rational 
development and utilization of resources.