Assessing the Dragon's Choice: the Use of Market-Based Instruments in Chinese Environmental Policy

Georgetown International Environmental Law Review, Summer 2004 by Shuwen, Jolene Lin

b. Environmental Standards

Environmental standards have been the mainstay of China's regulatory policy. They fall under three categories: ambient environmental quality standards, pollution discharge standards and technological standards. These standards include those promulgated at the state level by the SEPA, and those developed by the local EPBs. According to the 1998 National Report on the State of the Environment, there were 364 national standards for environmental protection and 34 industry-specific environmental standards in 1998.39 Experts have observed that these standards are generally weaker than those found in OECD countries,40 but this may very well be appropriate. For example, the Soviet Union had very stringent environmental standards established as early as the 1960s but they were very rarely enforced and were honored more in breach than compliance.41 Regulation characterized by strict adherence with moderate standards is preferable to non-compliance with strict standards.

Ambient air and water standards are an example of the types of standards set by the environmental regulatory regime. The first set of ambient air and water standards was issued in 1979 by the Environmental Protection Bureau and the Ministry of Public Health.42 These standards specified the maximum allowable concentrations of specific hazardous substances on both a single-event and 24-hour daily average basis. For example, the maximum allowable concentrations of carbon monoxide in the atmosphere of residential areas were three milligrams per cubic meter in any thirty-minute period and one milligram per cubic meter in a 24-hour cycle. In some cases, only one standard was issued, for example, only a thirty-minute maximum was set for nitrogen oxides.43

The enforcement of environmental standards remained difficult as long as they remained outside the State Plan, a five-year plan drawn up by the State Council to direct economic and social development. Faced with a conflict between production norms and environmental regulations, industrial polluters emphasized the former. Although, in principle, the EPBs had the authority of the law behind them, they lacked political clout and financial independence. The EPBs' fiscal dependence on local governments gave the latter a powerful levy to influence regulatory decisions. Consequently, local governments' economic concerns almost invariably took precedence over environmental protection. The incorporation of environmental protection as a specific chapter in the State Plan since 1982 has helped remove some of these enforcement difficulties.

In recent years, China has focused on moving from concentration-based pollution discharge limits to mass-based or total load control. This is seen in the implementation of the "Two Compliance" policy, which seeks compliance with both discharge standards and ambient standards.44 However, while these new environmental standards have contributed significantly toward pollution control, they are inherently blunt instruments which seek compliance, but not necessarily ccxvi effective compliance. Increasingly, the search for a more cost effective environmental regulatory approach has led the SEPA to explore other options.