been put into practice effectively.

is costly even after it is built and many factories do not use it except when they are being inspected. More recently the government is trying to introduce the use of monitoring device to measure the amount of sulfur dioxide emission coming out of each plant, but such a monitoring system has not yet been put into practice effectively.

China is also using economic incentives to solve the problem of externalities resulting from the use of energy. To reduce the use of coal and encourage a switch to cleaner burning fuels, the government has introduced a tax on high-sulfur coals. A system of emissions trading for sulfur dioxide, similar to that used in the United States, is being tested in some cites with pilot projects, and may eventually be applied nationwide. The Chinese government will advance reforms in the pricing of natural gas, water and other resources, raise the tax levied on pollutant discharge, establish a "polluter pays" system and severely punish those who violate the environmental protection laws. To insure that fees charged on pollutants are higher than abatement costs and to strengthen existing laws, the government is considering the imposition of large fines on pollutant emissions. The rationale for charging higher fees than the abatement cost may be the expected imperfect enforcement. Potential polluters will equate expected fine (equal to the fee charged times the probability of getting caught) to the benefit of abatement. Future Chinese environmental initiatives also may include formulating a tax structure beneficial to environmental protection, and granting preferential loans and subsidies to enterprises that construct and operate pollution treatment facilities. The government will also provide incentives to companies that use more energy efficient production facilities and techniques.

Besides economic incentives, efforts are made to introduce technologies that will treat wastewater, prevent air pollution and improve environmental monitoring systems. Because of the above mentioned government policies state and non-state enterprises have tried to find cleaner technology to generate power than from coal.  Governments of cities like Shanghai have tried to adopt urban planning strategies that are friendly to the environment.  Space within a city is reserved for planting trees in order to improve air quality.  Travelers to Beijing, Shanghai and Guangzhou in years 1998 to 2000 could