Beginning in the late 1980s

Beginning in the late 1980s, Premier Li Peng, a nuclear engineer by training, issued statements underscoring the government's commitment to giving attention to environmental protection in its formulation and implementation of economic development policy. China's national legislature, through its promotion of "Cleaner Production" and other attempts to reduce air pollution, has significantly revised the Law on the Prevention and Control of Air Pollution in 2002.

New laws establishing comprehensive regulations have begun to curb the environmental damage. On the national level, policies are formulated by the State Environmental Protection Administration (SEPA) and approved by the State Council. The role of SEPA, which was established in 1998, is to disseminate national environmental policy and regulations, collect data and provide technological advice on both national and international environmental issues. . In June 2002, China enacted the Cleaner Production Promotion Law, which established demonstration programs for pollution regulation in ten major Chinese cities, and designated several river valleys as priority areas. So far the laws are mainly of the regulation and control variety,  rather than market-based policies such as taxing the polluters, partly because the government has not been able to design a set of appropriate market-based policies, e. g. to estimate the appropriate tax rate (more on this point in section 3.3).

3.2 Policies for energy saving

On Friday, May 8 2007, Premier Wen Jiabao made a speech stating that the current macro-control policy must focus on energy conservation and emission reduction in order to develop the economy while protecting the environment. The Chinese government has set a target of reducing energy consumption for every 10,000 yuan (1,298 U.S. dollars) of GDP by 20 percent by 2010 [or 4 percent per year], while pollutant discharge [presumably measured by an index of quantities of different pollutants] should drop by 10 percent.

"To curb excessive growth of the sectors that consume too much energy and cause serious pollution, China must tighten land use and credit supply and set stricter market