According to SEPA, China's investment on environmental protection in the next five years is expected to reach 1.3 trillion yuan, or 1.6 percent of GDP. This marks a significant increase considering that the investment from the budget of the Central Government in the past five years was only 110 billion yuan.

Legal support

"Companies will rather pay fines than use the money to purchase pollution control equipment," said Huang Xihua, Deputy Director of Environmental Protection Bureau of Huizhou City, Guangdong Province. Her city is located in the Pearl River Delta, which is known for its high concentration of factories churning out consumer goods.

According to SEPA, the cost of violating environmental protection legislation is less than 20 percent of the damage. "The primary problem in China's environmental protection legislation is that the upper limit of administrative fines is too low," said Wang Canfa, a law professor at the China University of Political Science and Law.

Wang said China has passed nine environmental protection laws and 15 laws on natural resources; signed and ratified 51 multinational environmental treaties and 1,600 local environmental regulations. Wang said the problem is that many laws and regulations were drafted during the planned economy period and fail to reflect reality. For example, the Environmental Protection Law was passed in 1989 and has not been revised once in the past 17 years.

"We will try to set a comprehensive legislation network on environmental protection in five to 10 years," said Zhou Shengxian, head of SEPA.

Research on revising the Environmental Protection Law has been initiated. According to Professor Wang Shuyi, head of the Research Institute of Environmental Law of Wuhan University that participated in the research, "The draft will probably be worked out in 2008."