A harmful by-product of China's rapid industrial development in the 1980s has been increased pollution. Although China has passed environmental legislation and has participated in some international anti-pollution conventions, pollution will be a serious problem in China for years to come.

China is an active participant in the UN Environment Program and a signatory to the Basel Convention governing the transport and disposal of hazardous waste. China also signed the Montreal Convention for the Protection of the Ozone Layer in 1991.

The head of China's National Environmental Protection Agency (NEPA) proclaimed in 1991 that environmental protection was one of China's basic national policies, at the same time cautioning that environmental protection must be coordinated with economic development. According to NEPA, $3.2 billion was spent on pollution prevention and environmental rehabilitation from 1981-85, $8.8 billion from 1986-1990, and about $15 billion for the eighth five-year plan (1991-95).

China has sought to contain its increasing industrial pollution largely through administrative procedures and efforts to increase public awareness. The heavily polluted Pearl River delta is one of the first major industrialized areas targeted for clean up. Officials hope that new sewage treatment plants for cities in the delta area will enable the river to support an edible fish population by the year 2000. A small environmental protection industry has also emerged. However, in some areas of China, pollution has long been considered as one of the costs associated with economic development.

The question of environmental damage associated with the hydroelectric Three Gorges Dam project concerns NEPA officials. While conceding that erosion and silting of the Yangtze River threaten several endangered species, officials say the hydroelectric power generated by the project will enable the region to lower its dependence on coal, thus lessening air pollution.

In March 1998, NEPA was officially upgraded to a ministry-level agency, and renamed the State Environment Protection Agency, reflecting the growing importance the Chinese government places on environmental protection. The Chinese government recognizes the environmental situation in China is grim and that increasing water and air pollution, as well as deforestation and desertification, will threaten the base of China's economic development.