The SO2 emissions were 27 percent higher than in 2000 and were primarily from industrial sources, the State Environmental Protection Administration said.

China may have suffered 509.8 billion yuan (US$63.625 billion) in economic losses as a result.

Experts calculate that each ton of sulfur dioxide discharge costs society 20,000 yuan, said Li Xinmin, deputy director of SEPA's air pollution department.

Sulfur dioxide is hazardous to humans, animals and plants and is the main culprit in acid rain. It is produced primarily by the burning of coal and oil.

Li said China's coal consumption increased more than 800 million tons in the 2001-2005 period, most of which was used by the electric power industry.

"Coal accounts for 70 percent of China's energy consumption. This fact is hard to change in the short term," he told reporters.

China has been promoting desulfurization equipment at its thermal power plants, but only 5 million kilowatts of capacity has been outfitted since 2000.

By the end of last year, 142 desulfurization projects were completed or under construction at power stations whose installed capacity totaled 50 million kilowatts.

In its five-year-plan for the 2006-2010 period, China promised to achieve a 10 percent reduction in sulfur dioxide emissions compared with the previous five years.

To achieve that goal, the country's annual SO2 discharges must be kept under 22.95 million tons.

"This is a compulsory target," Li said.

SEPA has signed agreements with China's six biggest electric power companies, which discharge more than 60 percent of the country's total, requiring them to reduce their emissions.

Air pollution poses a great challenge to China's goal of building a developed society, the environmental watchdog said yesterday