About 60 percent of Chinese cities still suffer from air pollution and have no centralized sewage treatment facilities, according to a report by the State environment watchdog.

The report, issued by the State Environmental Protection Administration (SEPA) yesterday, rated air and water pollution as major environmental problems in the urban areas of 585 cities.

The air quality in only 37.6 percent of the cities was above Grade II, a national standard indicating a clean and healthy environment. The figure was 7.3 percentage points lower than for 2005.

Thirty-nine cities, four less than the number in 2005, were put on SEPA's black list, with air quality below Grade III, meaning they suffered severe air pollution.

Among the black list cities, seven were in North China's Shanxi Province, the country's largest coal supplier, and seven in Northeast China's Liaoning Province, the base for heavy industries.

The report also found that the ratio of quality water in the major urban areas, either for drinking or industrial use, had dropped by 7.24 percent.

But progress had been achieved in waste water and garbage treatment due to the construction of waste management facilities accross the country, especially in economically well off regions.

Compared with 22.9 percent in 2005, 42.5 percent of urban sewage was being treated in the cities surveyed. Also, 59.5 percent of household garbage was being handled properly, compared with less than 20 percent in 2005.

However, 200 cities still had no centralized sewage management system, and 187 cities had no garbage disposal plants.

SEPA urged these cities to raise investment in environmental protection and step up construction of related infrastructure.

An environmental goal has been set in the country's 11th Five-Year Plan to have at least 70 percent of sewage and 60 percent household garbage effectively treated in the cities.

The report said "the environment issue remains of serious concern and there is difficulty in realizing the goal".

It called on cities to improve their sewage handling and recycling capabilities and develop effective ways of treating sludge and hazardous liquids produced by sewage and garbage disposal plants.

Local governments should also pay more attention to problems like noise, floating dust particles, vehicle emissions and pollution by catering industries, the report said.

The National Development and Reform Commission (NDRC) recently ordered better regulation of the pricing of power from coal-based plants equipped with sulfur removal facilities.

While coal-based power plants are the major cause of the discharge of SO2 in China, the country in 2004 began to offer preferential pricing terms to plants with sulfur removal systems.

But some plants are not playing by the rules but are still enjoying preferential prices.

The NDRC's recent order to streamline the coal-based power market will help to ensure cleaner operation of the industry, officials said.