The challenge of eco-transition

Chinese top leader Xi Jinping's instruction on the environmental pollution problem at the Tengger industrial park in Inner Mongolia once again highlighted that when it comes to the environmental protection, China doesn't lack laws but lacks effective law enforcement.

Since the launch of reform and opening-up in 1978, China's GDP has grown by an average of 10 percent a year. But now the Chinese leadership is prepared to sacrifice the high GDP growth rate, to a certain extent, to transform the country's economic development model in order to protect the environment. The leadership says it is time China declared a war on pollution, and the new thinking is slowly permeating to lower-level authorities.

One of the first steps was to reform the environmental law. After two years of debate, the 1989 Environmental Protection Law was amended for the first time in 25 years to improve supervision and ensure that violators do not go scot-free. Before the amendment, the law was not tough enough to curb pollution, because the cost of compliance was often much higher than fines to be paid for violations. In some extreme cases, the fines were even less than the government's administrative cost for collecting them. These created the wrong incentives for industries.