The 1st meeting of the 3rd phase of the China Council for International Cooperation on Environment and Development (hereby referred to as the Council) was held in Beijing on November 23-25, 2002. Thirty five Chinese and international members, 15 Chinese and international Task Force co-chairs, 5 special guests and 53 observers attended the meeting. Mr. Xie Zhenhua, Mr.Good, Mr. Qu Geping and Mr.Lonroth, Vice Chairs of the Council, chaired the meeting respectively.

Vice Premier Wen Jiabao, Chairman of the Council, addressed the opening ceremony of this meeting. He noted that, as an advisory body giving advice to the Chinese government in its decision-making, the Council has successfully made a great many recommendations and suggestions to the Chinese government and conducted remarkable researches for the part 11 years. The Council has done its part in the achievements of China's environment and development cause and has made important contribution to the government's decision-making. He also stressed that, China has entered into a new stage of development during the period of the current CCICED. The 16th CPC National Congress has set out a blueprint for China's development for the future 20 years. This is an important period for the CCICED, as the key for an effective solution to environmental problems and strengthened capability of sustained development lies in the government' policy and action. Vice Premier Wen Jiabao believes that, with joint efforts of all members, the 3rd phase of the CCICED is sure to play a bigger role in the process of China's building a well off society in an all around way.

The participating members endorsed the terms of Reference of the 3rd Phase of the CCICED, Rules of Procedure of the 3rd Phase of the CCICED and Name list of Chinese and International Members, the Proposed Task Forces and Name list of Co-Chairs of the Task Forces of the 3rd Phase of the CCICED.

Compared with the last two phases, the 3rd phase of the CCICED has conducted some great reforms, including identifying two executive vice chairs, adding one international vice chair, the number of the Chinese and international members are reduced from 59 to 41, flexible task force system takes the place of the working group system which has not been changed for 5 year, and two Chinese and international lead experts are appointed to take the responsibility of reviewing the proposals of new task forces, drafting reports on Issue Papers and preparing for the establishment of core fund system, etc. The above-said reforms have set out a new landscape for the 3rd phase of the CCICED.

The meeting was centered around the theme environment, development and governance-response to the World Summit on Sustainable Development (WSSD). Mr. Strong, Secretary General of the United Nations Conference on Environment and Development in 1992 and Mr. Topfer, executive director of the United Nations Environmental Program and representatives from the State Planning Commission were invited to deliver keynote speeches, briefing the meeting on the WSSD, reactions of countries around the world after the meeting, directions of global sustainable development, China's support to the WSSD and its macro planning, general perspectives and important measures to implement its sustainable development strategy in the field of environment and development. The meeting listened to two Issue Papers by Chinese and international lead experts Professor Sun Honglie and Dr. Hanson, which talk about the overall situation and problems in world and China's environment and development. The meeting was also briefed by leaders from provinces and autonomous regions, namely Liaoning, Inner Mongolia, Fujian and Guangxi, on their trial projects of circular economy, eco-environmental protection and development, opening up policy, west development and sustainable development. With the above-said as basis, general debate was also carried out during the meeting. Many international members commended that, thanks to China's strategic planning, wealth that amounts to two present China and four present China will be produced around the world in 2010 and in 2020 respectively. It is necessary to make in-depth studies on what impact this will bring to China and world at large in the field of economy and environment. In this respect, it is essential to convert traditional development modality and to carry out sustainable development.

The meeting reviewed the working Report of the Secretariat, Report on Coordination Meetings by Co-chairs of Task Forces,and working reports by task force on forestry and grassland, working group on environmental economics, task force on biodiversity and task force on WTO and environment. Quite a few international members voiced their concerns to China's large importation of woods and the invasion of foreign species. The participating Chinese and international members and co-chairs of task forces showed special interests in China's adherence to its sustainable development strategy while establishing a well off society in an all around way and set forth lots of good proposals. Based on these proposals and after repeated discussions and revisements, the meeting endorsed the Recommendations to the Chinese Government by the 1st meeting of the 3rd phase of the CCICED(see Annex).
The meeting was closed on the morning of the 25th. Vice Chairman Mr. Xie Zhenhua gave his sum-up remarks on behalf the bureau. He noted that, CCICED is a high level advisory body to the Chinese government and will continue to play a particular and important role in the field of environment and development during the important period of China's establishing a well off society in an all around way; the working direction and focus of the CCICED is, by closely centering around the objectives set out by the 16th CPC National Congress and carrying out the spirit of the WSSD, to put forth suggestions on issues like how to coordinate the relationship between environment and development, how to strengthen the country's capability of sustainable development, and how to avoid various potential and practical challenges during the development process; the task forces should still put their priority on researches in the respect of implementation and put forth policy recommendations for the government to choose; By taking a down-to-earth and domestically oriented approach, we will solve China's environmental and development problems and contribute to the global sustainable development.

On the afternoon of the 25th, Premier Zhu Rongji met with the participating Chinese and international representatives and made an important speech. He said that, the Chinese government attaches great importance to the role of the CCICED. The Council has provided very good recommendations to the Chinese government, which are of great assistance to China's environmental protection and sustainable development. Premier Zhu noted that, it was during the process of industrialization that China has gradually come to realize the importance of environmental protection and sustainable development. Particularly after the Rio United Nations Conference on Environment and Development (UNCED) held 10 years ago, China began to pay more attention to environmental protection and sustainable development. Premier Zhu pointed out that, keeping sand storms under permanent control does not only requires China's action but also calls for the support of the international community. China is currently developing cooperation with Japan and South Korea in getting rid of the root causes of sand storms. Premier Zhu specially pointed out that, the Chinese government has been working actively in preventing air pollution and has formally acceded to the Kyoto Protocol. In preparing for the 2008 Olympics Games, Beijing has formulated and begun to carry out grand plans on air pollution controls, and for instance, Beijing has raised the emission standard for automobile' pollutants. Premier Zhu stressed that, China is still facing some problems in the process of improving environment and sustainable development. However, China will continue to make unswerving efforts to improve its environment and fulfill sustainable development. Finally, Premier Zhu expressed his hope that the CCICED would continue to show their concerns to China'ss environmental protection and sustainable development.

On the morning of the 26th, representatives from the State Environmental Protection Administration and some donor countries attended the coordination meeting of CCICED projects co-hosted by the Ministry of Foreign Trade and Economic Cooperation and Canadian International Development Agency and fully exchanged their views on the establishment of core fund mechanism in a step-by-step manner.

After the meeting, the Secretariat of the CCICED arranged an investigation tour for vice chair Mr. Lonroth and international member Mr. and Mrs Willoch(former Prime Minister of Norway) to visit Xi'an and Shenzhen. Through this practical investigation, the international members gained a comprehensive understanding of environment and development situations in these two places. They expressed their deep appreciation towards the measures and achievements of these two places in the field of environmental protection.　　

The first meeting of the China Council for International Cooperation on Environment and Development Phase III (CCICED) was held in Beijing during November 23-25, 2002. The Council examined the relationship of Environment, Development and Governance at a very auspicious time. The meeting takes place a year after China'ss accession to the WTO, and just after the WSSD and the Chinese Communist Party's 16th Congress.

The smooth transition in leadership at this Congress, representing both continuity and change, marks the next phase of China'ss long march to the front ranks of the world's most influential nations. Certainly China'ss remarkable progress on sustainability is a tribute to the efforts of this great country's leaders who took bold steps in the years following the Rio Earth Summit. And the recommitment to sustainable development by the 16th Congress is an important decision.

The path ahead will be even more challenging. The nature of environment and development problems is changing. With a doubling of the Chinese economy projected for this decade, and a doubling again in the next, addressing environment and development issues in a timely and effective fashion will require a singularly strong will, more financial resources, and great ingenuity. Sustainable development will have to be linked much more strongly to employment and a number of social policies. The challenge of creating a sustainable national economy on the scale of China'ss is unprecedented. There is no existing model to draw upon for a country the size and complexity of China.
China'ss achievements have taken place at a time when the world community is still being drawn in many directions. China'ss best efforts for sustainable development will fall short unless there is a stronger implementation effort for sustainable development on the part of the global community. And China is a country whose choices during the coming decade will have significant environmental implications for the region and for the globe. In reality, China has much to contribute internationally on how to implement sustainability within a developing economy. For all these reasons, the Council applauds China's effective participation in international processes such as the WSSD, and the commitment at the highest level to fully meet international obligations under the global conventions. China should be preparing itself for an even larger international role in the future.

The Council has heard keynote speeches, issues papers, plus the reports of four CCICED task forces and from four provincial vice-governors on their sustainable development progress. Our recommendations address several urgent issues related to the six priority areas of China's new draft sustainable development action plan. While the advice is intended for immediate use, it is with the recognition that today's decisions will affect the ambitious national objectives set for the year 2020.

PART A THE TRANSITION TO SUSTAINABLE DEVELOPMENT

Environment, Development and Governance

In the past CCICED has focused its attention on environment and development. The consideration of governance is new and in line with international views that this topic is essential for successful implementation of sustainable development. There are many definitions of governance, including the following one, from the Institute on Governance located in Ottawa, Canada: Governance comprises the traditions, institutions and processes that determine how power is exercised, how citizens are given a voice, and how decisions are made on issues of public concern.

Governance mechanisms cover a wide range of subjects, for example, the expanding role of civil society and communities in the management of natural resources, the role business can play in self-regulation of pollution, and partnership models to implement sustainable development. Good governance requires effective government. In this context the Council notes the need not only for improved coordination, but also for integrated approaches, so that sustainable development becomes the responsibility of all units of government and at all levels.

In all parts of the world the role of national and local government is shifting dramatically from implementer to enabler, and as a partner for sustainable development. The right enabling framework will go a long way towards guaranteeing the success of the partnerships called for at the WSSD, and for attracting new environmental investment. An enabling framework should provide appropriate legal, fiscal, policy and regulatory conditions that promote sustainable development. This approach does not imply a shrinking role for government, since the issues of environment and development are growing more complex, and of larger magnitude. Instead it will permit a better balance of action on the part of government, private sector and civil society.

The CCICED recommends the following actions to improve governance for environment and development:

(1) Strengthen integrated policy-making for sustainable development, and improve government coordination mechanisms for environmental protection. An integrated approach to policy development and implementation has become commonly accepted elsewhere in the world. Such policies deal with cross-sectoral impacts, the removal of systematic barriers to environmental and resource protection, and the internalization of sustainable development within organizations. The efforts of China to build integrated approaches to environment and economy could be further strengthened.

The existing level of coordination among departments and sectors is limited and forms a major barrier that has been pointed out in previous Council recommendations. At this point in time, when a renewed approach to sustainable development is under consideration, it is appropriate to seek new coordinating mechanisms that take into account the trend toward decentralized decision-making as well as cross-sectoral coordination within government.

(2) Build sustainable development implementation partnerships and capability among government, enterprises and civil society. For China, much work remains to be done in the establishment of such partnership relationships. New mechanisms are needed to provide for rapid funding and effective implementation of partnerships. Partnerships can be encouraged with both domestic and international enterprises. The goals for partnerships can include more effective sustainable development implementation, access to technologies and management experience, and attraction of more private investment. Some partnerships may best be carried out through international networks. An example where China could take a leadership role is in the development of an international Consultative Group on Clean Energy.

(3) Improve the incentives for enterprises to engage in environmental protection. Government can strengthen economic incentives for the participation of enterprises in environmental protection. While numerous initiatives already exist, much more needs to be done. Suggested measures include:

　　--Raising fees for polluted water and solid waste treatment to reflect total environmental damage costs, and then gradually opening more public utilities to the market.
　　--Ensure that prices reflect underlying costs and resource values.
　　--Establishing and improving environmental performance labeling (such as energy efficiency labeling, environmental labeling, etc.).
　　--Encouraging research and development of cleaner products.

(4) Encourage the development of non-government environmental protection organizations, and establish and improve an environmental information sharing system. Solving environmental problems requires collective action, with participation by groups and communities. It is recommended that non-government environmental protection organizations should be encouraged to develop, and to participate in environment and development policy-making, activities and monitoring. Such organizations are very important for improving environmental self-discipline of the civil society.

At the same time, an open and transparent environmental information sharing system should be established. Elements of a system, operating at national, provincial and local levels might include a transparent, highly accountable environmental protection administration; monitoring of regional water quality and drinking water quality; a highly-respected system for food inspection; and a system for corporate reporting on sustainable development. Increased public access to environmental information is an important element for accountability.

(5) Pay special attention to, and reduce the incidence of environmental degradation and resource depletion on the poorer members of society. Regulatory and economic instruments to improve environmental performance should be explicitly tailored to poverty alleviation objectives.

A Sustainable National Economy

The renewed commitment of China to build a sustainable national economy based upon environmentally-friendly and resource saving approaches comes at a critical juncture for its future. China'ss rapid wealth creation could be based on ever increasing levels of consumption that within a few decades or less could result in unsustainable pressures on the environment. Or it could be used to foster unique Chinese patterns of growth placing much greater emphasis on high quality of life approaches, an information-based economy, a high level of investment in environmental goods and services to ensure ecosystem integrity, and an equitable distribution of the fruits of economic progress.

A sustainable national economy is unlikely to come about through an incrementalist approach. It will require innovation, behavioral change, and action that takes China beyond international benchmarks and best practices. High profile and trend-altering events such as the 2008 Olympics can become part of the strategy.

CCICED recommends the development of scenarios that would explore the implications of developing a sustainable national economy. Such scenarios should draw upon quantitative and qualitative information on cross-sectoral impacts of sustainable development strategies, introduction of new technologies, and other factors. And the scenarios should take into account the impacts of various international financial, security, environment and development conditions.

A sustainable development economy will require even more attention than in the past decade to both sustainable production and consumption. Thus CCICED recommends the following two actions.

(1) Greatly strengthen the transition to sustainable development in the industrial, biological, energy and service sectors of the Chinese economy. China'ss future economy will be more diverse, with hidden challenges to sustainability, such as those related to tourism, or biotechnology, in addition to the existing environmental problems of energy, manufacturing and resource exploitation. These issues cannot be considered in isolation from employment strategies and concerns such as environmental health.

CCICED welcomes the new Cleaner Production Law and the commitment to a Circular Economy that addresses material reuse, recycling, and reducing the amount of waste. But tougher administrative and regulatory action will be necessary, along with an improved and broader range of economic incentives. Finally, as the experience of leading provinces reveals, a sustainable economy requires major industrial restructuring and redesign set in the context of improved urban planning and development.

(2) Establish sustainable consumption models appropriate for China'ss changing economic and social conditions. China'ss current low per capita consumption pattern is an opportunity to avoid the mistakes of many other countries that have developed very high levels of material and energy consumption. In the next five to ten years new patterns of consumption may well be set within China, since so many of China'ss citizens will be substantially wealthier. It needs to be reinforced that sustainable consumption models can still lead to economic growth. Indeed, attention to environment is an important means for creating growth. Expanding domestic demands also should not mean encouragement of waste. Sustainable consumption patterns within China will push production towards sustainable pathways. Sustainable consumption should have the added benefit of fostering the competitiveness of domestic enterprises and help to eliminate green barriers in international trade.

Education and Knowledge for Sustainable Development

Although sustainable development has become one of China'ss basic strategies, awareness and understanding of sustainable development still needs to be raised to a much higher level. Education and knowledge expansion of sustainable development need to be further enhanced through a variety of means, including the following: sustainable development capacity building for decision makers, particularly for local level decision makers, and for business leaders; education and awareness-building for the public, using a variety of media; and strengthening sustainability elements of school and university curricula.

Role of China in the Global Community

Members of Council highly appreciate the international role China has played over the past decade. CCICED views that China is well positioned in the coming years for continuing, and, at a rate that only the country can determine, perhaps expand its substantial role in international environmental cooperation. Its membership in the World Trade Organization adds a major new dimension to this capacity.

There is growing international concern about the possible impacts of China'ss rapid growth on the regional and global environment. It is therefore particularly important that China'ss policies for growth and sustainable development should take full account of their international impacts and implications. This will go far to avoid international concerns and misconceptions, and will facilitate productive international cooperation in fields vital to China'ss development.

PART B RECOMMENDATIONS BASED ON CCICED TASK FORCE REPORTS

In this first meeting of CCICED Phase 3, four Task Forces were asked to present their results. These reports receive a full discussion by Council members, who modified and selected among the options presented. The summarized policy recommendations noted below reflect the views of Council. Additional information and detailed technical recommendations are available in the reports and publications of the individual Task Forces.

Environmental Economics

In order to integrate environmental concerns into the mainstream of economic decision-making, the following suggestions are proposed:
--Improve the empirical basis and refine methodologies for strategic environmental assessment. According to the new Environmental Assessment Act, environmental and ecological issues of major development plans will be assessed. Effective implementation of the Act requires a series of guidelines on the technical, economic, environmental and social aspects involved.
--Develop a Green National Accounting System that reflects the true social and environmental costs of economic activities. Costs should include production, environmental degradation and resource depletion. Such a system should be in the form of satellite accounts, paralleling conventional national income accounting measures.
--Explore environmental pricing and taxation. The costs of depletion and degradation of the natural environment should be reflected in pricing policies such as user charges and pollution taxes. Increasing use of economic instruments for environmental management, paying particular attention to the implications for the poorest members of society, and in light of practical implementation issues, should be a key feature of environmental policy in China.

China'ss Accession to the WTO and its Environmental Impacts

The Government of China should require that the implementation process of its new Environmental Assessment Act specify that a strategic environmental assessment and perhaps a sustainability impact assessment be performed on the impacts of China'ss accession to the WTO and other important changes in trade policy. Studies have revealed that many of the important gains from liberalization can be dissipated by increased environmental costs if appropriate measures are not taken. A timely assessment and continued monitoring of the environmental affects of accession will allow China to adjust its environmental laws and regulations to counteract the harmful effects of rapid trade expansion.
China must strengthen the capability of its negotiators to negotiate trade and environmental issues in order to play a more active role in the Doha Round. Since China lacks the necessary knowledge and experience to deal with such a wide spectrum of issues simultaneously, considerable effort is needed to enhance technical support groups within SEPA (State Environmental Protection Administration) and MOFTEC (Ministry of Foreign Trade and Economic Cooperation). The enhancement effort should draw upon outside experiences, expertise and information to better inform Chinese negotiators. The technical support groups should become capable of providing analysis of the positions of other countries. And the strengthening effort should update China on new developments outside the negotiation process, and provide access to the latest research on trade and environment.

The Government of China and industry organizations should establish mechanisms to monitor and report on significant changes in the laws and regulations of other countries that might affect China'ss international trade. This early warning system, combined with China'ss access to the WTO's transparency mechanisms will help China to identify potential barriers to Chinese exports at an early stage, and to formulate government policies that assist industries to adjust. However, the key solution for addressing green barriers lies in improving China'ss own environmental standards and bringing these more into line with international standards. The government should provide incentives to industry to seek ISO 14000 certification. It also should promote international cooperation and exchange on standards development and seek dialogue with China'ss principle trading partners as they formulate their standards for ecolabels.

Forests and Grasslands

Although China has achieved great success in forest and grassland protection and restoration, the central government still has great opportunities to improve policies and their implementation.

Improve the SLCP (Sloping Land Conversion Program) and the NFPP (Natural Forest Protection Program) under the existing policy framework.

For the SLCP, the government should adopt a more holistic, more flexible and multisectoral approach to make land conversion both ecologically and economically sustainable. Needed is an approach aimed at achieving ecological restoration while providing realistic, economic market-based incentives to households. This will require a more fine-tuned, decentralized, location-specific approach suited to highly diverse land conversion circumstances in the different provinces. Second, the government should promote routine independent monitoring and evaluation to improve planning and implementation at all level, adopting a more participatory consultative approach to planning that involves stakeholders.

For the NFPP, remove the logging ban from collectively-owned forests, where appropriate. Furthermore, the government should make a gradual and carefully planned transition over time from a blanket logging ban to a more diversified, flexible approach that enables sustainable forest management on state-owned forests. This will require establishment of land use planning for diversified land use that includes ensuring adequate protection of old growth forests, tree planting, as well as natural rehabilitation of sites.

Adjust overall forest policy.

Forest policy reform has lagged behind other sectors such as agriculture. Thus it is recommended that reform proceed in at least five priority areas:
　　--Restructuring of public/private forest management and decentralizing of authority in forest administration.
　　--Monitoring and evaluation of performance of government and private forest management at the different levels.
　　--Rationalizing of taxes and improved identification of authority to tax within various sectors.
　　--Strengthening of property legislation pertaining to collective forests in accordance with the new land contract law; identifying due process for land takeovers by government, and procedures for valuation and compensation in cases of imminent domain.
　　--Updating relevant domestic and international trade policies.

Eco-Security

China'ss rapid economic development, including explosive levels of growth in trade, transportation and tourism, is increasing the introduction of species intentionally and unintentionally. Serious attention should be paid to Alien Invasive Species (AIS) threats and damage to biodiversity and natural ecosystems, and, in turn, to economic loss. It is therefore recommended that:

China develop a national Alien Invasive Species strategy designed to combat the multiple threats of AIS. The strategy should incorporate risk assessment, full social cost pricing, the user pay and precautionary principles, development of an early detection and warning system, fast sharing of information, and rapid response mechanisms.

China's Convention on Biological Diversity (CBD) Enforcement Coordinating Group should for a special AIS administration office to support the overall AIS program. Consideration should be given to establishing AIS administrative institutions at various levels.

Based upon an overall review of the relevant existing legislation, a new set of regulations pertaining to the control of AIS should be formulated, together with an AIS list.

Genetically modified organisms (GMOs) pose similar potential problems to AIS with regard to native species and ecosystems. Similar risk assessments and field trials before permitting should be carried for GMOs.
Research and capacity building for dealing with AIS issues needs to be strengthened.