China may fail to achieve its 2001-2005 water and air pollution control targets since concerns over profitability dampen the interest of investors due to unfair charges on waste water discharge, environmental officials and experts warned.

The State Environmental Protection Administration (SEPA), China's top environmental watchdog, said charges are well below the cost of treatment of polluted water, and it has turned out to be a major hurdle for China's slow progress in reducing water pollution as planned for the five-year period.

China formulated several national and regional water and air pollution control programs in the late 1990s to curb worsening environmental pollution and ecological degradation as part of its sustainable economic and social development strategy. The areas involved are home to 62 percent of the country's population and account for 75 percent of the country's gross domestic product (GDP).

SEPA officials said construction of about 700 planned major projects to cut water pollution, or half of the country's total planned by the central government for the 2001-2005 period, had not yet been launched by the end of last year.

No arrangement has been made yet for billions of US dollars worth of investment needed for waste water treatment projects to be launched, and there is only 18 months left, according to SEPA officials, who requested anonymity.

To make matters worse, the amount of chemical oxygen demand (COD)-related pollutants discharged into three major rivers in China, including Huaihe River in central China, Haihe River in north China and Liaohe River in northeast China, has been cut by only about one fifth of the planned sum, according to figures released recently by SEPA.

The total amount of ammonia and nitrogen, other major water pollutants, has not been reduced as planned, and some provinces had reported increase in the amount of those pollutants.

SEPA officials said "a significant number of" the several hundred State-funded waste water treatment plants built during the past decade remain idle, or are operating under capacity to reduce operating loss.

The charge for waste water treatment was set at 0.2 yuan (2.5 US cents) per cubic meter by local government in Quanzhou City in Fujian Province, east China, while the cost is about 0.9 yuan (11 US cents) per cubic meter.

Anhui Province in Huaihe River Valley, Hebei Province in Haihe River Valley, and Jilin Province and Inner Mongolia Autonomous Region in Liaohe River Valley, invested only one fifth of the investment planned, according to the SEPA figures.

Liu Jiang, vice-minister of State Development and Reform Commission, said about 16 percent of cities at prefecture level and most county-level cities have not yet charged fees on discharge of waste water, and most cities in major river valleys have done so but the charges are too low.

That is to blame for the slow progress in construction of wastewater projects, and some waste water treatment facilities may not operate normally, said the official.

But Jiangsu Province, which borders Shanghai, east China, is an exception. The provincial government raised in 2002 the rate on discharge of waste water to 1.1 yuan (13 US cents) per cubic meter in Taihu Lake Valley, a little higher than the actual cost and making it possible for waste water plants to be profitable.

The move spurred private investment in the waste water treatment sector in the area.

Shi Zhenhua, director of Environmental Protection Department of Jiangsu provincial government, said it is estimated the waste water treatment capacity in the valley will exceed the 2005 targets et by the central government for the region.

In Qianyang Village near the lake, a prosperous area and a source of waste water, seven private investors built a waste water plant at a cost of 30 million yuan (nearly US$4 million) in 2003.

Wu Wenhua, one of the seven investors and an owner of a manufacturing firm, said the plant has treated all the waste water discharged from the village, including the waste water from his own firm, and the investors are making profit with a little margin.

Wu said his own company saved waste water treatment cost of about 700,000 yuan (US$85,000) a year, compared with the charge by a specialized waste water treatment plant.

The director said construction of 92 percent of the waste water projects planned for the 2001-2005 period in the Jiangsu section of Taihu Lake Valley has begun, and nearly 60 percent were already operational by the end of this year.

Taihu Lake, one of the country's biggest freshwater lakes, is surrounded by Shanghai, Jiangsu Province and Zhejiang Province.

"We are achieving the five-year targets as a whole," said the director.

The situation of the country's program to cut emission of sulfur dioxide and acid rain is similar to that of water pollution projects.

China's programs to cut down industrial air pollution allows no room for optimism, a senior SEPA official told a news conference.

China's total emission of sulfur dioxide grew to about 22.2 million tons last year, up 2.9 million tons year-on-year, according to SEPA.

The administration cited slow progress in sulfur dioxide control projects and growing consumption of coal as major reasons behind the growth.

Only 61 of the country's 279 major projects listed by the central government for 2001-1005 have been completed, or about 22 percent, and construction of more than half of the 279 projects have yet to be started.

SEPA officials said it is an urgent job for China to set up a sound system on setting the rates on discharge of waste water, creating conditions for non-State investment to be used in the environmental protection sector, and turning waste water treatment plants into a viable business.

(Xinhua News Agency May 11, 2004)