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Since the launch of the “open door” policy in 1978, economic growth has been remarkable. Over the last 15 years, the average rate of economic growth has been 10.1% per year. China now has the fourth largest economy in the world. Large foreign direct investment and the increased role of market forces have facilitated the country’s integration into the global economy. In the process, large numbers of people have escaped extreme poverty. However, while China has about 20% of the world’s population, GDP per capita is still low (USD 6 000 for China compared to USD 25 000 for OECD countries at PPP 2000) and is unevenly distributed across the country, with wealthier coastal provinces and less-developed western provinces. Large migrations have contributed to rapid urbanisation (now 43% of the population), and income disparity between urban and rural areas has increased. Poverty remains a serious challenge in rural China.
This rapid economic growth, industrialisation and urbanisation have generated high pressures on the environment, with consequent damage to health and natural resources. Chinese authorities, aware of the deterioration of the environment, are promoting more balanced patterns of development, using concepts such as “harmonious society” and “scientific development”. Their responses have included planning for national economic and social development (covering environmental management efforts), modern environmental legislation, strengthened environmental institutions, and higher priority to environmental and natural resources management. Nevertheless, air pollution in some Chinese cities reaches levels that are among the worst in the world, energy intensity is about 20% higher than the OECD average, and about a third of the water courses are severely polluted. Challenges with waste management, desertification, and nature and biodiversity protection remain. To achieve a new economic and social development model (a resource saving and environmentally friendly society according to the 11th FYP), China will need to i) strengthen the effectiveness and efficiency of the implementation of its environmental policies; and ii) enhance the integration of environmental concerns into economic decisions (e.g. fiscal, energy, agriculture, transport and land-use decisions).
Environmental issues in China have often a strong international dimension, reflecting regional environmental interdependencies (e.g. transboundary air and water issues, regional seas pollution, desertification) and global economic and environmental interdependencies. The environmental pressures and demand for energy and other resources associated with China’s rapid economic development dramatically underlines questions about the environmental sustainability of current production and consumption patterns globally. Trade as well as financing of development (e.g. official development assistance, foreign direct investment) have important environmental dimensions. China therefore has a shared interest with OECD and other countries to address related challenges, and has significantly enhanced its engagement in international environmental co-operation in recent years. 
This report examines progress made by China since 1990 and evaluates the extent to which the country’s domestic objectives and international commitments are being met. Some 51 recommendations are made that could help strengthen China's environmental performance in the context of sustainable development.