Environmental damage is costing the government roughly 10 percent of the country's gross domestic product, estimated Zhu Guangyao, deputy chief of the State Environmental Protection Agency. China's GDP for 2005 was US$2.26 trillion.

Despite the efforts of half a million environmental officials in his agency and other organizations, China's environmental picture is worsening and "allows for no optimism," he said as he issued a report that described the situation as "grave."

Zhu's assessment came during a news conference tied to the release of China's second white paper on environmental protection since 1996.

The report, titled "Environmental Protection in China (1996-2005)," was published by the Information Office of the State Council, China's Cabinet.

The conflict between protecting the environment and encouraging development is becoming more serious, the paper said. A shortage of resources, a fragile ecological balance and insufficient environmental protection capacity are becoming critical problems hindering China's development, it said.

As such, environmental protection must now become a "brake" on China's economic macrocontrol policies and play a more prominent role in the approval process for large construction projects, Zhu said.

Projects will be canceled if they cause over-development of land resources or affect the surrounding environment negatively, he said.

The paper pointed out that since the late 1970s, China's economy has developed rapidly. In the process, many environmental problems that have challenged developed countries over their 100-years or so of industrialization occurred in China all at the same time.

China has established several main goals for environmental protection for the next five years.

Among them, by 2010 environmental quality in key regions and cities will be improved and ecological deterioration will be brought under control even as rapid economic development continues.

The five-year plan requires energy consumption per unit of GDP to decline by 20 percent from the previous planning period.

The total amount of major pollutants discharged will be reduced by 10 percent, and forest coverage will be raised from 18.2 percent to 20 percent.

Despite the challenges that lie ahead, there were several bright spots noted in the white paper.

Discharges of industrial wastewater, sulfur dioxide, smoke and dust per unit of GDP have decreased by double-digit percentages from 1995.

The biggest increase in China's commitment to environmental protection occurred in the past decade, the paper noted. Between 1996 and 2004, China's investment in pollution control totaled 952.27 billion yuan (US$118.7 billion).

In 2005, investment amounted to 238.8 billion yuan, 1.3 percent of GDP.