Chapter 5 - Financial Resources and Mechanisms

INTRODUCTION

5.1 The implementation of China's Agenda 21 and its associated Priority Programmes is an important strategic step in implementing the Chinese Government's policies of "focusing on economic development" and facilitating the implementation of the "Two Steps to Development" (viz., ensuring the provision of basic necessities for all by the year 2000, and attaining the economic level of moderately developed nation by the year 2050), aimed at achieving the strategic objective of modernization. The achievement of each of the goals of the "Two Steps" will also contribute to rapid, healthy and sustainable national economic development. Since implementing China's Agenda 21 is fully in line with the fundamental interests of the present and future generations of the Chinese people, and will contribute to the shared future of humankind, both the extensive participation and strong support from all walks of life in this country and that of international community are important. A practical approach for implementing China's Agenda 21 is to integrate sustainable development strategies into various plans and programmes for national economic and social development and to encourage the government, financial community, general society and overseas individuals to invest in the sustainable development of the country.

5.2 The Chinese Government will be the principal investor for implementing China's Agenda 21, through financing the plans and programmes of various ministries and local governments and gradually including the Priority Programmes of China's Agenda 21 into overall plans for national economic and social development, so that a strong investment flow can be stimulated, supplemented by other sources of investment from home and abroad. More efforts are needed to seek additional sources of financing and to gradually increase the proportion of investment for sustainable development activities. Obviously, it is key to implementing the sustainable development strategies of China's Agenda 21.

5.3 Financial resources and mechanisms:

  • (a) Formulate action plans for integrating China's Agenda 21 and its Priority Programmes into national economic plans and social development plans; based on existing management systems, strengthen the guiding role of strategies for sustainable development and steadily expand financing for China's Agenda 21;

    (b) Encourage the financial community (banks and insurance companies) by providing them with the latest information on technologies, enterprises and market developments; allow the financial community to pool funds to offer loans and insurance policies for sustainable development programmes;

    (c) Establish and improve financial and taxation systems and formulate policies for enterprises which are favourable to sustainable development; encourage enterprises to invest in strengthening their own capacities for sustainability by offering preferential tax treatment for those making such investments, by penalizing those who pollute on the basis of "polluter clean up the pollutants", and by establishing sustainable development awards;

    (d) Encourage the participation of the whole society, by encouraging work and labour investment in various forms; formulate associated policies to safeguard the economic interests of the people who get involved in sustainable development and make it a sustainable common cause for the whole society;

    (e) Make use of extensive publicity and market mechanisms to attract foreign funding (including those from bilateral or multilateral agreements, from overseas Chinese and foreign entrepreneurs) to finance important sustainable development programmes; encourage investment in newly emerging environmental protection and tertiary industries, especially in key sectors such as energy, transportation, science, technology and agriculture; special efforts will be made to attract "additional funds" from developed countries.

5.4 Financial management and operational mechanisms:

  • (a) By managing sectoral planning and centralized information processing, the national financial appropriation system will link plans at different levels together under the principle of sustainable development, which will in turn form a broad matrix management system; advocate a funding system based on fees so as to enhance the re-investment capabilities of the state financial system;

    (b) Based on the functioning of economic levers and market mechanisms and in accordance with the principle of "sharing both responsibilities and benefits", encourage shareholding systems and joint ventures; to improve the capacity for re-investment, policies promoting low taxation and high accumulation will be proposed for those industries which are in the public interest, but which have low economic returns, such as the treatment of pollutants, the recycling of wastes and activities associated with cleaner production technologies and the upgrading of technologies;

    (c) China will establish three Agenda 21 Development Funds required for the implementation of China's Agenda 21. These funds will include: a fund for building China's capacity for sustainable development, a technology transfer fund and a technological cooperation fund, all of which will fully absorb and effectively utilize the investments from both at home and abroad.

5.5 There are three programme areas in this chapter:



PROGRAMME AREAS


A. Integrating China's Agenda 21 into National Economic Development Plans

Basis for action

5.6 Financial investment by the Chinese Government will be the primary source of funding for the implementation of China's Agenda 21. It will guide other investments and will serve as a guarantor for the investments.

5.7 Existing national economic plans will play key roles in realizing the strategic objectives of China's Agenda 21 under the macro-guidance of sustainable development strategies.

Objectives

5.8 The objectives and essence of China's Agenda 21 which serves as the guide document for formulating the Ninth Five-Year Plan and the Plan for 2010 are embodied in the Ninth Five-Year Plan for national economic and social development, especially in important fields such as clean energy, comprehensive utilization of mineral resources, cleaner production, sustainable development of agriculture protection of ecosystem, transportation, telecommunications and the environmental protection industries.

Activities

5.9 Improve public awareness of sustainable development through education and training; decision makers, planners and management people should utilize concepts of sustainable development throughout the entire planning and implementation process.

5.10 Within the State Council, establish a joint meeting and planning system involving appropriate ministries or commissions to facilitate exchanging information and discussing developments, thereby improving the linkages amongst various plans and consequently, their sustainability.

5.11 Improve planning and information systems for the sustainable development of the national economy to enhance the capacity for tracking, surveying and conducting cost-benefit analyses and assessments for national sustainable economic development.


B. China's Agenda 21 Development Funds

Basis for action

5.12 China's Agenda 21 Development Funds will be established with major donations from both at home and abroad. They will play a critical role in channelling investments for sustainable development, in carrying out important sustainable development activities such as formulating policies, laws and regulations, and capacity building, and in financing important scientific and technological activities.

Objectives

5.13 Relevant departments of the State Council will co-establish China's Agenda 21 Development Funds.

Activities

5.14 Formulate China's Agenda 21 Priority Programmes and establish a programme management information system; widely publicize these at home and abroad to generate greater understanding and support.

5.15 Gradually establish three funds: a Technology Transfer Fund, a Technological Cooperation Fund and a Capacity Building Fund.

5.16 Formulate regulations, such as General Regulations for China's Agenda 21 Development Funds, and establish associated management mechanisms, in order to attract investment from home and abroad.


C. Financial, Taxation and Economic Legislation for Sustainable Development

Basis for action

5.17 Establish healthy financial and taxation systems and formulate associated economic laws and regulations, with sustainable development as a fundamental consideration, to ensure the participation of all segments of society in implementing Agenda 21. In order to fulfil the needs of a socialist market economy, existing financial and taxation systems, and economic legislation and associated policies are being reformed. This provides a good opportunity for establishing financial and taxation systems, and economic legislation and associated policies, which are oriented towards sustainable development.

5.18 China possesses a large, powerful contingent of economists, jurists and economic policy experts. Based on the abundant knowledge and information acquired during the last decade's economic reform activities, they are now in a good position to conduct appropriate detailed studies and provide a reliable scientific basis for formulating financial, taxation and economic legislation with Chinese characteristics.

Objectives

5.19 Formulate and put into operation new financial and taxation systems, and new economic legislation and technological policies favourable to sustainable development.

Activities

5.20 Ministries or departments concerned should organize studies on finance and taxation, economic legislation and technological policies which focus on the compatibility of and consistency amongst different policies and legislation and to regional and systemic differences which can affect their implementation.

5.21 Start to improve the financial and taxation systems and the legal system for the economy, within the context of sustainable development in China. Establish demonstration sites or areas to gain experience necessary for revising and promulgating the new laws.

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