In March 2004, Vice Minister Zhu Guangyao said that despite some progress, the overall picture still showed significant vulnerability. He identified the most pressing problems as the over-utilization of grasslands, erosion, severe pollution in densely populated areas, food safety, reduction and destruction of biodiversity resulting from the intrusion of alien species, and the loss of some ecological functions.

　　To understand China's environmental situation, one briefly has to examine its history. China largely missed out on the modern Industrial Revolution as a result of the conservatism of the country's feudal rulers. As a result, with the Liberation in 1949, a new generation of progressive Chinese thinkers recognized that the country had to modernize if it was to compete in the modern era with global powers such as Britain or the U.S.A.

　　After 1949, they turned at first to the Soviet Union for example and investment was mainly channeled into large-scale, technologically intensive heavy industry such as steel production, chemical plants, coal extraction, cement works and electricity production mainly via thermal power stations.

　　The results were dramatic. From 1949-57 for example, coal production increased over four times, electricity production 4.5 times, steel production an amazing 334 times (from 0.16 to 5.35 million tons), chemical fertilizer more than six times, and cement more than 10 times. Towns and cities became steel, oil or chemical towns and cities as single, large-scale plants came to dominate the locality.

　　It was not until the economic reform program launched in the late 1970s that people generally began to realize that there was a downside to all the industrialization in terms of environmental well being, and public health.

　　However, coal burning is another source of concern. Huge amounts of coal are consumed during the winter. With its high sulfur content, coal burning contributed to an estimated 90 per cent of the sulfur dioxide in the air. In 1999, official estimates put the amount of sulfur dioxide discharged into the atmosphere at 23 million tons.

　　This helps create the visible haze commonly known as 'photochemical smog' that can cause respiratory problems and permanently damage lung tissues. It is also a component of acid rain, harming streams and lakes, and affecting soil and vegetation, such as denuding trees of their leaves. The Chinese Research Academy of Environmental Sciences in Beijing estimated that 40 per cent of the country was affected by acid rain causing US$1.6 billion worth of damage to crops, forests and property annually in the mid-nineties.