Interregional Diffusion of Environmental Pollution in China : Effective Domestic Policies and Economic Cooperation by Japan

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China has successfully attained high economic growth after the Open Up Reform policy. Township and village industries (TVI's) have increased their production, and environmental problems caused by this production have been quickly recognized as serious social and economic issues. Japanese experience has clearly shown that fiscal support by central and local governments can play a crucial role in inducing firms to institute environmental measures in addition to their initial efforts. However, it would be difficult for the Chinese government to subsidize TVI's since the fiscal situation in China has rapidly worsened. Furthermore, profits from export have been suppressed due to the sluggish improvement in the unit price of export goods.A questionnaire survey for TVE's was implemented to clarify the problems to take environmental measures. In total 228 answers were collected in Yunnan, Hebei, Shandong and Jiangsu provinces and Tianjin city. The result shows that the problem of environmental … More technology that each TVE has is the high running cost rather than the low level of technology. The most answer for the future plan to introduce environmental technology is to adopt the technology developed by the government. The result also shows that most of the TVE's use their internal reserves to take environmental measures and many of them do not have sufficient money for that purpose. Many of the TVE's in Hebei province and Tianjin city expect the government to financially support their environmental measures. Suitable financial support to take environmental measures will be more important to solve environmental problems of TVE's.Primary environmental policies for TVI's should be relocation and concentration of polluting operations (including shutdown of operations), so that efficient treatment of pollution becomes possible. Secondary measures should consist of 1) discharge fee, 2) the requirement for three simultaneousness, and 3) effective transfer of environmental technologies from state own industries and abroad. Less