ABSTRACT
As a transitional economy, China is confronted with the dual task of economic development and environmental conservation. To sustain its economic development, the Chinese government has made environmental protection one of its basic national policies. The situation of a deteriorating environment in China is critical. Many observers blame enterprises’ poor awareness of polluting activities as the major contributor to the degraded environment, and the central Chinese Government has sought to encourage environmental protection by setting up a market-oriented institutional environment. But, regulatory instruments have been employed due to the imperfect performance of market-oriented approaches, including closing polluting firms, upgrading technologies, intensifying monitoring, providing firms with training, and subsidizing innovative efforts to curb polluting activities.
