1.All co-chairs presented, based on an impressive set of new studies and reports, a brief overview of the major achievements of last year, followed by a lively debate on issues of mutual interest. General members of the Council also participated in the meeting. The coordination meeting identified areas of potential synergy and suggested ways to promote collaboration. It showed again to be an important mechanism for the Council to achieve horizontal coordination.

　　2.Other means of coordination that are frequently used and can be expanded are:

　　- exchange of progress reports, preferably through the internet including FTP-sites to disseminate reports and technical documents(where appropriate with restricted excess);

　　- frequent contact between co-chairs of different working groups;

　　- participation in meetings of other working groups;

　　- mutual membership of working groups.

　　Particularly the Environmental Economics Working Group already uses many coordinating mechanisms with the other groups. As the work evolves the interaction of all groups has become more manifold and complex.

　　The meeting identified a.o.the following areas which would benefit from a more intense interaction:

　　- the Task Force on Environmental Protection and Economic Planning with the Working Groups on Energy, Pollution Control and Environmental Economics (long term targets, growth scenario's and pollution mitigating options)

　　- Working Group on Energy with the Working Group on Pollution Control(e.g. the study on options to mitigate CO2 emissions)

　　- Working Group on Sustainable Agriculture with the Working Group on Pollution Control(a.o.CO2 sequestration)

　　- Working Group on Biodiversity with the Environmental Economics Working Group (services of biodiversity to economy by preventing floods,forest cover etc

　　-.)and Trade Working Group (rules for export)

　　This will be followed up by the working groups concerned.

　　3.The meeting recognized that the major goal of the Council is to get environmental concerns into the economic engine of the country. To overcome difficulties in e.g.handling energy,forest and watershed resources and to arrive at integrated environmental and economic planning.institutional changes as recommended by the Task Force on Environmental Protection and Economic Planning are important.This includes the proper coordination between the tasks of SEPA,SDPC and other government bodies.The meeting discussed the potential of incorporating environmental targets in the 10th Five-Year Plan, their effective enforcement at all administrative levels,monitoring progress by yearly State of the Environment Reports and narrowing remaining gaps between the targets and the reality by additional policy measures,including fiscal and financial instruments. The principle of subsidiarity and the need to decentralize and take account of regional differences were acknowledged,as was the contribution that new coordinating mechanisms in the top of the government can make.The experience among members of the Council in having coordination taking place at national cabinet level may be valuable for the leadership of China in achieving better horizontal coordination.

　　4.The meeting considered the feasibility of possible policy instruments at the present stage of the Chinese socioeconomic development. Leaving the stage where economic growth was hardly restricted by environmental constraints,a typical command and control approach to limit and eventually reduce the impact of the economy on the environment is now followed.When proper legislation and institutions to implement and enforce these rules are in place,next steps are becoming feasible.Such next steps include the gradual introduction of pricing policies that reflect real costs,closer cooperation with the business community and the application of preventive actions through cleaner production and consumption. For the latter, public participation and education are essential. The pace of introducing these next steps needs to be attuned to the specific situation of China,shifting gradually to a market economy.

　　5. A number of important issues that require good coordination in the Council an

　　d in the Chinese government were discussed, including:

　　- the development of a long term sustainable energy strategy

　　- assessment of the cost of environmental damage and the value to the economy of biodiversity and the national ecosystem

　　- the use of financial instruments (taxation, reduction of unsustainable subsidies etc.)to discourage the use of polluting resources and promote sustainable energy resources (such as biomass, wind, solar power),to create market opportunities for cleaner technologies (including the use of syngas,cogeneration,coal bed methane recovery) and to promote low emission transport systems and cleaner production

　　- the better use of the economic benefits of protecting the biodiversity of the nation (such as flood control, CO2 sequestration and ecotourism, including raising funds to protect the Panda and its habitat)

　　- development of rules for foreign investment in China and of a code of conduct for the way Chinese enterprises operate abroad

　　- the development of environmental industries in China

　　6.The meeting noted that a comprehensive plan to improve air quality in cities, further cure water pollution and reduce industrial solid waste should include an estimate of the budget needed and the benefits to the economy and the public healty that will result from it. These benefits include reduced acid rain, particularly in the north of China, and reduced smog specially in the south.

　　7.The meeting has moved away from only discussing better organizational arrangements towards issues of substance. This is an encouraging trend for the future, and due to a better functioning of our internal coordination mechanism