Rural Industrialisation and Water Pollution, 1978–1996
After China began economic reform in 1978, rural industrialisation accelerated rapidly. Township and village enterprises expanded across the country, producing paper, textiles, leather goods, chemicals, building materials, food products, and other manufactured goods.
These enterprises became an important part of rural development. They created employment outside agriculture, generated revenue for local governments, and allowed many towns and villages to industrialise without relying on large state-owned factories.
But this model of growth also created a new environmental problem.
Many township and village enterprises were small, geographically dispersed, and operated with limited capital. Wastewater treatment facilities were expensive, environmental monitoring remained weak, and local governments often depended on the same enterprises for jobs and revenue. As a result, industrial wastewater increasingly entered rivers and canals with little or no treatment.
The problem was especially difficult to regulate because pollution no longer came only from a small number of large industrial plants. It came from thousands of smaller factories spread across counties, towns, and river systems.
By the 1980s and early 1990s, water pollution had become one of the clearest environmental consequences of China’s rural industrialisation. In response, the government gradually built a more formal system for regulating industrial pollution.
Policy Response
1979 — Environmental Protection Law (Trial)
“中华人民共和国环境保护法（试行）”
China adopted its first national environmental protection law on a trial basis, establishing an early legal framework for pollution prevention and environmental management. The later 1989 Environmental Protection Law formally repealed this trial law.
Official Chinese source:
https://xbj.nea.gov.cn/xxgk/zcfg/gjfl/202311/t20231102_193709.html
1982 — Interim Measures on the Collection of Pollution Discharge Fee
“征收排污费暂行办法”
China introduced a national pollution discharge fee system. Enterprises and institutions discharging pollutants above prescribed standards could be charged according to the quantity and concentration of their emissions. The measure also stated that paying the fee did not remove an enterprise’s responsibility to control pollution or compensate for damage.
Official English source:
1984 — Provisions on Strengthening Environmental Management of Township and Street Enterprises
“国务院关于加强乡镇、街道企业环境管理的规定”
The State Council introduced specific environmental requirements for rapidly expanding township and street enterprises. The regulation addressed problems including outdated equipment, inefficient use of resources and energy, and inadequate pollution-control facilities, while placing greater responsibility on local governments for environmental management of rural industry.
Official Chinese source:
https://www.gov.cn/gongbao/shuju/1984/gwyb198426.pdf
1984 — State Council Decision on Environmental Protection
“国务院关于环境保护工作的决定”
The State Council formally described environmental protection as a basic national policy and called for environmental protection to be coordinated with economic construction and national development planning. The decision also created the State Council Environmental Protection Commission to coordinate environmental policy across government departments.
Official Chinese source:
https://www.mee.gov.cn/zcwj/gwywj/201811/t20181129_676351.shtml
Huai River Pollution Control
1995–1997
By the mid-1990s, the Huai River had become one of China’s most heavily polluted river systems. Rapid industrial growth across Henan, Anhui, Jiangsu, and Shandong had brought thousands of small paper mills, tanneries, chemical plants, and other factories into the basin, many of which discharged untreated or poorly treated wastewater directly into rivers and tributaries.
The deterioration became severe enough to affect drinking water and everyday life. Contemporary reporting from Bengbu described residents buying bottled or trucked-in water for cooking because local tap water remained unsafe even after treatment. In some parts of the basin, waterways were no longer suitable for drinking, irrigation, or fisheries.
In August 1995, the State Council issued the Interim Regulations on the Prevention and Control of Water Pollution in the Huai River Valley, establishing one of China’s earliest large-scale basin-wide pollution-control programmes. The regulation set clear deadlines for industrial polluters to meet discharge standards and made provincial and local governments directly responsible for water quality within their jurisdictions.
Enforcement intensified in 1996. Thousands of heavily polluting small enterprises were ordered to close or suspend production, especially small paper mills, tanneries, chemical plants, and other high-pollution industries. Authorities used measures including cutting electricity, revoking business licences, withdrawing credit, and dismantling production equipment.
The campaign marked an important shift in Chinese environmental governance. Pollution was no longer treated only as a problem of individual factories. The Huai River crisis showed that when thousands of polluters shared the same watershed, environmental regulation had to operate across an entire river basin and across multiple provincial governments.
Selected Sources
Interim Regulations on the Prevention and Control of Water Pollution in the Huai River Valley
Official English text from the Ministry of Ecology and Environment:
https://english.mee.gov.cn/Resources/laws/regulations/Water_Pollution_Control/200710/t20071017_111503.shtml
China Tackles Cleanup of Foul Huai River
Los Angeles Times / Associated Press, March 17, 1996
https://www.latimes.com/archives/la-xpm-1996-03-17-mn-47994-story.html
“矿泉水做饭几时休” — “How Long Will We Have to Cook with Bottled Water?”
People’s Daily, May 27, 1996
Closure of Small Paper Mills
1996
As part of the Huai River pollution-control campaign, authorities targeted small chemical-pulp paper mills because they discharged large volumes of heavily polluted wastewater while often lacking effective treatment facilities.
The central government required all paper mills in the Huai River Basin producing less than 5,000 tonnes per year to shut down their chemical-pulping operations by 30 June 1996. Henan, Anhui, Shandong, and Jiangsu carried out the closures through measures including power cuts, licence withdrawals, credit restrictions, and the physical dismantling of pulping equipment.
By 1 July 1996, 999 small paper mills across the Huai River Basin had been closed. In Henan alone, 1,380 small chemical-pulp paper enterprises were ordered to shut, including 512 within the Huai basin.
The closures immediately exposed the economic cost of enforcement. A contemporary People’s Daily report described one paper-mill owner crying as he personally destroyed equipment that had only recently begun making money, while workers around him also wept. In other places, resistance was more direct. One factory reportedly removed environmental seals three times and resumed production, while several mill owners in Shenqiu were detained after breaking official seals and continuing to operate at night.
After the shutdowns, provincial governments had to address debts, disposal of factory assets, worker reassignment, and industrial conversion. Some local governments offered tax relief or preferential loans to help closed mills move into less-polluting production. Officials reported that the closure of the small paper mills reduced the Huai River Basin’s pollution load by about 15%.
Selected Sources
“沿淮999家小造纸厂全部关闭” — “999 Small Paper Mills Along the Huai River Closed”
People’s Daily, July 3, 1996
https://cn.govopendata.com/renminribao/1996/07/03/1/
“Hopes for Cleaner River”
South China Morning Post, July 15, 1996