The World Bank has recommended in a draft report that China needs to focus on priority issues in environmental investment.

The State should also encourage environmentally sustainable development in all its relevant institutions.

Those are among highlights of the World Bank's report on China's Environmental Update which was released yesterday in Beijing.

The main priorities put forward in the report include:

Environmental spending as a proportion of GDP needs to increase and much greater allocations need to be made for basic capacity (environmental protection training and technology aids, for example) building;

To meet the challenge of increased urbanization, the government should increase investment in urban environmental infrastructure;

China should improve the effectiveness of investment in ecological construction and conservation to which the government is allocating substantial resources and capital;

Authorities and institutions should expand their co-operation with their counterparts in other countries or international organizations in environmental research and technology transfer.

"China is different from how it was in 1992, when the World Bank formulated and published its first report on the country's environment," said the report in its preface.

According to the report, the second since 1992, China has progressed further in transforming itself from a planned economy to a market-orientated economy.

The environmental challenges will continue to be "formidable" despite the government pledging to better control environment and halt the deteriorating trend in the ecological the environment, said the report.

Officials from the World Bank said the report will be useful to governments at all levels and environmental investors.

"After careful study and research for more than a year, the report has been produced to mirror... what is valuable enough for policy-makers in China to consider," said Zafer Ecevit, sector director of the Environmental and Social Development Sector under the World Bank.

He added that the main priority issues suggested in the report are already on the agendas of the Chinese environmental authorities so it can play an important role in guiding foreign investment in the environment.

Chinese officials welcomed the report and expressed their thanks for international and bilateral co-operation and aids in this sector.

"We will lodge this report to the State Environmental Protection Administration and will put the advice into effect if they are useful and fit the current situation in China," said Zou Shouming, an official with the administration at yesterday's Workshop on the China Environmental Sector Update sponsored by the administration.