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"We used to resort to the traditional mode of administrative penalty to curb pollution, but such an approach has its own limitations such as it relies too much on the personal feelings of the regulation enforcers," he said.

"Now we have begun to use economic policies to protect environment and make them into a long-term system. Adopting economic polices to protect the environment is now the most effective approach to curbing environmental pollution in the international community and economic policies are easier to be institutionalized," he said.

"After introducing the economic policies, we will continue to amend environment-related laws and have a long-term mechanism to protect our environment," he said.

Pan called on the Ministry of Commerce, the China Securities Regulatory Commission and the China Insurance Regulatory Commission to cooperate in the formation of economic policies including, tax, insurance and security policies.

"With our joint efforts, we will try to work out several economic policies in one year, finish a pilot program of major economic polices in two years and primarily establish the economic policies mechanism to protect the environment in four years," he said.