The report, one of two released by the administration to coincide with Monday's World Environment Day, listed excessive logging, degraded pasture land and shrinking wetlands as among the major problems.

Overuse of fertilizers and pesticides in farming and contaminated coastal areas were also areas of concern, the report said.

About 90 percent of China's natural pasture land, which makes up 40 percent of the nation's territory, is facing degradation and desertification, leading to more sand and dust storms, it said.

Releasing a separate "White Paper" looking at environmental protection efforts from 1996 to 2005, Zhu Guangyao, vice minister of the administration, said: "The current situation allows no optimism."

Zhu said the estimated cost of environmental degradation was about 10 percent of the nation's gross domestic product.

China's GDP was worth 2.26 trillion dollars last year, meaning the economic losses would be over 200 billion dollars annually.

Conversely, China's economic progress over the past decade, which has placed the highest priority on industrial output, has been the main cause of environmental problems, according to Zhu.

"Excessively fast development will put a lot more pressure on the environment and this kind of development is not sustainable," he said.

The ecological report for the economic and environmental priorities to be balanced much more evenly.

"We must place the costs of ecological degradation and environmental pollution into the accounting system of the national economy," it said.

It called for the 1988 Environmental Law to be better implemented, and urged new laws to clarify the relationship between development and environmental protection.

Zhu further lamented the inability of China's environmental non-governmental organizations (NGOs) to speak out against ecological destruction in localities out of fears of retribution by local leaders.

"This problem does exist at local levels and the local environmental NGOs are not willing to or dare not criticize their local government for unscientific and less than sound decisions," Zhu said.

"However the practice of some local governements in question do not represent the position of the central governement."

Meanwhile Beijing marked World Environment Day by launching a campaign for drivers to take their cars off the road for one day a month.

More than 250,000 drivers had committed to participating in the "no-car" day, according to organizers.

However traffic on the streets of the capital appeared as gridlocked as ever and the heavy pollution that has become a trademark of the city had not diminished.

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