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A World Bank study conducted in spring 2007 estimates that 750,000 people die annually in China from diseases related to pollution. Of that total, 350,000-400,00 die from outdoor air pollution, 300,000 from indoor air pollution, and 60,000 from water pollution. The World Bank study is consistent with prior estimates by the World Health Organization, but is an underestimate according to Chinese experts. China's state apparatus underprices water, electricity, and oil. As a result, Chinese industry uses 4-10 times more water per unit of production than industrialized nations and consistently more energy: 20% more energy for steel production, 45% more for cement and 70% more for ethylene. China's building boom exacerbates the problem because buildings lack insulation, requiring twice as much energy for heating and cooling than those in the U.S and Europe. Over two thirds of China's energy needs are met by coal. Small and medium coal-powered plants, using cheaper but outdated and inefficient technology, accounted for most of the 66 gigawatts of power production added in 2005 and the 102 gigawatts added in 2006 -- the latter equivalent to the entire energy output of France. China already consumes more coal than the U.S., Europe and Japan combined, and in 2005 became the leading source of sulfur dioxide pollution globally. The International Energy Agency estimates that China will overtake the U.S.A. as the leading producer of greenhouse gases by the end of this year, while the Netherlands Environment Assessment Agency says it already has. China's air pollution is about three times the maximum level considered safe by Europe and the U.S. China's official efforts to curb pollution have failed, due to unwillingness to use market-based incentives at the cost of growth, and a lack of central control over local officials.

Sources: New York Times
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Source: Coal Pollution May Stunt China's Growth