For the first time, China will include "carrying capacity"－an environmental standard measuring land and resource use－as a major part of how it assesses the success of regional development, a move that underscores the country's resolution to balance economic growth and environmental quality, said an expert.

The government announced recently that it would roll out a new pollution alert system for regions ranging from the cleanest "green non-alert zones" to the most severe "red zones", where the environment and natural resources are severely strained.

"Carrying capacity" refers to the level of land or resource use, both by humans and animals, that can be sustained over the long term by the natural regenerative power of the environment.

"The new mechanism calls on long-term precautionary approach, which will accelerate China's pace of shifting towards sound and sustainable development," said Li Yan, a professor with the School of Environment & Natural Resources at Renmin University of China.

"The addition of carrying capacity to the list of assessment standards will urge local authorities to take a strategic and long-term perspective to formulate their development plans. GDP is not the only indicator of a region's well-being," she told China Daily.

The previous supervision system on environmental activities was necessary and effective, but the government could not ignore the fact that it also brought about some challenges, such as the high economic and social costs of development, she said.

To help implement the policy, China is planning to set up a database by the end of 2018 to analyze regional environmental and resource capacity conditions, said an official of the National Development and Reform Commission involved in the issue.

"By 2020, a general survey of regional capacity conditions on environment and resource will be completed," according to the official, who was quoted by the website of People's Daily.

The new system will divide environmental capacity conditions into three levels: overloading, near overloading and not overloading, according to a document released by the State Council, China's cabinet.

Meanwhile, based on actual resources or environmental losses, regions facing capacity overloading will receive a red or orange alert, while regions close to capacity overloading will receive a yellow or blue alert.

Regions whose environmental capacities are without excessive pollution and resource loss will be labeled green, non-alert zones.

When asked whether such a policy would hit business around the country, Li Yan said: "Environmental costs will definitely increase in the future. But for enterprises, the rising costs will be borne through improving technologies and enhancing efficiency.

"This external factor will drive companies to explore greener and smarter solutions, continue to lower product costs and optimize their site selection. In the long run, more sectors including environmental technologies and green finance will benefit from the policy."

For example, Zhang Hua, chairman of Sichuan-based Fuhua Tongda Agro-chemical Technology Co Ltd, said: "Our company has invested 651 million yuan ($98.35 million) to meet the environmental requirements. Its self-owned technologies helped reduce costs by more than 300 million yuan and increase the sales value to more than 500 million yuan."

Xinhua contributed to this story.