Chongqing, at the upper reaches of the Yangtze River, has spearheaded new forms of environmental protection in recent years.

Last June, the southwestern municipality of 30 million people in the heartland of the Three Gorges Reservoir area launched the Chongqing Resources and Environment Exchange to trade pollution rights, set up an environment investment company and launched the country's first equity fund for environmental protection.

"The establishment of these three enterprises shows that Chongqing's reform of its ecological civilization system, especially in investment and finance, has entered a new level," said Chongqing mayor Huang Qifan at the launch ceremony.

"The market will play a decisive role in resources allocation."

In early January, President Xi Jinping held a meeting on development of the Yangtze River Economic Belt during an inspection tour of Chongqing, urging the provinces and cities along the river to prioritize ecology and "green development" to boost the area's growth.

The city's resources and environment exchange has provided a trading platform for sewage, garbage and waste gas pollution rights for more than 1,000 companies, with around 4,000 deals completed so far carrying an overall trade volume of 200 million yuan ($30 million).

This money will be put into ecological projects such as sewage treatment in rural areas, according to Chongqing Environment Protection Bureau.

Currently, only around half of the counties in Chongqing have proper sewage treatment facilities, which has caused severe pollution of the Yangtze River.

To solve this problem, Chongqing Environment Protection Investment Co has introduced a public-private partnership model, which facilitates cooperation between the government and the private sector on projects concerned with water conservation, transportation and environmental protection.

"Under the management and supervision of the company, sewage facilities in rural areas cannot only protect the environment but also achieve economic and social benefits," said bureau chief Shi Daping.

By the end of 2017, all 1,071 counties in Chongqing will have modern sewage treatment facilities following an estimated total investment of 6.1 billion yuan.

"We will become China's first city to achieve that goal," said Qian Zhongming, president of the company.

"Without the PPP model, it would probably take 20 years to build so many facilities."

The new one billion yuan equity fund, set by the municipal government, will support the local environment protection industry, according to the bureau.

It is part of a large-scale campaign to protect the Yangtze River, with polluting factories shut down, wetland restored and fishing curbed.

The government is also drafting a landmark program, scheduled to be released this year, to restore the river's impaired ecosystem.