Abstract: Market failure often occurs in resources allocation，as the property right of environmental resources is not clear，so the government interference is needed．However，the environmental policy in China still has the characteristics of planning economy i．e．the executive measures take the first place while law and economical measures are not sufficiently applied．It is very difficult for government to make reasonable choice between equality and efficiency in allocating resources．A new view is put forward that the government can play a role in well—defined property rights of resources，while the allocation of resources is to be optimized by market mechanism．The tradable emission permits should be an optimum approach to solve the environmental problems on the condition of socialist market economy in China．