The report, launched by the International Energy Agency, also stated that outdoor pollution could be the cause of as many as one million premature deaths while air pollution was claiming a total 1.2 million lives every year in the country.

"average life expectancy in China is reduced by almost 25 months because of poor air quality," said the report released on Monday.

The report pointed out that nearly half of China's population was living in areas where air quality targets were still not met.

It warned that deaths due to outdoor air pollution and household air pollution could soar up to 1.5 million and 1 million, respectively, if air quality does not improve.

"Growth in energy demand has gone hand-in-hand with economic transformation and social development, but there has been a high cost for the environment," observed the 266-page report.

It lamented that "only 8 of the 74 major Chinese cities that are currently subject to air quality monitoring met the national standard for clean air in 2014".

Air pollution is one of the biggest problems in China. Unchecked growth of industries and factories over the past two decades has led to massive pollution in the country.

Beijing is one of the most polluted cities in the world. Its neighbouring province Hebei, which accounts for 25 percent of China's steel production, is heavily polluted.

In 2015, China issued 97,000 administrative orders, shuting down 20,000 polluting plants and recovered $654 billion in fines -- an increase of 34 percent over 2014.