* Just 3 out of 74 cities met China's pollution standards in 2013
* Economic restructuring, better laws required to solve China's problems
* Western regions still have the capacity to boost coal production (Adds detail, quotes, background)
By David Stanway
BEIJING, March 8 (Reuters) - Almost all Chinese cities monitored for pollution last year failed to meet state standards, the vice-minister of environmental protection said on Saturday as he outlined the country's plans to redress the environmental consequences of rapid industrialisation.
Out of the 74 cities that Beijing monitored, 71 had various degrees of problems, Wu Xiaoqing said at a news conference on the sidelines of the annual parliament session in Beijing.
Only Haikou in the island province of Hainan, the Tibetan capital Llasa and the coastal resort city of Zhoushan met standards.
The environment has emerged as one of Beijing's key priorities amid growing public disquiet about urban smog, dwindling and polluted water supplies and the widespread industrial contamination of farmland.
China's environmental policy goals also serve a wider agenda, aimed at diversifying and "upgrading" the country's resource-intensive economy.
Wu said the country's pollution problems will only be thoroughly solved by fundamental changes to the way it develops its economy.
"When we were chasing GDP growth, we were also paying the price of pollution, and this price is heavy, is massive," he told reporters.
Premier Li Keqiang said in his report to parliament on Wednesday that the country would "declare war on pollution" in the same way it declared war on poverty, but critics say stronger rhetoric might not be enough without deeper legal and institutional reform.
Wu said improving the way laws are enforced is a crucial element of China's plans, and changes to the country's 1989 environmental protection law, currently being deliberated by parliament, will help raise the costs of violating standards and ensure that polluters pay.
SHIFTING THE POLLUTION BURDEN
China's pollution action plan has focused primarily on the heavy industrial heartlands of Beijing, Hebei and Tianjin as well as the commercial and manufacturing centres around Shanghai and Guangdong, where heavy industrial capacity and overall coal consumption will be cut.
But campaigners have expressed concern that the burden of pollution is likely to be shifted to other regions, with high-emission sectors like thermal power still on course to expand rapidly in big, coal-rich regions like Inner Mongolia, Ningxia or Xinjiang.
"Premier Li's statement will ignite hopes for people living under the threat of smog but it would be even more encouraging if the central government realised that there are a lot of regions outside the scope of the current air pollution action plan," said Huang Wei, campaigner with Greenpeace in Beijing.
Wu said at the press conference that the three main regions covered in the current action plan occupied just 8 percent of China's total area, but were responsible for 55 percent of national steel production, 40 percent of total cement output and 52 percent of gasoline and diesel.
As a result, they produce 30 percent of the country's pollution and average emissions were five times higher than other regions.
"China's central and western regions are rich in coal, and their environmental capacity is better than the Beijing-Hebei-Tianjin region, so we are encouraging them to develop coal-to-gas and to replace coal burning in eastern regions."
"We also hope that these regions will also implement stricter environmental regulations," he added. (Reporting by David Stanway; Editing by Kim Coghill)