The two countries are mastering energy-efficient technologies, implementing cheap and environmentally responsible transportation systems, and adopting new water harvesting techniques as models for a sustainable economy, says the annual report of the Worldwatch Institute.

"China and India are positioned to leapfrog today's industrial powers and become world leaders in sustainable energy and agriculture within a decade," said Christopher Flavin, the president of the US-based environmental research group, in Washington.

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China's solar industry already provides water heating for 35 million buildings, and India's pioneering use of rainwater harvesting brings clean water to tens of thousands of homes, according to the 244-page report.

Zheng Bijian, head of China Reform Forum, an academic group, called in the report for "a new path of industrialization based on technology, low consumption of resources, low environmental pollution and the optimal allocation of human resources."

Sunita Narain of India's Center for Science and Environment, said in the report "the South - India, China and their neighbors - has no choice but to reinvent the development trajectory."

A country heavily dependent on coal, China's ambitious renewable energy law enforced this month stands a good chance of jumpstarting windpower, biofuels, and other new energy options, the report said.

The mainland has already successfully pioneered the use of small wind turbines, hydro generators, and biogas plants for power generation in rural areas. It is a world leader not only in solar hot water technology but also in producing super-efficient compact fluorescent light bulbs.

Beijing also aims for an ingenious bus rapid transit system that combines the speed of a subway with the affordability of a bus, the report noted. Trials have been held and bus ridership has jumped five fold during rush hour. Electric bicycles are also becoming popular, with domestic sales having reportedly trebled the projected sales of cars.

"Armed with creative solutions to critical problems and with evidence of the futility of current development paths and the superiority of the alternatives, Chinese and Indian pioneers are providing models for a new and sustainable economy," the report said.

This is seen as welcome relief as China and India - with 40 percent of the world's people between them - are set to join industrialized economies as major consumers of resources and polluters of ecosystems.

"Rising demand for energy, food and raw materials by 2.5 billion Chinese and Indians is already having ripple effects worldwide," Flavin said.

While China and India have often been blamed for driving up the price of oil and other commodities, Flavin said one of the most striking conclusions of his group's analysis was "how dominant the United States still is when it comes to resources and pollution."

With oil, for example, the United States imports nearly four times as much as China, despite having only one fourth as many people.

"Americans wondering why the price of oil is so high need only to look in the mirror," Flavin said. AGENCE FRANCE-PRESSE