China declared its first victory in a centuries-old war against the desert yesterday after a campaign to plant 12bn trees in five years finally made a small green dent in an ocean of sand dunes and dustbowls.

It is being hailed as a sign of a budding ecological consciousness in a country that is trying to move away from a growth-at-all-costs industrial model. Yesterday, the government also announced plans to build 32 nuclear power stations; part of a scheme to reduce dependence on fossil fuels.

Faced by one of the world's fastest deteriorating environments, the government in Beijing has invested more than 50bn yuan (3.5bn) since 1978 on a "Great Green Wall" to protect the country's northern cities from the encroaching desert. For most of that time, it has been a losing battle because climate change and rapid industrialisation have sucked lakes and rivers dry, while over-logging and over-grazing has left many hillsides bare. Deserts now cover almost a fifth of China's territory or more than seven times the area of Britain.

But yesterday, the government said the tide had - at least temporarily - turned. According to a new report by the State Forestry Administration, the nation's deserts have shrunk at a rate of 1,283 sq km (797 sq miles) a year since 2001. Forest cover, by contrast, has increased by 66m hectares every year. "It's the first time since the people's republic was established [in 1949] that we have brought about a reversal," the administration's director Jia Zhibang told reporters.

The gains are tiny compared with the environmental losses during the past 28 years of breakneck economic growth and many conservationists question how long they will last, but they show the government's ability to mobilise huge resources.

Every March, government leaders join 3 million people who take up shovels on tree-planting day. Some of the statistics are so large they are hard to swallow. According to the forestry administration, the 1.3 billion population has planted an average of 40 trees each since 1982.

Since 2001, the pace of planting has accelerated. The People's Daily reports that 6m hectares are now covered every year. If, as planned, the momentum can be maintained over the next five years, the government estimates that the proportion of China covered by trees will increase from 16.5% in 2000 to 20% in 2010.

The most noticeable gain has been in the reduction of the sandstorms that plague Beijing every spring. According to the United Nations Environment Programme, there were an average of five storms a year in the 1960s. This jumped to 24 during the 90s, but in the past two years, there have been three or four.

Part of the reason has been international support. During the worst period, the yellow storms blew eastwards across Korea and Japan, sometimes stretching right across the Pacific to the west coast of the United States. These countries have contributed expertise and money to the 3.5bn project to halt the expansion of the desert.

But worst affected has been China. The government estimates that the livelihoods of 400 million people, or 30% of the population, are threatened by the encroachment of the Gobi and Taklimakan deserts, which have swallowed many cities along the old Silk Road.

Although the battle against the desert stretches back hundreds of years, it has intensified along with China's rapid development. Throughout the country, fast-growing cities are eating up farmland and water resources and flooring, furniture and printing factories are consuming forests. But the impact is being felt most in the poorest, driest regions in the west, where the deregulation of agriculture prompted many farmers to double and triple the sizes of their herds. In little more than a decade, the expanded populations of sheep, cows, yaks and goats stripped away much of the grass cover in Qinghai, Tibet and Xinjiang that had taken centuries to form.

Lester Brown, the president of the Earth Policy Institute, said the desertification problem was becoming greater than that seen in 1930s America.

"They are trying but not fast enough. A huge dust bowl is developing in western China." According to the United Nations, desertification costs China $6.5bn (3.7bn) a year.

As well as controversial efforts to move herders off the land and into cities, the government has put a priority on tree planting, particularly in the northern areas most affected by sand storms, such as Xinjiang, Ningxia, Shaanxi and Inner Mongolia. The Great Green Wall also covers the lusher forests in the north-east, where excess logging was blamed for worsening floods. The scheme pays farmers 1,500 yuan for every hectare of newly planted trees along with an annual payment of 75 yuan for maintaining a hectare of existing forest.

"Other countries could not afford to do this, but Chinese farmers do not need much financial incentive. They know it is in their interest to improve the local environment," said Chu Weidong, of the Green Great Wall bureau. "But it is becoming more difficult. We have done the work in the easiest areas. The situation in the remaining areas is very serious."

Critics, however, say the plan is as flawed as many previous mass mobilisations - such as the bird and insect extermination campaigns during the Great Leap Forward, which destroyed the nation's ecological balance for decades.

They say that planting trees in the desert wastes scarce water resources. In many cases, they say farmers simply plant as many saplings as quickly as they can to make money rather than considering the need for diversity and the local environment.