China Releases Green GDP Index, Tests New Development Path

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The Chinese government released its first “green” gross domestic product (GDP) report earlier this month, presenting an alternative to the nation’s current economic development path. The report, titled China Green National Accounting Study Report 2004, measures economic growth while also factoring in the environmental consequences of that growth, and is the world’s first national index of its kind.

According to the report, environmental pollution cost China 511.8 billion yuan (US$63 billion) in economic losses in 2004, accounting for 3 percent of GDP. The environmental costs of water pollution, air pollution, and solid wastes and pollution accidents accounted for 55.9 percent, 42.9 percent, and 1.2 percent of the total costs, respectively.

These figures demonstrate that the rapid economic growth that the Chinese government has been so proud of has been achieved in part at the expense of the environment and people’s health. Pan Yue, Deputy Director of the State Environmental Protection Administration (SEPA), notes that as much as one-fifth of China’s GDP growth is attained though “overdraft” of resources and the environment.

China is undergoing a serious environmental crisis. One-third of its land area is contaminated by acid rain; more than 300 million rural residents have no access to safe drinking water; over 400 million urban dwellers breathe heavily polluted air (15 million of whom suffer from related respiratory diseases); and the country is home to five of the ten most polluted cities in the world. 

Pan Yue, Deputy Director of SEPA

Pan Yue, who is well respected for his willingness to speaking openly, believes that China’s environmental concerns have their root in the country’s politics, specifically in its narrow view on development. The government has long equated economic growth with development, believing that economic growth would bring the material resources needed to address various political, social, and environmental problems. Even today, the major benchmark for evaluating local government officials is GDP growth. As long as the economy is expanding, officials are likely to be promoted even though a locality may suffer from deteriorating environmental quality.

Pan Yue believes that political issues should be addressed through political means. To solve China’s environmental problems, he says, the government should change its approach to development and introduce the Green GDP index into its official evaluation system. Pan has been actively promoting the new index in recent years, and hopes to refine it in the future. Currently, the accounting system covers the costs of only 10 items, including: the health, agricultural, and materials losses caused by air pollution; the health, industrial, and agricultural production losses and water shortage caused by water pollution; and the economic loss caused by the occupation of land for solid waste disposal. It does not account for groundwater or soil contamination and many other key items.

According to Zhou Jian, Director of SEPA’s Planning Division, the agency has coordinated with China’s Central Committee in a trial effort to include the Green GDP index in the evaluation system for officials in three provinces and cities. The trial will initially include two components of the index: environmental quality and pollution control. Many experts, however, are not optimistic about the new measurement system, worrying that it is not perfectly scientific and that it may face strong resistance from local officials.

But Pan Yue continues to express strong enthusiasm for the Green GDP index, noting that any resistance from local officials reflects their own uneasiness about being held accountable to it. “We will achieve half of our goal in holding them in check,” Pan says. He is confident that China will ultimately pursue a development path that follows the Green GDP.

Jianqiang Liu is a senior investigative journalist with China Southern Weekend and a visiting scholar at Peking University.

Outside contributions to China Watch reflect the views of the author, and are not necessarily the views of the Worldwatch Institute.