Taking account of China’s growth
To understand the total volume of a country`s economy at any period in time, we must look at its Gross Domestic Product (GDP). There are two main ways to calculate this: one can measure the country`s total revenue, in salaries, profits, interests and so on. Or one can measure the country`s expenditure: spending on consumer goods, investments, net export etc. These two numbers, of total revenue and expenditure, should be the same. GDP can express a country`s total economic output and its national income level quite accurately.
GDP is, at present, the accounting system for China`s national economy. In fact, every country in the world has adopted GDP as their accounting system, and it has become the standard for measuring the development level of a country.
But, as they say, there`s no such thing as a “free lunch.” Increases in a country`s total economic output will certainly mean an increase in the consumption of natural resources; pollution and environmental damage will also increase. GDP statistics only show the total economic revenue or output, and do not show environmental costs. There is no number that can quickly help us ascertain the ecological situation in a country. But the environment is an integral part of a country`s economy.
In the absence of ecological factors, a GDP figure cannot give a comprehensive picture of a nation`s economic situation. The numbers may even look ridiculous, since environmental pollution may in fact cause an increase in GDP. For example, in the case of a flood, a dam has to be constructed to prevent it. This will lead to an increase in investments and salaries, and therefore an increase in GDP. This is also true where pollution makes people ill; despite the obvious pain and loss, the increase in patients will lead to growth in the medical industry – and increase GDP.
In the past 20 years, China`s economic growth has been the fastest in the world. But how to calculate the cost of this development, in terms of loss in natural capital and environmental damage? Aside from the environmental angle, from a social point of view, GDP does not reflect quality of life, wealth distribution or income disparities between rich and poor. GDP statistics have some obvious defects, but no amendment has ever been made to them.
Since the middle of the last century, along with the development of the environmental movement and the rise of the concept of sustainable development, some economists and statisticians have tried to incorporate environmental factors in their calculations. This is what is called “green GDP.” It is the adjustment of GDP indicators to represent GDP after deducting environmental costs. Experts in China and the rest of the world have worked on this in recent years, and although some progress has been made, there are still many points of contention. Some countries have already adopted green GDP calculations on a trial basis, but there has never been a green GDP assessment model that is accepted by all nations. No government has ever announced their green GDP results.
Difficulties
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