Li Yang: China's real GDP growth rate is only around 5%

"China's real economic growth rate would only be around 5%, if economic losses caused by ecological degradation and environmental damage are subtracted from the overall GDP," said Li Yang, Vice-President of the Chinese Academy of Social Sciences, at the "China's Recycling Economy and Green Development Forum."

The traditional economic growth pattern is unsustainable

Chinese economy has been in high growth for over 30 years since the beginning of the opening up and reform, with an annual growth rate of almost 10%; this is an incomparable achievement among all the countries in the world, and laid a solid foundation for the enhancement of China's comprehensive national strength, rising of people's living standards and national status, said Li Yang.

"Nonetheless, under the traditional pattern of growth, rapid growth is inevitably accompanied by high resource commitment and pollution discharge," added Li. This kind of development pattern has resulted in the depletion of natural resources and wreaked havoc on the environment.

The costs of ecological degradation and environmental pollution were about 8% of the nation's GDP in the 1980s-1990s, said Li. That percentage has been reduced markedly since 2005, to about 4% now. But still, the nation's real economic growth rate would only be around 5%, if economic losses caused by ecological degradation and environmental damage are subtracted from the overall GDP.

"The situation of resource depletion, environmental pollution and ecological degradation is worsening. This kind of growth pattern, characterized by 'killing 1,000 enemies while sacrificing 800 soldiers,' namely, growing the economy at the cost of the environment, is unsustainable," said Li. He deemed that China's economic transition should be targeted at a green, recycling and low-carbon economy, and the transition process should be steady and efficient.

"The Central Economic Working Conference is in progress. I believe that the word 'quick' would be mentioned less and less in the conferences and meetings and in documents in China's economical work from now on, whereas quality improvement, cost reduction and productivity promotion would be placed in a more and more prominent position," said Li, "and this shift of emphasis is significant".

According to Li, a few research groups of the Chinese Academy of Social Sciences are now measuring and calculating the "rate-slowing-down". Slowing down the growth rate means to keep economic growth within the potential growth rate and adjust the target which is in line with the latter.

"Macroeconomic policy does not seek to surpass the potential growth rate." Li Yang noted that to spur efficiency is to place more emphasis on quality improvement, cost reduction and productivity promotion, which in turn will improve income distribution and guard against financial risks.

The core of slowing the rate and spurring on efficiency is to use the improvement in quality and economic efficiency to compensate for the falling rate, and ultimately bring about further accumulation of wealth and improvement of people's well-being.

Li regarded reducing ecological environmental costs as one important link to increasing efficiency. To this end, the focus of economic work should be on further technological innovations, new industries and new products; on the technical updating of old capacities toward a green and recycling orientation; and on the development of ecological restoration and environmental protection industries. The nation's economy can be directed toward a recycling, safe, efficient and green growth driven by innovation, by improving economic growth quality and reducing ecological degradation and environmental pollution. Hence, real growth can be realized.

The reform of "tax-for-fee" in pollutant discharge

It is reported that recently several research institutes have been undertaking research on green GDP. Chen Wenling, a chief economist at the China Center for International Economic Exchanges, a comprehensive association operating under the guidance and supervision of the National Development and Reform Commission, told the reporter that the traditional measure which takes GDP as the core measurement for economic development can not reflect the environmental cost, not to mention the value of a sound ecosystem from better natural reservation. To go toward a green economy, an index with the economy, resources and environment as a whole factored in is needed to measure regional development.

Calculated results indicates that the discharge of sulfur dioxide and COD, and the production of solid waste per unit area in regions of high per-capita GDP is higher than in regions with low per-capita GDP, 3.7, 4.1 and 2.8 times respectively.

Data released by the Chinese Academy for Environmental Planning of the State Environmental Protection Administration (SEPA), suggests that financial losses by environmental pollution caused by economic growth is approaching RMB1 trillion a year, and the number is becoming ever larger year by year.

"We should bear in mind basic economic laws while dealing with economic issues," said Li. Tax reduction, tax exemption and privilege are mentioned too much when talking about development. They are actually practices which increase costs with no stress on efficiency and quality.

Li argues that the change of the traditional economic growth method needs innovation on three levels, namely, overall innovation in pricing mechanism, tax system and fiscal and monetary policy; innovation in environmental management methods, resource management methods, industrial distribution and resource allocation regulation; and innovation in the market access standard, production technological system standard, waste emission standard and economic calculation standard.

The article was first published in Chinese and translated by Du Mei.

(Source:CSSN)