China's environmental problems are
apparent to any visitor, and the statistics are
striking: the nation is home to 20 of the world's
30 most polluted cities, 90% of its rivers and
lakes are polluted. Yet, the central government's
efforts to mitigate environmental problems through
policies and regulation have encountered
significant implementation challenges.
In
an effort to rebalance economic growth and
environmental degradation, Beijing launched the
Green GDP program in 2003. The initiative was
intended to quantify environmental degradation and
thereby create incentives for local governments to
improve environmental standards.
Unfortunately, the Green GDP program was
doomed from the
start and was cancelled by
the central government in 2007. Despite initial
central government support for the project, local
recalcitrance, bureaucratic infighting, and elite
party politics eroded support and led to its
demise. The bureaucratic and structural issues
that Green GDP faced are not exclusive to this
case - in fact, their impact on a wide range of
policies in China make them relevant to the study
and understanding of the various factors that
influence the Chinese policy implementation
process.
The Green GDP
initiative Green GDP assigns a value to the
cost of environmental losses (such as pollution
and resource consumption) and adjusts GDP
accordingly, so that GDP reflects environmental
costs. The project began as a joint project
between the National Bureau of Statistics (NBS)
and the State Environmental Protection Agency
(SEPA), which began work on how to quantify Green
GDP in the spring of 2004. [1] The Green GDP
program came at a time when leaders were searching
for a way to ensure policy implementation and were
working to prevent overheating, in large part
created by the same resource-sapping factories
that cause a significant amount of pollution.
Pan Yue, vice minister of SEPA, emerged as
a champion of the Green GDP project in 2004-2005.
He gained notoriety by blocking billions of
dollars of development projects and warning that
China was going to hit an "ecological wall". He
was able to be outspoken as a result of strong
family credentials and the support of Prime
Minister Wen Jiabao.
In May 2004,
Chongqing municipality was named the trial city
for testing the Green GDP program. In August the
same year, Shanxi, the first Chinese province to
calculate Green GDP, announced is Green GDP
figures. According to Dong Jinbin, deputy director
of the Academy of Social Sciences in Shanxi
Province, though Shanxi's official GDP was 11.2% ,
the cost of pollution was 10.9%, leaving a growth
rate of just 0.3%.
Support for Green GDP
began to wane in the spring of 2005. In March
2005, People's Daily Online, a Chinese official
news source, published an editorial entitled
"Don't let Green GDP go to your head", warning of
the problems with the Green GDP calculation. In
the same month, the five-year national economic
development plan neglected to mention Green GDP in
its discussion of a "resources-saving and
environment-friendly society".
Based on
data collected from a number of provinces, the
first complete Green GDP report was released in
2006. The report, which represented the year 2004,
showed that as a result of pollution, China had a
financial loss of 511.8 billion yuan (US$61.8
billion), or 3.05% of the nation's GDP. After the
report's release, a number of provinces and
municipalities (fearing their own disastrous
numbers) threatened to withdraw from the Green GDP
pilot program, causing an official to admit that
"the pilot project had lost its appeal".
In March 2007, the Green GDP report for
2005 was blocked from release by National Bureau
of Statistics - the report was said to show even
higher losses and reductions in GDP than the 2004
report, and also included figures on economic
losses from pollution for each province, "a
sensitive step in a system where maintaining
economic growth can be crucial to officials'
promotion prospects".
By March 2009, the
project had been completely sidelined, along with
Pan Yue himself. He was passed over for a
membership seat at the 17th Party Congress in
2007, became less active and bold in promoting the
concept, and lost the power to block development
projects and approve environmental impact
assessments.
Why Green GDP
failed Green GDP (and environmental policy
implementation as a whole) was significantly
impacted by central-local tensions and local
recalcitrance. While the Hu Jintao / Wen Jiabao
administration has tried to change the "growth at
all costs" mentality through such programs as
Green GDP, there are substantial incentives for
local officials to pursue growth and disregard
such programs as Green GDP that seek to moderate
growth.
After fiscal reforms in 1994,
local government revenues declined, but demand for
public services remained, resulting in financial
pressures that incentivized short-term revenue and
rapid growth (which can have significant
environmental repercussions).
Growth and
investment are the best ways to close the revenue
gap. Revenue coming from commercial and
residential land leasing and sales are crucial:
they account for 30-50% of rural government
revenues and 50-60% of city government revenues.
[2] Green GDP figures would reflect the
environmental impact of these sales and dampen
growth figures, as well as pressure local
officials to move away from
environmentally-harmful short-term growth. The
significant revenue pressure means that local
officials have serious incentives to maintain and
increase growth and thus have no reason to follow
along with the Green GDP program.
Additionally, promotion of local officials
also remains chiefly based on the rate of economic
growth in their areas. Local officials are
promoted based on hard targets, which are easily
measurable, and soft targets, which are more
nebulous. Economic growth is a hard target, which
makes it a higher priority, and is easily
quantifiable. As James Q Wilson notes, "work that
produces measurable outcomes drives out work that
produces unmeasurable [sic] outcomes". [3]
Green GDP's potential impact on promotion
was a key sticking point for local officials. They
had pursued economic growth without regard for the
environment, and knew that their GDP figures, and
thus their potential for promotion, would be
dramatically lower if environmental degradation
was accounted for. They also feared that Green GDP
numbers would force them to address environmental
degradation, which would necessitate a cool-down
in growth, and a lower chance for promotion.
In addition to being judged by their
supervisors based on their growth rates, local
officials also live and die career-wise by the
level of social unrest in their territory. Local
officials can face demotion or firing if their
locality posts high protest figures, and local
officials understand the state's overwhelming
desire to keep social unrest under wraps. [4] This
often translates into support for local
enterprises and resistance to environmental
policies (that often call for taxes and fines on
polluting companies), as unemployment is a key
instigator in social instability. Based on these
counterincentives, local officials launched a
successful pressure campaign on the central
government to drop Green GDP. Bureaucratic
infighting Top officials from the NBS and
the Beijing Bureau of Statistics came out against
the project in the spring of 2006, noting that it
was too difficult to find a formula, and isolating
SEPA. NBS chief Xie Fuzhan even rejected the term
Green GDP, saying that "we would never call it
Green GDP. There is no international standard for
GDP calculations in this regard, and no country in
the world has ever made such calculations".
Targeting SEPA directly, an NBS official
commented that SEPA was not able to "appreciate
the problems in producing a single, simple figure
which reflected all the complexities of measuring
environmental impact". The NBS backed up its
criticisms through its actions. In Anhui province,
the NBS sent environmentalists, not economists, to
gather economic data and in March 2007, as noted
above, NBS asked SEPA not to release the most
recent Green GDP figures. Wang Jinnan, chief
engineer with the Chinese Academy of Environmental
Planning, commented that bureaucratic infighting
had "made the project almost impossible".
Elite party politics and the timing of the
17th Party Congress in the fall of 2007 may also
have played a role. President Hu Jintao's planned
political reshuffling ahead of the congress
required the support of local officials, and Hu
did not want the Green GDP project to get in the
way. His support of Green GDP may have been
significantly dampened by his desire to keep local
officials happy and satisfied. Despite the initial
support of the center, the environment, and thus
Green GDP, was too low on the totem pole to merit
an expenditure of Hu's political capital.
Conclusion Green GDP was weak to
begin with because the environment remains a
tertiary priority behind growth and social
stability. As long as growth continues to generate
wealth and social stability, the central
leadership will have very little motivation to
prioritize the environment, and local governments
will have even less motivation to follow central
environmental policies.
In the end, the
Green GDP program was effectively a strawman set
up to appease the global audience and the critics
of China's environmental record. While the
initiative initially made the Chinese government
look progressive and proactive, the numbers that
came out of the program revealed a shocking level
of environmental degradation, leading Beijing to
cancel the program rather than face the
embarrassment of more damning statistics.
It is possible that there will be a
reemergence of some aspects of the Green GDP
program. In December 2008, the NBS held a
consultation meeting in Beijing on "China's
resources and environmental statistic index
system," with experts from various ministries,
eventually resulting in an agreement by seven
ministries to restart discussions on resource and
environmental accounting. In February 2010,
Southern Weekend reported on the project, noting
that the index system would result in a yearly
report including indicators on climate change,
ecology, and the environment.
Most
recently, the 12th Five-Year Plan (released in
March 2011) has made an effort to address China's
environmental issues, with a number of sections
promoting "green development" and environmental
conservation. More specifically, the plan includes
the following provisions: a 16% reduction in
energy consumption per unit of GDP, the creation
of a "green, low-carbon development concept,"
support of international climate change efforts, a
focus on "ecological security," monitoring and
enforcement systems for energy use and pollution
output, and strengthening environmental protection
laws and regulations.
Though there is no
mention of anything akin to the Green GDP program,
the environmental focus of the plan indicates an
increased recognition of China's significant
environmental challenges. Yet many of the
bureaucratic characteristics that killed Green GDP
are still present. Thus, in order for these
initiatives to succeed in the future, there must
be a sea-change in the central government's, and
local governments' conception of environmental
issues. The contents of the latest five-year plan
may be a step in that direction.
Notes 1. Wang, Jinnan,
Jiang Hongqiang, and Yu Fang, "Green GDP
Accounting in China: Review and Outlook." Chinese
Academy for Environmental Planning, 5-6 2. Tao,
Ran and Dali L. Yang. The Revenue Imperative and
the Role of Local Government in China's Transition
and Growth. Prepared for conference on China's
Reforms, July, 2008, 16-17. 3. O'Brien, Kevin
and Lianjiang Li. Selective Policy Implementation
in Rural China. Comparative Politics, Vol. 31, No.
2, January, 1999, 173-174. 4. Bernstein, Thomas
P. "Unrest in Rural China: A 2003 Assessment,"
Irvine, Center for the Study of Democracy,
2004.
Eve Cary graduated from
University of California, Berkeley with a Masters
in Asian Studies, with a focus on China. Her
research focuses on Chinese domestic politics,
overheating and real estate issues, and
central-local relations.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
