To Make Its People Happier, China Has To Ease Back On Growth
The Age
Tuesday August 5, 2008
Chinese people are choking on their country's success.
THE Olympic Games have focused the world's attention on China's pollution problems, with experts suggesting that athletes pushing themselves for glory could die in the Beijing smog. But, for the duration of the Olympics, Beijing's air quality will be much better than is normally the case - the Chinese Government has closed factories and reduced the number of cars on Beijing's congested streets. The real problem is what is going to happen to pollution in Beijing after the Games are over.The reality is that the factories will start up again, the cars will be back out on the streets and Beijing's pollution will be as bad as ever.China has had one of the highest rates of economic growth in the world since market reforms began three decades ago. There is little doubt that the average living standards of the urban populace are much better than when Mao Zedong was alive. Disposable income has almost tripled over the past decade; the private sector has expanded considerably, providing an avenue for China's upwardly mobile entrepreneurial class to get rich fast; and rising incomes have been the catalyst for a consumer revolution.Mobile phones and personal computers are now indispensable items; entertainment and travel are integral parts of Chinese people's daily lives; and despite the fact that some sites are censored, China has the second-largest internet use in the world.But China's high growth has come at considerable cost in terms of environmental degradation. The country has 16 of the world's 20 most polluted cities. There are up to 750,000 premature deaths related to pollution in China each year. Asthma cases have more than doubled in China since 1990. Only 1% of China's 560 million urban residents breathe air considered safe in the European Union.Economic wellbeing is a broader concept than economic growth. It takes account of the impact of economic growth on the environment. When the costs of pollution are taken into account, China's growth rate is not nearly as good as it otherwise seems. In 2004, the Chinese Government reported figures for green gross domestic product, which adjusted gross domestic product to reflect the cost of pollution. The figures were sobering, with the pollution-adjusted growth rates in several provinces being close to zero. This was too confronting for the Chinese authorities and figures for green gross domestic product have not been reported since.There is evidence that despite more income and more goods to purchase, the massive pollution associated with China's rapid modernisation has left the Chinese people choking on their country's economic growth. In a recent study at Monash University, we examined how pollution affects people's subjective wellbeing in China. The study was based on a survey of 8890 adults in 30 major Chinese cities, including Beijing. The respondents ranked their wellbeing on a scale of one to five.The results suggest that a 1% increase in atmospheric pollution increased the probability of respondents classifying themselves in a lower wellbeing category by 15%. Other negative consequences of unchecked growth also impeded people's sense of subjective wellbeing. In particular, the study found that in cities with higher traffic congestion and more environmental disasters, Chinese citizens reported significantly lower levels of subjective wellbeing.These results challenge the view that pursuing growth at all costs is the best approach to increasing the quality of life of China's urban citizens. On the contrary, reducing atmospheric pollution will generate big gains in terms of improving their wellbeing.This is not to suggest that China should not continue to pursue economic growth, which has brought the rapid development of the private sector and associated job creation. However, China needs a more balanced growth strategy in which greater attention is paid to the potential ill effects of growth.While pollution levels in Australia and China are very different, the same trade-offs between growth and sustainability confront Australia as the Government seeks to decide appropriate pollution emission targets in a bid to slow global warming. There are no studies for Australia, but there are studies for European countries with comparable incomes that suggest pollution has a negative effect on subjective wellbeing. Katrin Rehdanz and David Maddison from the University of Birmingham found that in Germany, reducing household income by 2% to 3% would improve atmospheric pollution sufficiently to improve the wellbeing of those who were "strongly" to "moderately" affected by air pollution. The costs of improving the wellbeing of those less affected by air pollution would be considerably higher with smaller marginal gains. These findings suggest that a country such as Australia might be able to improve the subjective wellbeing of those most affected by atmospheric pollution with moderate reductions in income. Certainly, the costs in terms of economic growth forgone would not be as large as in China.This is worth remembering the next time our politicians attempt to justify doing nothing about global warming on the basis that China is dragging its heels.Professor Russell Smyth is deputy head of the Department of Economics at Monash University.
© 2008 The Age