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Home >> Opinion
UPDATED: 13:43, October 14, 2006
Negative impact of GDP growth cannot be ignored
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Force promoting GDP growth is overly powerful

Consumption of land and environmental resources difficult to curb

Balance of forces to needed to check blind GDP growth

Obvious overly-fast growth to be controlled

GDP and GDP growth have come become two of the key indicators of economic and social development; they are important performance indicators for governments.

Economic and social development raises income levels; this is one of the benefits of GDP growth. However, each percentage point of GDP growth also represents a corresponding increase in land and resource consumption as well as more pollution and waste. When the force behind GDP growth is too strong and the power to check GDP growth is too weak, an imbalance occurs. The rapid growth of GDP will lead to a dramatic increase in land and resource consumption. Then it will be difficult to stop the deterioration of the ecological environment. The crucial issue here is that the GDP growth rate has been made an inflexible target by government at all levels. They often have no effective checking system for other indicators and if they do, they rarely consider them.

The government must decide on some indicators and set up a system to ensure the balance of real GDP growth. Several factors should be taken into consideration when these decisions are being made.

Natural resources and land preservation are very important considerations. As GDP growth is certain to lead to a reduction in natural resources and land availability, decisions must be made in the interest of long term land and resource use and preservation. In recent years many local governments have turned a blind eye to the large number of cases of illegal land occupation, construction of development zones and abuse of natural resources. If these things were checked, GDP would grow at an appropriate rate. Departments in charge of land resource protection have failed in their responsibility to apply an effective checking system.

Macroeconomic adjustments and controls must be reviewed. Excessive GDP growth will inevitably lead to financial risks, inflation and other macroeconomic problems. The department of macroeconomic controls should have a means by which to contain overly-fast GDP growth. People have tended to ignore an important common phenomenon; that government departments at all levels treat the growth rate set in the five-year plan and annual plans as a minimum target, and fail to realize this actually indicates an appropriate level of growth. As a result, GDP growth rates are much higher than is stipulated in the national plan. People must be educated and pushed to implement the concept of moderate growth. As long as the country has made a scientific and appropriate plan, it take measure to stop any growth rate which deviates significantly from what has been outlined. This will help to ensure the central macroeconomic policy is effectively implemented.

Environmental protection is also very important. GDP growth leads indirectly to a certain degree of pollution and ecological destruction. It is a romantic illusion to believe that economic benefits can be made to go hand in hand with the improvement of the environment. Departments in charge of protecting the environment must play an important role in maintaining the balance of GDP growth. Environmental protection groups, in addition to assessing the environmental impact of investment projects, should decide on the impact of GDP growth on the environmental and on the basis of this decide on an appropriate level of GDP growth rate for the local region.

The comprehensive development of society must also be taken into consideration. GDP growth does not necessarily indicate corresponding social development. In some cases, GDP growth is achieved at the expense of social harmony. Civil administration, agricultural groups and production security departments should also be involved in balancing GDP growth. An economic ethical standard should be applied here; the economic interests of one class or group should not override those of society as a whole.

International relations also play a role. A country's economic growth will also influence the ecological environment of neighboring countries. Therefore international relations, to some extent, have a checking function in the growth of GDP. Nation states are required to act very carefully when conducting economic activities in international rivers, lakes and other areas. The GDP growth rate in these regions should be strictly controlled.

If each of these indicators and factors are effectively monitored and allowed to play a role, the GDP growth rate will no longer be such an important target for all levels of government. This will help facilitate appropriate economic growth.

(The author, Zhong Maochu, is a professor at Nankai University's Graduate School of Economics)

By People's Daily Online


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