China abandons plan for green GDP index

By Richard McGregor in Beijing
Published: May 9 2006 22:01 | Last updated: May 10 2006 07:27

Beijing has abandoned plans for a “green measure” of gross domestic product as it battles to restrain growth to protect the environment.

An official at the National Bureau of Statistics said the plan to introduce a new measure of national economic output that took into account the impact on the environment had been dropped because of problems in calculating such a figure.

“It is virtually impossible to calculate accurately a figure for gross domestic product adjusted for the impact on the environment,” said the official, who asked not to be named.

Chinese leaders asked the NBS in 2003 to draw up a “green GDP” index for use in benchmarking the performance of local officials, now currently assessed mainly on the speed of economic growth in their localities.

Worried that officials have pursued growth at all costs, the government’s latest five year economic plan, released in March, calls for a more balanced development model.

China’s two decades of near double-digit annual growth rates have wrought a devastating impact on the environment, which in turn has become the focus of a growing number of local protests by disgruntled citizens.

“The word from on high was that China needed a numerical mechanism to judge the work of officials,” said Arthur Kroeber, managing editor of the China Economic Quarterly.

Finding accurate ways to benchmark the work of local leaders is crucial in ensuring the execution of policies issued by Beijing in a country as large and diverse as China.

The debate over the proposed “green GDP” index has set the NBS against the State Environment Protection Agency, which continues to back the idea.

“The implementation of green GDP will help China assess the environmental cost of the economic development and achieve a sustainable growth,” said a Sepa spokesman on Tuesday.

However, the NBS official said that Sepa had trouble appreciating the problems in producing a single, simple figure which reflected all the complexities of measuring environmental impact.

“They thought ‘green GDP’ was quite easy to calculate, as if it was just a matter of adding or subtracting from the original growth figure, but it is not so simple,” the official said.

The NBS is instead working on the introduction of so-called “green accounting” in China, a system backed by the United Nations which uses flow charts to track resources such as water, raw materials and grass lands.

The statistics bureau in Norway has just funded a year-long study with the NBS, initially on “green GDP” in China, but when that proved too difficult, on “green accounting”.

The government is pushing a number of other measures to improve environmental protection and energy efficiency.

The government’s chief economic planning agency has launched a programme mandating cuts in energy use by 1,000 enterprises, which collectively account for 47 per cent of industrial energy consumption.

The NBS is also expected to start publishing this year the progress of each province and region towards meeting one of the few firm numerical goals in the five-year plan, to reduce energy use per unit of output by four per cent a year.

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