Is Economic Growth at the Expense of the Environment?

5 Mar

China appears to be an economic miracle. Since reforms in 1978 it has grown to be the world’s second largest economy with extremely rapid economic growth.  Where Western countries such as the UK and USA took centuries to expand their economies, China appears to have miraculously done so in around 20 years (BBC, 2012). This rapid expansion, however, seems to have come at the price of the environment, with regular news reports focusing on the smog and poor air quality of many Chinese cities. Murray (1998) predicts that China will soon become the world’s largest superpower, but will environmental damage halt the Chinese economy from further growth in the near future?

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Figure 1- Economic costs to the environment 2011 (Cited from BBC, 2012)

There appears to be a trade-off between economic growth and environmental depletion, and the facts surrounding China’s environment clearly suggest that their economic growth will not be able to continue at the same rate indefinitely. Air pollution in China increased by 130% between 2000 and 2010, with Beijing frequently in the news regarding the air quality. In January 2013, it was reported that the air in Beijing contained 40 times the concentration of hazardous particles deemed safe by the World Health Organisation (Xu, 2014).  With less than 1% of China’s 500 largest cities meeting safe air quality values, the economy surely cannot continue to pollute in the way in currently does (Fenby, 2012).

There is a vast array of costs associated with increasing environmental depletion in China. In an article produced by the BBC in 2012, and as shown in Figure 1, China’s economic cost to the environment was estimated at 8.9% of Gross National Income, which relates to $650bn. Asides from the financial costs, China’s coal-fuelled power stations are making huge contributions to global pollution and greenhouse gas inputs into the atmosphere (BBC, 2012).  In addition to air pollution, China is also facing problems of biodiversity loss, water pollution, loss of cropland, desertification, soil erosion and many more environmental problems (Liu and Diamond, 2005).

The main cause of China’s air pollution is a heavy reliance on coal. 70% of energy in China is produced using coal and accounts for almost half of global coal consumption (Xu, 2014, Zhao et al. 2008). With the largest population on the planet, undergoing a transformation from rural to urban living since economic reform has undoubtedly put pressure on the economy to produce more energy (BBC, 2012).

The environmental impacts of China’s immense growth appear to have taken their toll on the population. In 2010, air pollution was the cause of an estimated 1.2 million premature deaths (Xu, 2014).  Respiratory, cardiovascular and cerebrovascular diseases are rife throughout China, along with the problems of contaminated water also to contend with. Rising health problems throughout the country, especially with increasing pollution, are sure to become a major problem in an economy that is only willing to spend 2.7% of GDP on healthcare, compared to 16% in the USA and 8.4% in the UK (Fenby, 2012).

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Figure 2- Environmental Kuznets Curve (Dasgupta et al. 2002)

 It is easy to see a connection between economic growth and environmental depletion, but are these factors always in a trade-off with each other? Much recent research suggests that there may be a threshold, beyond which environmental degradation decreases with further economic growth (Zhang and Cheng, 2009, Dasgupta, 2002). The environmental Kuznets curve, as shown in Figure 2, recognises that initially, as a country’s per capita income rises, there is an increased impact on the environment, but as economic growth continues to rise, pollution levels begin to subside (Peng and Sun, 2010, Dasgupta et al. 2002).  At present, the industry sector in China represents the core of economic growth, representing 43% of GDP in 2007.  As China continues to develop, a move away from the industrial sector towards services, perhaps, may provide a slowdown of environmental damage, whilst maintaining economic growth (Peng and Sun, 2010).

Although China does not seem keen to make changes to their environmental awareness in fears of reduced economic growth, recent studies suggest that China should be able to implement policy, which can both reduce environmental degradation whilst sustaining high levels of economic growth (Zheng et al. 2006).  There may be temporary reductions in growth, but this will be regained in the long run, with the benefit of a better quality of environment in the country. Zhang and Cheng (2009) suggest that China could enhance the efficiency of their energy production, reducing wastage and therefore meaning less has to be produced. Carbon emissions are directly related to use of fossil fuels, policies promoting varied energy sources would be valuable to the environment. In it’s current position as the world’s largest greenhouse gas emitter, China should be taking active measures to reduce environmental impacts, even if this comes at the expense of economic growth.

However, is the Chinese contribution to environmental depletion as bad as the public are lead to believe? In 2001, it was identified that China’s per capita energy consumption was a ninth of that of the USA (Liu and Diamond, 2005). Surely China’s vast population’s need for energy should be taken into account. In addition to this, China’s use of coal has in fact decreased since 1950, with the Chinese government making a personal goal of closing 50GW of inefficient coal power plants between 2006 and 2010 (Zhang and Cheng, 2009). China has also set a target of producing 15% of it’s energy from renewable sources by 2020 (Zhang and Cheng, 2009), as is investing in appropriate technology to meet this goal. Advanced economies such as the USA have been, and continue to, make significant contributions to environmental depletion, so if they can pollute should China not be able to exploit resources in the same way?

Overall, it is clear to see that China should be looking into policy changes in order to reduce its current impacts on the environment. Growth appears to be the only concern, but the facts surrounding environmental degradation in China are vast, and surely cannot continue at this pace. If implemented correctly, policy could enable China to maintain fair levels of growth, whilst reducing their emissions, and running a cleaner economy.

 

Lucy Edwards

 

 

References:

BBC News. 2012. China’s economic miracle. [online] Available at: http://www.bbc.co.uk/news/world-asia-china-20069627#year2010 [Accessed: 1 Mar 2014]. (Figure 1)

Dasgupta, S., Laplante, B., Wang, H. and Wheeler, D. 2002. Confronting the environmental Kuznets curve. The Journal of Economic Perspectives, 16 (1), pp. 147–168

Fenby, J. 2012. Tiger head, snake tails. New York: Overlook.

Liu, J. and Diamond, J. 2005. China’s environment in a globalizing world. Nature, 435 (7046), pp. 1179–1186.

Murray, G. 1998. China: the next superpower: dilemmas in change and continuity. China Library London.

Peng, S. and Sun, Z. 2010. An Econometric Study of CO2 Emissions, Energy Consumption and Economic Growth in China. Mechanic Automation and Control Engineering (MACE), 1 pp. 1805 – 1808.

Xu, B. 2014. Chinas Environmental Crisis. [online] Available at: http://www.cfr.org/china/chinas-environmental-crisis/p12608 [Accessed: 3 Mar 2014].

Zhang, X. and Cheng, X. 2009. Energy consumption, carbon emissions, and economic growth in China. Ecological Economics, 68 (10), pp. 2706–2712.

Zhao, C., Yuan, J. and Kang, J. 2008. Oil consumption and economic growth in China: a multivariate cointegration analysis. pp. 178–183.

Zheng, J., Bigsten, A. and Hu, A. 2006. Can China’s Growth be Sustained?. A Productivity.

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