China’s Environmental Worm is Turning

China’s Environmental Worm is Turning Sooner Than Expected Today’s Financial Times (Tuesday July 10 2007) reports that “Campaign to clean the Yangtze under way”, “Official willing to sacrifice growth” and “Factories must improve or close”. It even looks as though the State Environmental Protection Agency (SEPA) may be developing into something more than a hopelessly understaffed paper tiger . Mr Li Yuanchao, Communist party secretary of Jiangsu province, is quoted as saying that “The measures [to protect the environment] must be strictly implemented even if they cause a 15 percent downturn in the province’s gross domestic product’. Probably nowhere in the world is measured GDP a worse proxy for the value of currently produced goods and services than in China, where in the heavily industrialised regions the air is unbreathable, the water undrinkable and much of the soil unfit for cultivation or residential use. The environmental and ecological externalities of the Chinese miracle are of such a staggering magnitude that they will soon begin to impinge even on the production of those things captured in conventional GDP measures. They have long since driven a growing wedge between measured GDP and any measure of economic welfare (MEW). The external effects are partly global in their impact (through global climate change driven by greenhouse gas emissions) but many are national, regional and local in nature. I would add the food safety problems that are now affecting Chinese exports but have been a well-established public health problem inside China to the list of urgent Chinese environmental and ecological challenges. Unless they are addressed promptly, the Chinese miracle could become a nightmare.

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Maverecon: Willem Buiter

Willem Buiter's blog ran until December 2009. This blog is no longer active but it remains open as an archive.

Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.

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