As China’s growth figures have rocketed, criticism of the country’s “GDP first” approach has also been rising. That criticism is now starting to influence policy: in January, the Communist Party branch in Guangdong, a province in southern China, specified a “Happy Guangdong” as one of its goals for the 12th Five-Year Plan period, which runs from 2011 to 2015. It aims to achieve this target by boosting domestic demand, innovation, workforce development, regional coordination, green development and “harmonious sharing”.
Guangdong’s proposal won swift approval from civil society, with both the media and the public praising the “Happy Guangdong” concept. It is clear that the Chinese people – particularly those in more developed regions – have come to realise the limitations of a system where, once a certain degree of growth has been achieved, GDP is still prioritised above all else. They hope that broader indices can be used to promote economic and social development and increase the well-being of China’s citizens.
At the end of the 1970s, China’s per-capita GDP was only US$290 (1,906 yuan). Housing was basic and people struggled to survive. Private bathrooms, personal transportation, refrigerators, televisions, cassette players and telephones were all part of daily life in the United States and Europe, but remained an unreachable dream for most Chinese people. A low level of economic development was preventing the pursuit of happiness
And so China declared war on poverty. With economic growth as its central battle strategy, it went all out in pursuit of higher GDP. Thirty years later, China has overtaken Japan to become the world’s second largest economy and has per-capita GDP of about US$3,000 (19,700 yuan). Challenges to basic survival have been met, while some areas have become wealthy and modern. The GDP figure in Guangdong, one of China’s most developed provinces, is now close to that of the four Asian Tigers – Hong Kong, Singapore, South Korea and Taiwan – which themselves have entered the ranks of developed nations.
The dream of a better life among ordinary people has driven this economic miracle. And economic growth has become the Communist Party’s most important source of legitimacy.
Once an individual’s material needs have been met, further consumption provides diminishing returns of happiness. For a nation, it is the same – once economic development provides subsistence, or even a comfortable existence, for its people, further GDP growth does not noticeably increase well-being. Sociological, psychological and economic research has shown this to be the case, and our own experiences confirm it. When issues of survival have been dealt with nationwide and when many regions have achieved economic modernisation and comfortable living standards, the additional happiness generated by further economic growth begins to fall.
Moreover, the narrow pursuit of GDP growth can actually damage the factors that create happiness. For example, many parts of China have welcomed polluting industries for the sake of economic growth, resulting in air and water contamination, higher rates of illness – and a decline in day-to-day well-being. What is the point of this kind of economic growth?
This question is not unique to China. Some nations have gone so far as to propose replacing GDP with Gross National Happiness (GNH) – easy to calculate by combining indices measuring GDP, public health, social welfare, culture and environmental quality. Bhutan has already adopted the idea of GNH into national policymaking, leading it to cap the number of tourists allowed to visit the country each year in order to limit environmental and social impacts. As a result, Bhutan’s per-capita GDP is low, but it has become, many argue, the world’s “happiest nation”.
In China, Guangdong has taken the lead in moving away from GDP-focused development and stressing that a happy society is not simply a rich one: it also needs a clean environment, secure civil rights, social justice and the provision of public and cultural goods. The implications of this are worth considering.
But while the idea of Gross National Happiness is now taken seriously, its implementation in China still faces obstacles. Take one component – environmental indices – as an example. Over recent years, China has seen continuous reports of heavy-metal pollution, algal blooms, sprawling landfills and air pollution. But the environmental authorities have used reported reductions in chemical oxygen demand (a measure of water pollution) and carbon-dioxide emissions to claim that the environment is improving. Even Zhang Lijun, vice minister for environmental protection, admits that there are problems with using those two measures to evaluate the quality of China’s environment. Meanwhile, using their own cameras, Beijing residents have shown that the city’s “blue-sky days” are much rarer than official statistics claim.
Against this background, it is easy to understand why official environmental data gets better every year, while the public’s sense of well-being diminishes. Non-GDP indices are being used for appearance’s sake only. Meanwhile the GDP-first approach remains popular, particularly with local governments under increasing financial pressure. Short-term measures designed to boost GDP, such as selling land, speculating on property markets and supporting polluting industries, are constantly employed.
Why, when the extra well-being provided by further economic growth is falling, is China still pursuing GDP at the expense of other forms of social development? Besides the fact that there is still room for growth, the most important driving force is the system for assessing the performance of officials. Over the past 30 years, China’s market reforms, combined with a concentration of power in government hands, have created a form of economic development led by local government. This has made economic growth the most important measure of an official’s success and, to a certain extent, distorted his or her public-service role.
In the 1980s, the Chinese Communist Party’s source of legitimacy shifted from ideology to economic record. Although ideological education remained significant, the party’s right to rule was increasingly drawn from actual economic growth. This formed the core of a system for assessing local government performance, evaluating results and determining promotions that, over three decades, has become entrenched. But society has developed faster than the political system, and China has been left with a rigid assessment framework that is ill-suited to the needs of a rapidly changing society.
Another issue is that, under the existing system, local government and local business come together to form a powerful interest group that supports GDP growth over competing demands, such as environmental protection. Its members have interests to protect, organisational ability, financial backing and, in some cases, media control. Meanwhile, the needs of the environment are advocated by newer groups, which are both scattered and weak. Sometimes their voices are heard in the media, but they are no match for powerful lobby groups. This is why many polluting projects continue despite objections from numerous environmental organisations.
Everyone knows that protecting the environment is a good thing. And everyone knows that money does not equal happiness. But the system nonetheless results in a chronic focus on GDP. Merely advocating happiness indices will not solve the problem. As long as local government officials seek good evaluations – and those evaluations are carried out by superiors from higher levels of government, without public involvement – GDP will remain the most direct and effective measure of success. And, for officials, ignoring public demands to prioritise well-being over GDP growth will continue to make perfect sense.
The GDP chase is the product of an outdated method of assessing government performance. Calling for officials to pay more attention to well-being without changing that system will make happiness indices nothing more than window-dressing. Only reforming that system and letting the public participate in the evaluation of local government will force officials out of the GDP rut and allow the creation of a “Happy China”.
Tang Hao is deputy professor at South China Normal University, a Fulbright scholar and a columnist.
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