Environmental Degradation In China Leads To Overstating Real Growth......

A country's GDP[gross domestic product] is defined...

GDP = consumption + investment + exports - imports

China's measured GDP has been growing between 7-9% annually. But I think that this overstates the true growth, somewhat. This number does not include any costs associated with the severe ecological degradation that has been going on in China and the long-term costs in money as well as health and quality of life that it has on its habitants. It is a kind of negative investment that is going on. Wealth and health is being destroyed and there is not national account that captures this phenomenon.

Today's Standard has an article on the some of the environmental consequences of Chinese style hyper-growth.

More than 10 million people in the western region have long been short of drinking water because of ecological deterioration.

Beijing is beginning to recognize the damage brought about by unchecked economic growth in the past two decades, characterized by high energy and material consumption, as well as high pollution.

Imagine this example. Lets suppose that the net growth in the US is zero for some year where a few industries experience growth but others contract. The contracting industries are those that are large net polluters and this production has moved overseas to China. The US GDP figure for the year as measured by the above formula is measuring zero. But the real net effect is a reduction in pollution and the positive consequences associated with the health and welfare of US residents through reduced pollution and a healthier environment.

Granted, that economic prosperity generates value for inhabitants through better access to healthcare and better diets that improve the human condition but there is also a downside to the unchecked growth experienced in much of China. And I am also of the opinion that the environmental problems in China are going to get much worse before the country is in a position to do anything about them.