(Published in Political Economy Review, 29 march 2023)
For many, putting ‘green economy’ and ‘China’ in the same sentence is an oxymoron. Push the idea to ‘leader in global climate governance’ and eyebrows will start raising. A new report from LSE’s Grantham Research Institute stands to do just that. It suggests that as part of this new role, China would champion a shift away from pursuing growth purely in GDP terms towards a wellbeing economy, both kinder to ourselves and the planet.
Is China then such an unlikely contender to lead the next stage of the global response to climate change? President Xi Jinping announced at the 75th general assembly of the UN that China would commit to reaching peak emissions by 2030 and carbon neutrality by 2060. With pollution levels dropping rapidly in the capital, and China becoming one of the leading producers of renewable energy, there are signs that we should take its eco-credentials seriously.
Yet the idea is ridden with complications, not least in the suggestion that China could lead a transformation to a global wellbeing economy. Since its economic reform period in the late 1970s, few countries have been such strong adherents to the cult of GDP as China. In its case, GDP growth has appeared to mirror better standards of living, with cities modernising and poverty plummeting. In the meantime, pollution and environmental degradation proliferated. One must question whether the incentive for a new growth paradigm exists for China.
GDP does not measure wellbeing
Mainstream economics would lead us to believe that wellbeing should be a natural result of market systems. Our actions, being rational and in purely of our own preferences mean that our ‘wellbeing’ is ensured. In practice this is not the case. GDP is merely a measure of the market value of goods and services, not of progress towards societal wellbeing (Zhu, 2023).
Indeed, it can have the opposite effect. To deliver those goods and services, productivity must be kept high, and market competition compels it to grow. This translates into ever growing resource use, which increasingly pressures our environment — ultimately to the detriment of wellbeing.
The failings of GDP as a measure of wellbeing are probably most striking in the US. In GDP terms it is the most successful country in the world, but it suffers from crippling inequality. In terms of emissions, that most ‘successful’ country pumps almost double as much Co2 into the atmosphere per capita than China. Canada, often presented as a green champion, is worse than the US.
Should we blame China for its emissions?
This is not to tiptoe round the reality that China has a real emission problem — anyone visiting Beijing until a few years ago would be familiar with its toxic air (though recent years have seen an astounding improvement). We should however take a few nuances into account:
China did not choose to be the polluter it became. As Malm (2012) highlights, China’s liberalisation of markets allowed for FDI inflows wishing to exploit the mass of cheap labour suddenly available. The search for cheap labour brought the pollution of wealthy industrialists to China — and the emerging dogma that ‘to get rich is glorious’ toted by Deng Xiaoping was willing to oblige.
There certainly has been a lack of action until now, but China really has been following the core advice of the IFIs — GDP growth will lift developing countries out of poverty and should be their key priority, so goes the tale. This is paired with the incessant promotion of export-oriented growth which further compels the overextraction of resources. The 2060 carbon neutrality targets must change this by necessity, hence promotion of wellbeing over GDP.
Bringing wellbeing to the centre of development is not new, but it is far from the dominant strain of thought.
Hayden and Dasilva (2022) state that a wellbeing economy (WE) can be seen as a ‘post-growth perspective’, that is inherently sufficiency oriented. Fioramonti et al (2021) explore what a wellbeing economy would look like in practice. They suggest a system that would not only look at what should increase, but also what factors should be reduced. Value shifts away from material production and consumption, and attempts to more holistically take into account what raises happiness and wellness — which isn’t necessarily anything to do with material accumulation.
“A WE approach would ask: is a banker more productive in terms of wellbeing creation than a teacher or a nurse?” (Fioramonti et al, 2021). Health, education, social life and other social factors become the goals, instead of attempting to model such factors through associations with monetary value. No longer are social factors seen to merely contribute to a more important project of material outputs.
Perhaps the best known example of a WE approach is Bhutan’s ‘Gross National Happiness’ (GNH) indicator, first coined by King Jigme Singye Wangchuck in 1972, when he contested “Gross National Happiness is more important than GDP”. The GNH is disaggregated into social indicators including health, living standards and ecological diversity — the last of these an essential factor in tackling climate change.
New Zealand offers a more recent example in the shape of its new ‘Wellbeing budget’, which has set out to reframe the government annual budget better towards addressing social needs. People, environment and social cohesion take centre stage over creeping up the GDP figures. Capital and finance are oriented more towards public good than profit.
Governmental support for the idea is growing, with six countries — Canada, Finland, Iceland, New Zealand, Scotland and Wales joining the Wellbeing Economy Governments partnership (WEGo). The group is committed to promoting the concept of a wellbeing economy and moving towards making it a reality.
Global implications of China’s call.
If China were to step up to global climate leadership and adopt a wellbeing economy there are issues to keep in mind.
First to consider is China’s dominance of the renewable energy industry. China is at the heart of the global solar energy industry, supplying about 90% of the world’s photovoltaic industry modules. It is also the largest producer of wind turbines, representing half of the international market. (Zhu et al, 2023). This represents tremendous political leverage for China, but also shows its potential to truly lead green development. On one hand its capability to deliver so much renewable energy technology could provide the world with clean energy. On the other hand, it represents a dependency structure with potential for political exploitation.
Economic and infrastructure relations along China’s Belt and Road Initiative (BRI) could simultaneously be a blessing and a curse. It represents an obvious way for China to lead a green revolution through clean energy projects in BRI partner states, but it poses the risk of deepening debt burdens already growing along the initiative.
There is also the question of how China intends to drop its emissions. Just as China became the fossil emission importer of the world, there is significant risk of it becoming the new exporter. The easiest way for it to domestically shrink emissions would be to move them to BRI countries, as Europe once did to it. That would result in an apparent ‘wellbeing economy’ at home, while burdening BRI countries further and making little mark on real global emissions.
The unlikely eco-hero
Optimistic scepticism is needed in considering China as a potential leader in the global climate response. While Xi Jinping has committed to admirable climate targets, and the country truly is improving in many respects on its environmental track record, placing it at the forefront of international climate politics comes with new structural challenges. Regardless of the future of international climate politics, a China championing the emerging wellbeing economy will no doubt give real legitimacy to an important reframing of the role of economics in society.
Fioramonti, L. et al. (2022) Wellbeing economy: An effective paradigm to mainstream post-growth policies? Ecological economics. 192107261.
Hayden, A. & Dasilva, C. (2022) The wellbeing economy: Possibilities and limits in bringing sufficiency from the margins into the mainstream. Frontiers in sustainability (Lausanne). 3.
Malm, A. (2012) China as Chimney of the World: The Fossil Capital Hypothesis. Organization & environment. 25 (2), 146–177.
Zhu, M. et al. (2023) Embracing the new paradigm of green development: China carbon neutrality policy framework research report. Grantham Research Institute on Climate Change and the Environment. Available at: https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2023/02/Embracing-the-New-Paradigm-of-Green-Development-in-China.pdf