GDP pursuit indispensable to cure social ills

0 CommentsPrint E-mail Global Times, January 21, 2011
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According to figures released by the National Bureau of Statistics Thursday, China's GDP stood at 39.79 trillion yuan ($6.04 trillion) in 2010, or a 10.3 percent growth from 2009.

These stats arrived as more and more people begin to rethink the traditional meaning of GDP as a trademark of China's financial success. Among these, a few are trying to sort out the influence of the GDP hike and China's broader economic and social progression.

Some say that a singular focus on GDP obscures, or even violates, the true interests of the general public, and that runaway pursuit of GDP growth has harmed the environment and led to precarious social inequality.

Similar arguments are upheld by foreign pundits, claiming that this blinkered drive has made China materialistic, at the cost of labor rights and environmental care.

All these views reflect broad concerns for the social and environmental problems arising in China. However, these views revolve around one tenet - To what extent is China's reputed GDP obsession responsible for these problems? Not that much.

The role of GDP as an irreplaceable policy priority is indisputable. Although many concerns such as social security, healthcare, environmental protection and equal distribution have garnered public attention, the solutions to all these depend on economic prosperity and the deriving fiscal ability. Meeting GDP targets determines how efficiently the government and its social institutions can run.

Employment pressures also keep China securely on the GDP growth track. Some studies show that unemployment will tack up sharply should annual GDP growth drop below 6 percent, partly due to the enduring sensitivity of the job-creating private sector.

As such, given the important role that China's GDP plays, a broader range of options should be delved into to solve social and environmental problems. Addressing them does not mean sacrificing GDP growth.

Institutional reforms and fairer income distribution can be done without slowing economic growth but by boosting consumption. Adoption of pollution licenses and fairer compensation packages will help root out the cost of pollution without impeding on economic activity. Although these are difficult, they have the advantage of not casting a tradeoff on GDP growth as a necessary evil.

It is true that soaring GDP has not always led to significant improvement in citizens' circumstances. This social sentiment should not take down sensible policies, but should give food for thought for policy-makers.

How to translate economic growth into improved well-being for the Chinese people is a key question needing an answer. Without this, we risk increased bad sentiment against GDP.

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