Taking account of China’s growth

Pan Yue

29th March, 2007

China boasts the fastest growing economy in the world. But how to calculate this development’s impact on natural resources, on public health and the environment? Pan Yue sets out the case for green GDP accounting

To understand the total volume of a country’s economy at any period in time, we must look at its Gross Domestic Product (GDP). There are two main ways to calculate this: one can measure the country’s total revenue, in salaries, profits, interests and so on. Or one can measure the country’s expenditure: spending on consumer goods, investments, net export etc. These two numbers, of total revenue and expenditure, should be the same. GDP can express a country’s total economic output and its national income level quite accurately.

GDP is, at present, the accounting system for China’s national economy. In fact, every country in the world has adopted GDP as their accounting system, and it has become the standard for measuring the development level of a country.

But, as they say, there’s no such thing as a “free lunch.” Increases in a country’s total economic output will certainly mean an increase in the consumption of natural resources; pollution and

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