06 MAR 2015Timothy Nixon

http://blog.thomsonreuters.com/index.php/china-opportunity-sustainable-growth-leadership?from=singlemessage&isappinstalled=0

We’ve seen the headlines.  China’s economy is experiencing a “new normal”.  The double digit growth which has helped to lift tens of millions out of poverty is declining to mid-single digits.  This same growth has left huge environmental costs.  As Premier Li Keqiang said a few days ago at the opening of the country’s annual parliamentary meeting, pollution has become “a blight on people’s quality of life and a trouble that weighs on their hearts”.

So now, a pure growth solution is no longer viable as a pathway for economic development.  In order to understand this “new normal” pathway which matters so much to all of us and on which China may provide global leadership, we sat down with two champions for sustainable development in China, Professor Dajian Zhu, who advises central government planners, and Mr. George Lee, Chairman of Shanghia-based De Tao Group, which is catalyzing new avenues for sustainable development with the help of a growing network of global thought-leaders.

Professor Zhu helped provide some context, explaining that “China still has a significant challenge with per-capita income and economic prosperity compared with the rest of the world.  Consider how our trajectory looks from a population growth perspective:

Source: Professor Zhu’s presentation to De Tao Group’s New Future Economy Workshop, February, 2015 (data from UN 2005)

And also consider Professor Zhu’s presentation on key measures of per-capita prosperity:

For China alone, Professor Zhu estimates that per capita GDP should, as a matter of economic and social equity,  grow by 4X  (in comparison to 2010) by 2030, a staggering amount of actual growth given the population size.

So the problem is clear.  China and the developing world can and should continue to lift their populations out of poverty and develop a modern economy with all of its benefits, but the world cannot do so without a radically new economic model.   The solution according to both Professor Zhu and Mr. Lee is “decoupling” economic growth with environmental and natural resource degradation:

Mr. Lee explains that “we must find new, innovative ways to drive sustainable growth, where impacts on the environment and natural capital are swiftly reduced.  This strategy includes rapid innovation in the fields of renewable energy, agriculture, architecture, urban planning, and equally important, finance and transparency.”

This kind of collaborative and progressive thinking holds great promise for a more sustainable world.   China is one place where change can happen very quickly, and through the innovation and leadership like that from Professor Zhu and Mr. Lee, we are likely to see a rapidly evolving and exciting model for sustainable development and investment for the developing world.

Returning to Premier Li Keqiang’s comments of a few days ago, “We will implement the ‘Made in China 2025′ strategy, seek innovation-driven development, apply smart technology, strengthen foundations, pursue green development and redouble our efforts to upgrade China from a manufacturer of quantity to one of quality.”  He then went on to “promise a greater role for private business in the economy, which he said would be further opened up by halving the number of industries in which foreign investment is restricted.”

The stars for leadership on a new and more sustainable world economy may be starting to align where it is perhaps needed most.

In the next and final installment on the new “normal” and economy in China, we will be taking a look at how natural capital accounting is being implemented to help account for the actual loss or gain of natural capital as economic growth continues.  As the saying goes, you can’t manage what you can’t measure.

Background on Professor Zhu and Mr. Lee:

Dr. Zhu Dajian

Dr Zhu Dajian is Distinguished Professor of School of Economics & Management, Director of Institute of Governance for Sustainable Development, Head of Department of Public Management and Policy, and Vice Chairman of University Academic Committee, at Tongji University in Shanghai.  He was awarded the special allowance by China’s State Council in 2000.

Mr. George Lee:

Mr. George Lee, is one of the founders and a permanent member of the “Boao Forum for Asia” , a global forum which fosters cooperation at the highest levels of leadership on economic and environmental development matters.  He is also the founder and chairman of the DeTao Investment and Development Group in 2002.