CANBERRA – Scientific circles have generally accepted the need to account for natural capital – and the ecosystem services that it provides – when assessing progress toward sustainable human well-being. Now, the highest levels of China’s government seem to be recognizing this need, too.

Indeed, at the Chinese Communist Party’s recent 18th Congress, top officials advocated “ecological progress,” in addition to the longstanding goal of economic prosperity and a “harmonious society.” As President Hu Jintao stated in his keynote address at the start of the Congress, the CPC views ecological progress as a “task of vital importance to the people’s well-being and China’s future.”

The “harmonious society” concept, which can be traced to Confucius, has become a hallmark of Hu Jintao’s socioeconomic vision, which calls for a fundamental shift in China’s policy focus from economic growth to social fairness and environmental protection. But, while the idea of a harmonious society has widespread appeal, whether China has actually begun to move away from a GDP-driven development model is open to question.

For example, in 2004, China attempted to replace standard GDP accounting with the “Green GDP” index, which accounts for the environmental consequences of economic growth. But the initiative was abandoned three years later, after it became clear that factoring in health and environmental costs would reduce otherwise remarkable GDP growth to politically unacceptable levels.

More recently, the Genuine Progress Indicator (GPI), which accounts for the distribution of wealth and social and environmental costs, showed that, while China’s per capita GDP has routinely grown at an annual rate exceeding 10% in the last three decades, per capita GPI leveled off in 1998, largely owing to mounting environmental damage and an increasingly uneven distribution of wealth. (China’s wealth distribution is now as skewed as that of the United States, one of the most unequal developed countries, where the GPI has not risen since the late 1970’s.)

China was able to transform itself into a modern industrial power at an unprecedented rate. It could conceivably make an equally rapid transition to a post-industrial, sustainable, harmonious society – if it takes certain crucial steps.

•          Adopt methods for measuring real progress that account for the complex interactions between GDP growth, social fairness, and environmental protection, rather than focusing principally on GDP, which measures only marketed economic activity – some of which undermines human well-being.

•          Make sustainable human well-being the primary goal (as Bhutan has done), based on the understanding that harmony and balance, like GDP, are means to this end, not the end itself.

•          Internalize the costs of pollution and greenhouse-gas emissions, while reducing reliance on fossil fuels.

•          Implement measures to reduce inequality and ensure that wealth is distributed more equitably.

•          Maintain a firm population policy, while placing greater emphasis on education.

The long-held view that GDP growth will cure all is being exposed as a fantasy. Meanwhile, as the West becomes increasingly discordant, China’s global influence is growing. Leading the world toward a sustainable, fair, and harmonious future may require the kind of top-down policy changes of which only a country like China is capable. The country’s new generation of leaders should take note.