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China Briefings

Reports on China issued by Samsung Economic Research Institute

Factors Restricting China's Sustainable Development

Factors Restricting China's Sustainable Development

Samsung Economic Research Institute Beijing Office

Feb. 1, 2007

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In 1992, the Chinese government announced "Agenda 21" as a framework designed to shed light on sustainable development, as well as protect ecosystems, the environment, and natural resources. Sustainable development promotes economic growth and social progress by leveraging technological progress.

The rise of sustainable development is linked to a host of problems inherent in economic development. Since the end of World War II, rapid economic growth and industrialization has become an accepted path every nation had to follow. However, traditional development models do not sufficiently balance short- and long-term benefits, particularly given limited natural resources and environmental degradation.

Since the 1960s, rapid economic growth has resulted in mounting problems such as deforestation, water and air pollution, desertification and overall declining quality of life. Negative externalities, stemming from break-speed economic growth, have progressively worsened to threaten human's quality of life and even existence.

Historically, countries have chosen one of the two development models known as the US or European models. The US development model stresses that environmental problems, once manifested, can be solved by human efforts. Currently, the US consumes 30% of global natural resources and generates 28% of the global GDP, even though it accounts for a mere 5% of the world's population.

The European development model is based on the understanding that natural resources are inherently limited. European countries traditionally invest more effort in policies to protect the environment and get one step closer to satisfying the goals of sustainable development suggested by the WCED.

Following the US example, China has preferred economic growth ahead of sustainable growth. However, China is unable to continue to emulate the US' growth pattern since it is more dependent on external resources than the US.

In China, the cost of economic development has gradually increased each year. The total cost of economic development includes the input costs required for production, as well as hidden costs such as environmental degradation and natural resource depletion. Because China has not traditionally considered hidden costs, the cost of economic development will likely keep growing as it is figured in as part of total production cost.

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