Opinion

Making people happy

By Hu Angang (China Daily)
Updated: 2011-03-02 14:15

Focus of development needs to shift to fairness and the social and environmental impacts of growth

Rapid economic development is transforming China from a low-income to a medium-income nation. Now an influential economy, China is at a crucial stage of industrialization and urbanization and faces many challenges in economic development, such as transforming the nature of economic growth and ensuring its sustainability, tackling unequal income distribution and ensuring the balanced development of economy and society.

Let's look at these challenges in more detail. First, structural problems in China's economic growth model are increasingly apparent and require urgent resolution if the country is to develop sustainably. Investment-led growth has caused a grave imbalance between the roles of consumption and investment, and this continues to worsen. But China no longer has the domestic resources to support that investment-led approach.

Second, as the economy has grown, the distribution of income has worsened. The proportion of China's GDP made up of household income dropped by 10 percentage points between 1996 and 2006, and the gap between rich and poor and urban and rural residents is widening - with no sign of a turnaround. There can be no doubt this is a major threat to the construction of a harmonious society.

Third, personal livelihoods have failed to keep pace with rapid economic development. As the welfare system of the planned economy has been dismantled, the cost of education, access to healthcare and high house prices have become common issues of concern, and the government finds itself challenged by food and workplace safety, environmental degradation and corruption.

The focus of economic development needs to shift from expansion and investment to the quality and fairness of growth and its social and environmental impacts, otherwise, the nation risks falling into the middle-income trap.

In his 2007 report to the 17th National Congress of the Party, Party leader Hu Jintao made clear that a "people-first" approach lies at the heart of the Scientific Outlook on Development. Premier Wen Jiabao has also told the National People's Congress that everything the government does is aimed at providing people with happier and more dignified lives and at creating a more just and harmonious society. A people-first mode of development would increase happiness, and public policy founded on achieving that happiness could become the foundation of China's harmonious society.

National happiness has also become a focus for academic research. The most influential study on this issue is the World Values Survey, which has so far examined 98 countries or regions. Using the data obtained, international happiness expert Ronald F. Inglehart has identified two stages in the relationship between survival, well-being and per-capita GDP - economic gains and lifestyle changes.

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During the economic gains stage, well-being is sensitive to economic growth, and the two increase in tandem. During the lifestyle changes stage, economic growth has little impact on well-being. Once incomes reach a certain level, subjective happiness and GDP growth show no clear positive correlation.

Inglehart places the boundary between these two stages at an income of $5,000 at 1995 purchasing power parity (PPP). In 2009, that was equivalent to $7,038, and in 2010 China's per-capita GDP is thought to have passed that level. And so China has, by these figures, already entered the stage where well-being is insensitive to economic growth. This means that policies designed to increase well-being cannot focus on GDP alone. For this reason, research into national happiness will be an important factor in China's public-policy decisions as the nation reaches middle-income levels.

A national happiness index with Chinese characteristics should have a role in this process. Back at the start of China's period of reform and opening-up, the nation identified a well-off society as a development aim - and the government promised to create that society. The proposed index would not only provide a more comprehensive measure of the development of that society, but also a new way of assessing government performance.

Governments are the planners and implementers of development. And they have a duty to increase the happiness of those they govern. Governance focused on the "comprehensive raising of the people's sense of well-being" would be a demonstration of socialism with Chinese characteristics - the system intended by Deng Xiaoping's market reforms - and increase the degree to which the Chinese government is seen to be governing for the people. The following recommendations are for putting together a Chinese National Happiness Index:

First, the index should reflect China's national characteristics. Many nations are in the process of trying to build similar indices, and there is no standardized measure. I believe that differences in culture and traditions during the development process mean that these indices should reflect national characteristics.

Second, while the index should be comprehensive, it should not include too many factors. The index must cover the content of the Human Development Index - per-capita GDP, life expectancy and educational level - as well as important factors in development such as governance, environmental quality, sense of security, social capital and distribution of income. Selection of indices should reflect the key variables in the development of the above factors.

Third, the index should include subjective as well as objective measures. The main difference between a happiness index and classical development rankings is the inclusion of subjective measures, allowing citizens of a country to assess the factors that are hard to capture objectively - environmental satisfaction, sense of security, satisfaction with local government and so on.

Fourth, we must encourage local implementation. A number of local governments are already working on these issues, including Chongqing in western China and Jiangyin on the east coast. Their experiments use a well-being centered approach to assess government performance. Such systems will encourage officials to use public resources in ways that increases happiness and boost the people's satisfaction with local government.

The author is professor at the Chinese Academy of Sciences and Tsinghua University. The article was originally carried on www.chinadialogue.net, a bilingual website dedicated to environment issues.