ECONOMIC GROWTH AND THE ENVIRONMENT IN TRANSITIONAL CHINA—AN OLD...

Abstract: Following experience elsewhere in the world, China has pinned its hopes for development on industrialisation and China’s economy has grown exceptionally fast in the last two decades. But many unintended environmental consequences have been recognised. This paper asks whether there really is a trade-off between economic and environmental performance. This is considered in the context of China’s macroeconomic performance as well as in the case study of a Chinese state-owned enterprise (SOE) (Zhengzhou Abrasive Company (ZZAC)). The feature of the paper is that stakeholders’ perceptions of the trade-off were considered. Our results indicate that the low economic performance of ZZAC to some extent resulted in its improved environmental performance. However, other factors like investment in pollution abatement, which is also influenced by the economic performance, have had a positive impact. Furthermore, ZZAC is found to have increased its labour productivity level, but is retreating from social commitments. Finally, our results clearly indicate that the characteristics of the stakeholders, as well as their positions in the local economy, make a significant difference to their perception of trade-offs between economic growth and the environment, which will finally affect environmental policy making in China. Copyright # 2007 John Wiley & Sons, Ltd.