Money to repay environmental debts, not boost growth

The investment in treating water pollution is to pay back the debts accumulated over in previous years, when the government ignored environmental protection. The investment should not be regarded as a driving force to boost economic growth, says an article of the 21st Century Business Herald. Excerpts:

The central government is reviewing an action plan on cleaning water pollution in the country, which involves a 2 trillion yuan ($328 billion) investment.

The public hopes the plan will stop the worsening water pollution in China and bring more clean water. But some local governments may embrace the plan more as a “green light” to promote investment in the field, than an urgent signal to treat the pollution.

Among the 10 main rivers and 62 large lakes in China, nearly half of them cannot provide drinkable water, or even irrigation water. Water pollution has become a big threat to public health, especially for poor people in the polluted areas, who cannot afford to buy clean water.

Unlike business investment, the money spent to clean up water pollution will not directly yield monetary returns.

The central government must see to it that the investment in dealing with water pollution must be used to tackle the most pressing challenges. There must be an assessment system to evaluate the effects of the investment in pollution control. An accountability system is also necessary to supervise local government officials in case they seek illegal profits from the special funds.

Governments at various levels need to change their mindsets on economic growth. China cannot rely on investment to boost growth any more. Innovation and consumption will become the main driving forces for future economic growth.