Exclusive Interview by Shenzhen Special Zone Daily: Prof. Yuan Yiming: Driving High-Quality Development by Consistently Improving Ecological Environment

Scholar Intro Yuan Yiming: Professor of CCSEZR, SZU, Academic Leader of Human Resources and Environmental Economics (doctoral discipline), Chief Expert of African Development Bank Projects, Director of Shenzhen Hanlun Institute for Green Development, President of Shenzhen Federation of Scientific Workers, and Founder and Chief-Editor of Studies on China’s Special Economic Zones. He has published 15 academic works, including Resources Constraint and Evolution of Industrial Structure and Equity-Substitution And Choice of Efficiency, with over 100 papers in Economic Perspectives and Economic Research Journal, many of which are reprinted by Xinhua Digest.

■ Journalist with Shenzhen Special Zone Daily Wang Yue
According to the report to the 20th National Congress of the CPC, Chinese modernization is the modernization of harmony between humanity and nature. We will advance the Beautiful China Initiative and take a holistic and systematic approach to the conservation and improvement of mountains, waters, forests, farmlands, grasslands, and deserts. We will carry out coordinated industrial restructuring, pollution control, ecological conservation, and climate response, and we will devote concerted efforts to cut carbon emissions, reduce pollution, expand green development, and pursue economic growth. We will prioritize ecological protection, conserve resources and use them efficiently, and pursue green and low-carbon development.
Prof. Yuan Yiming is the academic leader of Human Resources and Environmental Economics of CCSEZR, SZU. His literature Breakthrough of Contradiction Between Ecology and Growth -- Shenzhen's Practice and Experience in Ecological Civilization Thought in the New Era was cited in the special edition of reform and innovation in Shenzhen in the Past Decade. It summarized a series of pilot experience in lifting out of the dilemma of ecological construction and economic growth, which has theoretical and practical reference value for the coordinated development in other regions, facilitates green development and Beautiful China Initiative, and provides Chinese wisdom and Chinese solutions to human development.
Recently, Prof. Yuan Yiming accepted an exclusive interview with the journalist at Shenzhen Special Zone Daily.
We are not going to wait for the “Turning Point”, but to take actions.
Shenzhen Special Zone Daily: You wrote in the book that "At present, the economic growth and eco-environment deterioration in most regions of China are at the growing up stage of the Environmental Kuznets Curve", so what is the Environmental Kuznets curve and when will the "Turning Point" appear?
Yuan: Environmental Kuznets Curve means that when a country maintains a low-level economic development, the environment will be slightly polluted. With the rising per capita income, environmental pollution becomes more severe, and the degradation intensifies. If the economy reaches a certain level, that is, a certain "Turning Point", with the further increase of per capita income, environmental pollution tends to decrease, the degradation gradually relieves and the quality improves. The level of environmental pollution and economic growth shows an inverted U curve.
It is a pattern summarized by observing the development of the economy and environment in different countries, which is not a natural phenomenon that necessarily occurs. Therefore, this U-shaped curve may not apply to a specific country. It is also believed that if there’s a “Turning Point”, we can develop the economy only as fast as possible, since when the “Turning Point” arrives, the environment will definitely improve. This is not true.
A country, while developing economy, without considering the relationship between the environment and economic growth, may get stuck at a point on the left-rising side of the curve. In another word, the environment constrains economic growth, making it impossible for the economy to go out of the medium-low level stage, and there will be no second falling half of the curve. We can’t just wait for the “Turning Point”. We have to take actions. Whether there is a “Turning Point” and when will it come actually depend on our policies, actions the enterprises have taken and the environmental concerns performed by all sections of society. If everything goes smoothly, the “Turning Point” will be met earlier.
Shenzhen Special Zone Daily: What should we do to reach the “Turning Point” earlier?
Yuan: Before the “Turning Point” comes, economic growth and environmental quality show a substitution relationship. The better the environmental quality gets, the slower the economy grows, and vice versa. In order to change the substitution relationship to a synergistic relationship, the following should be abided by:
First, adjust the rules of economic growth. In the past, we attracted investment as long as the enterprise can yield economic value, pay taxes, and offer employment opportunities. But now, we have to take carbon emissions into consideration and levy environmental taxes on polluters. The social cost of environmental pollution and ecological damage generated by enterprises should be internalized as the cost to be borne by themselves, thus forcing entrepreneurs to weigh the cost of environmental pollution in the decision-making process, in addition to the profits.
Second, raise investment in environmental governance. The government should adhere to the concept of lucid waters and lush mountains are invaluable assets, perfect ecological civilization system, well handle the development-protection relationship, and constantly improve sustainable development capacity.
Third, call for action among society. We will get everyone involved in ecological governance, of which each of us is the protector, builder and beneficiary.
Just as President Xi proposed, to “Build an environmental governance system in which governments will take the lead, enterprises will assume the primary responsibilities and social organizations and the public will jointly participate.” With all these efforts done, the “Turning Point” will be met ahead of presumed time, and the synergistic relationship can be achieved.
Shenzhen Special Zone Daily: You mentioned that ecological environment and economic development present a complex relationship. They are complex, but interdependent and concomitant. So how to understand “interdependent and concomitant”?
Yuan: It means when the economy develops to a certain stage, especially the middle-income to the high-income stage, the environment and the economy will be mutually reinforcing, rather than the previous mutual substituting and offsetting. At this stage, with environmental awareness raising and consumption upgrading, people start to purchase green products instead of those unfriendly to the environment. Then the energy-intensive enterprises with high carbon emissions can hardly survive.
What is more, people’s focus on the environment also generates business opportunities. For example, the recycling of waste materials creates economic value, and cars with fuel economy and exceptional performance will be more favored. Environmental protection enterprises are exactly the outcome of interdependence between ecological environment and economic development, as well as a significant aspect of high-quality development.
The current environmental problems require both political and economic instruments.
Shenzhen Special Zone Daily: As you have made a detailed analysis of the current situation of China's ecological environment, what problems still exist in our environmental governance?
Yuan: First, disequilibrium. During the past four decades of reform and opening-up, we have developed gradually from coastal regions, regions along the river, and frontier regions to the mainland. Since our institutional reform is a progressive process, the economic development between different regions still varies. During the reform, some regions have taken the initiative in entering a synergy stage, while others are still falling behind. This is a basic reality of the relationship between economic development and environmental protection in China.
Second, differentiation. China is a country with a vast territory and abundant resources. Each region is faced with its own ecological issues, which necessitates adapting measures to specific local conditions. For instance, pollution control in resource-based provinces should be supported by technologies. Desulphurization processing of coal is vital in main coal-producing areas. If issues in these areas are duly handled, the marginal contribution to environmental protection will be extensive.
The current environmental problems require both political and economic instrument Politically, the green economy should be advocated, while highly polluting enterprises ought to be restrained. Economically, enterprises must be guided to follow the market mechanism to solve environmental problems. The carbon market is currently our one of effective means.
Shenzhen Special Zone Daily: According to the report to the 20th National Congress of the CPC, we will continue to control pollution in a lawful, targeted, and science-based way, and we will make further efforts to keep our skies blue, waters clear, and lands clean. So how to control pollution in a lawful, targeted, and science-based way?
Yuan: There’s no master key to all locks. “Targeted” means to propose solutions according to the specificity of environmental issues in each region. “Science-based” means that in the intensity, strategy and techniques of pollution control, we must take full account of the local economy and culture and industrial structure, and cross the river by touching the stones. “Lawful” means that all pollution prevention and control policies should have a legal basis and comply with the law. All along the law-based administration of government, “one size fits all”, “go through the motions” or “formalism” should be avoided, let alone the ridiculous case of “painting the stones in the mine to green” to cope with inspection and supervision.
Through the approach of “addition, subtraction, multiplication and division”, Shenzhen effectively crossed the environmental “Turning Point”.
Shenzhen Special Zone Daily: You mentioned in the book that under the guidance of Xi Jinping Thought on Ecological Civilization, Shenzhen crossed the environmental “Turning Point” while maintaining economic growth, and once again created the “Shenzhen Miracle”. What did Shenzhen do?
Yuan: In the past decade, Shenzhen has performed “Addition” to strategic emerging industries and modern service industries, “Subtraction” to traditional superior industries, “Multiplication” to green and low-carbon industries, and “Division” to energy-intensive industries. The four-pronged approach promotes the optimization and upgrading of industrial structures for a more significant low-carbon characteristic.
Specifically, the “Addition” is to identify environmentally friendly industries based on a scientific study of the current environment. It is found that strategic emerging industries and modern service industries are knowledge- and technology-intensive, with great growth potential, impressive overall benefits and less material resources consumption.
On the contrary, “Subtraction” is to conduct reasonable constraints on energy-intensive industries with high pollution. Shenzhen's traditional superior industries, including furniture, textiles, and jewelry, maintain a high resource consumption and low energy utilization rate, but they are crucial support to Shenzhen’s economy. “Subtraction” is not to “eliminate” them once and for all, but to stimulate their transformation to low-carbon industries, achieving breakthroughs in scale and efficiency.
“Multiplication” applies to the industries that have a multiplier effect on environmental protection, specifically the green and low-carbon industries. These industries are of low energy consumption, low pollution, and low carbon emissions. At the same time, they can create new economic growth points, generating a multiplier effect. Shenzhen's green low-carbon industry has basically formed a green low-carbon industry pattern with enterprises taking the initiative, industrial parks serving as the platform and lead-edge technologies as the support, creating a green low-carbon ecology of “enterprises + parks + technologies”.
“Division” is targeted to energy-intensive industries. Phase out those that exert the greatest impact on the environment through various means. Explicitly, it is understood that energy-intensive industries with high pollution and carbon emission have low profits and are sensitive to cost investment. Shenzhen tapped into the price leverage effect of water, electricity, gas, and minimum wage, gradually increasing the operating costs of low-end enterprises, and using the “invisible hand” of the market to speed up the elimination of “energy-intensive industries with high emissions and low profits”.
Shenzhen Special Zone Daily: What practices of Shenzhen are worth advocating and learning from?
Yuan: In the past ten years, Shenzhen has accelerated the establishment of a sound ecological economic system with the industrialization of the ecological environment and eco-friendly industrial development at its core, as the key to breaking through the contradiction between ecology and economy. In the system, the anti-driving mechanism, guidance mechanism, value motivative mechanism, and assessment mechanism will together to help Shenzhen build an economic system where “lucid waters and lush mountains are invaluable assets”. These mechanisms have theoretical value and practical reference for the synergistic development of economic growth and ecological construction in other regions of the country.