Recently, Xu Jintao, professor and vice president of the National Development Research Institute of Peking University, and director of the Center for Energy Security and National Development Research, was interviewed about environmental protection. Xu Jintao graduated from the Department of Management Engineering of Jilin University of Technology in 1984 with a bachelor's degree in engineering. He graduated from the graduate class of forestry economy of Beijing Forestry University in 1986 and obtained a master's degree in agriculture (forestry economy) in 1988. In 1994, he went to the United States to study abroad, and successively obtained a master's degree in economics (1996) and a doctor's degree in forestry (1999) from Virginia Tech University. He has successively served as a guest researcher of the China Economic Research Center of Peking University, deputy director and associate researcher of the Agricultural Policy Research Center of the Chinese Academy of Agricultural Sciences, deputy director and researcher of the Agricultural Policy Research Center of the Chinese Academy of Sciences, and professor and director of the Department of Environmental Management of the School of Environmental Science and Engineering of Peking University.
The National Bureau of Statistics recently released the GDP accounting results for the first quarter of 2016. The GDP in the first quarter increased by 6.7% year on year, and the downward pressure on the economy is still great. How should local governments deal with the relationship between development and protection under the new economic normal? Is it really difficult to transform and develop? What are the specific good ways?
Interviewer: Xu Jintao, Vice President of the National Development Research Institute of Peking University
Interviewer: Huang Tingting
With the increasing downward pressure on the economy, the responsibility and motivation of some places to solve environmental problems will be weakened?
■ The economic downturn should not be an excuse for local governments to do nothing in environmental protection. The top priority is to formulate good policies to promote win-win development and protection.
Reporter: The National Bureau of Statistics recently released the GDP accounting results for the first quarter of 2016, which showed a year-on-year growth of 6.7%. What do you think of this data? What impact will it bring to environmental protection?
Xu Jintao: The environmental protection department has always been worried about the high economic growth, because high growth will generally bring high pollution, especially when the economic growth rate exceeds 8%, the pollutant emissions will rise sharply. It can be seen from the current situation that the economic growth rate has slowed down, and the industries with high pollution and high energy consumption have been greatly impacted. For environmental protection, slowing down economic growth is not necessarily a bad thing. It can leave more space for local governments to adjust their structures, and it is an opportunity to promote green development.
Reporter: From the perspective of structural adjustment, the slowdown of economic growth brings opportunities for transformation and development. However, in reality, with the increasing downward pressure on the economy, the responsibility and motivation of some places to solve environmental problems will be weakened, and even some places attribute the economic slowdown to environmental protection. How do you understand this?
Xu Jintao: There are externalities in environmental pollution. For local governments, whether the economy grows high or low in the short term is not necessarily affected by environmental protection and has no direct relationship. The economic downturn should not be an excuse for local governments to do nothing in environmental protection. The top priority is to formulate good policies to promote win-win development and protection.
Now the central government has proposed supply side structural reform, which I think is a very good idea. In fact, it is necessary to make greater determination to allocate more resources to clean industries, rather than high pollution and high energy consumption industries. Local government behavior will be affected by national leverage, which is beneficial to local development.
Reporter: We often mention the need to promote the coordinated development of economy and environment. From the perspective of economics, what exactly is "coordination"?
Xu Jintao: There should be a balance point between economic development and environmental protection, so as to maximize the economic and social benefits. Serious pollution not only brings environmental costs, but also affects social welfare, so it is necessary to strengthen environmental protection. Economic growth may slow down in the short term, but the overall social welfare is growing. This is what I call coordination.
Is it difficult to transform places without outstanding advantages?
■ Good policies will bring about changes in behavior, and will not generate particularly high social costs.
Reporter: Of course, it is a good choice to invest resources and funds in green industry, and many places may want to do so. However, the conditions are different in each place. Not all places have the endowment and ability to develop three industries and high-tech industries. For example, Beijing has the advantage of capital, while Shenzhen has the advantage of geography and location. Where is the path of transformation for places without prominent advantages? For Hebei and other heavy industrial provinces, is it difficult to return to green transformation?
Xu Jintao: I don't think it's very difficult. If we can adopt good policies, we can do it. Generally speaking, good policies will bring about changes in behavior, and will not produce particularly high social costs. The economic circle has always advocated that the country should adopt economic policies or market means to solve the resource and environment problems, because the cost of doing so is relatively low. The reason why some people once mentioned environmental protection in the past thought that it would affect economic development is that the main idea of some local environmental protection work is to simply rely on heavy fists to attack, close and turn, which is relatively big for some places. Because the financial revenue of some counties is supported by a few enterprises, the enthusiasm of local governments to promote environmental protection is not high. If we adopt effective environmental economic policies and change the behavior of all enterprises, it may not particularly affect local fiscal revenue. Why not try? Now is a good time to adopt economic policies to solve environmental problems.
Reporter: In fact, the environmental protection department has been exploring how to solve environmental problems through economic policies. However, China's current development has its own characteristics, with a large population, a large economy and serious pollution. Can economic policies achieve good results in the short term under this background?
Xu Jintao: The key to improving environmental quality is to improve the behavior of enterprises. How to change the behavior of enterprises? It is to let enterprises know that benefits can also be achieved by adopting cleaner technologies and minimizing pollution. The adoption of economic policies will certainly change the behavior of enterprises and promote the improvement of environmental quality.
How to promote local governments to fulfill their environmental protection responsibilities?
■ Adopt economic policies such as environmental taxes to strengthen the environmental protection power of local governments.
Reporter: You mentioned that foreign local governments have a strong desire to promote environmental protection, and will take the initiative to develop more stringent local standards than the state, but some local governments in China will shield polluting enterprises. Of course, there are also some places that have begun to have such awareness. For example, Shenzhen took the lead in proposing that PM2.5 should meet the standards of the World Health Organization, but some local governments may not be able to do so. How to promote local governments to fulfill their environmental protection responsibilities?
Xu Jintao: The actions of local governments have a great impact on environmental protection. For example, the overheated development of some local real estate will drive the development of related industries with high pollution and high energy consumption. The problems such as overcapacity in some places are the result of this development model. Some local governments need a process from shielding polluting enterprises to actively solving environmental problems and promoting environmental protection.
Reporter: Now the country has issued a series of policies to restrain local government behaviors, including "the party and government share the same responsibility" for environmental protection, "one post has two responsibilities", and the party and government leaders are held accountable for ecological environmental damage. These systems are urging local governments to fulfill their environmental protection responsibilities.
Xu Jintao: As long as there is GDP assessment, local governments will have the desire to develop economy. It is hoped that the introduction of these systems can promote local governments to strengthen environmental protection and make GDP more green while pursuing economic development.
Reporter: Environmental taxation has been called for by the industry for a long time. At present, the introduction of this policy has also accelerated the process. The Standing Committee of the 12th National People's Congress has just released the 2016 legislative work plan, which will review the environmental protection tax law in June. What's your opinion on this?
Xu Jintao: The introduction of environmental tax, on the one hand, can change the environmental behavior of enterprises and solve the external problem of environmental pollution. On the other hand, it can increase the income of local governments and strengthen their motivation to promote environmental protection. With the increase of financial revenue, there is no reason for the county head and the county party secretary not to attach importance to environmental protection, and the supervision and assessment of enterprises will be strengthened.
Take the resource tax as an analogy. In the past, important natural resources in some places were taken away by central enterprises, which did not play a role in local economic development. The resource tax is a local tax, which can increase local fiscal revenue and improve the distribution relationship between the central and local governments to a certain extent. The introduction of environmental taxes, if targeted at local taxes, can play a role in promoting local governments to actively implement the environmental policy objectives formulated by the central government, and ultimately effectively bring about environmental improvement.
At present, the tax burden of individuals and enterprises in China is on the high side in the world, so an important goal of the reform of the fiscal and tax system is to reduce taxes. There are many advantages to adding environmental taxes in the economic downturn. Fiscal and tax reform requires the government to reduce bad taxes and increase good taxes. For example, it is necessary to reduce the taxes that lead to the distortion of the factor market. What environmental taxes overcome is the distortion of the market, which can achieve win-win development and protection. It is a good tax and should be increased. Now, financial experts say that we should promote the reform of the comprehensive fiscal and tax system, and carry out structural tax increases and structural tax reductions. That is what they mean. We should make good use of this opportunity to solve environmental problems with economic policies.
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