A well-to-do society?  [By Jiao Haiyang/China.org.cn]

"The Rise and Fall of the GDP." That was the apt title of an incisive and informative article by US-based writer, John Gertner, published on the Internet in May 2010. In it, he traced the birth of the Gross Domestic Product and the long efforts by distinguished economists in the Western world to show its deficiencies and lessen dependence on it as a measurement of a nation's wealth and its living standards.

Gertner's thorough research showed that doubts have existed about the extent of reliance on the GDP for many decades, but the world is finally coming around to the reality of its deficiencies, albeit very slowly, very silently.

Ever since the GDP was developed in the wake of the Great Depression of the 1930s, it was always felt that the higher a nation's GDP, the better and happier the state of the people. For 70 years after, entire national economies were arranged and rearranged to improve GDP figures. But the countries that have most relied on GDP have begun to realize they were on the wrong track. Now, some have begun to backtrack, others are moving off the beaten track.

GDP masks distortions. Take China. It's the largest exporter in the world and the second largest importer, has the third largest economy in aggregate terms and the largest foreign currency reserves. Between 1978 and 2009, its GDP increased from US$364.5 billion to US$36.6 trillion. China has also been able to maintain an average annual 10 percent GDP growth rate in the last ten years. It now has a higher GDP than Japan. But the world knows that in a very real way, China is poorer than Japan.

No one has advocated dumping the GDP. What the proponents of new or additional yardsticks argue is that a nation's actual well being cannot be determined by only measuring the final market value of goods and services, but also by measuring the quality of life. And that depends, in part, on the types of goods consumed, access to health care, quality of education, family relations, integrity of public officials and the state of the environment.

Those still enthralled with GDP are being asked by the advocates for change to consider the complex relationship between money and happiness. For example: Does higher GDP mean a higher level of national happiness? What's the relationship between wealth and satisfaction? Do people want to be made to feel better, or to live without misery? Is the national objective to make more people richer, or to bring as many people as possible into the middle class?

There is much political resistance to moving away from GDP in some developed countries, where politicians are afraid that exposure and publication of some national indicators could force them to make policy decisions they don't want to face or implement – like environmental legislation.

But while the opponents and proponents argue over GDP's reliance, China's Sichuan Province is already leading the way away from it. Earlier this year, it decided to remove GDP from its tools to measure the progress of its cities. The provincial government will not assign local authorities GDP growth rate quotas in 2011. Instead, it will use 12 indicators to measure how the local economies perform.