China has achieved miraculous economic growth over the past 30 years to become the world's second largest single-country economy. However, growing gross domestic product (GDP) at any cost has created a series of social and environmental problems, and consequently, economic losses.

In this Asia Society report from September 2012, Junjie Zhang, Assistant Professor of Environmental Economics in the School of International Relations and Pacific Studies at the University of California, San Diego, considers the policy shift that the Chinese government has called for to address the environmental impacts of economic growth, and assesses the challenges ahead.

The report argues that any new policies must explicitly address trade-offs in sustainable development, and must be strictly enforced to improve the overall state of the environment. The report also notes the tension between the government’s preference for faster economic growth with lower environmental standards, and the public’s inability to express its preference for a combination of income and pollution that may differ from the government’s preferred combination.