A Sustainable China

Will the next stage in China's economic development lead to a more ethical economy? And what would that look like?

At the Business and Organizational Ethics Partnership at Santa Clara University's Markkula Center for Applied Ethics, Prof. Baocheng Liu addressed these questions in a talk titled, "A Sustainable China." Liu is director of the Center for International Business Ethics at China's University of International Business and Economics.

In his talk, Liu outlined four stages of economic development: a natural economy, in which people adapted to the environment; an industrial economy; a knowledge economy; and finally an ethical economy. "A knowledge economy is not sufficient," he said.

China has made a lot of progress along this path: Its GDP is No. 2 in the world, and it is growing faster than the United States and Europe. Life expectancy for its citizens has risen significantly in recent decades. It has gone from having three companies in the Fortune 500 in 1995 to 79 today.

Yet sustainable development, Liu said, will require harmonization between what he called the three P's: people, planet and profit. China's carbon dioxide emissions have grown in correlation with China's GDP growth, and smog is now a huge problem in the country's most prosperous and industrial areas.

He listed a number of drivers behind China's growth and its sustainability concerns: China has received a lot of foreign investment, most of it in manufacturing. Its corporate law is fairly young, having been developed 20 years ago. It relies on coal much more than other countries. When the government intervenes in business, it's usually for the purpose of boosting GDP growth, not to protect the environment or encourage corporate social responsibility.

Although Westerners may assume that the Chinese have different philosophical motivations, Liu said there are some "universal values." He drew a parallel, for example, between the Confucian advocacy of benevolence and the Western idea of altruism.

Liu discussed changes that need to happen in China, including clearly defining property rights and building awareness of the need for greater sustainability.

He also discussed the relatively short history of corporate social responsibility in China. "China encountered CSR in 1993 when Levi's decided to pull out of China because many of the Chinese suppliers were violating what they termed the human rights code," he said. At the time, most Chinese blamed Levi's, saying that the only concerns of those purchasing the goods should be price and quality.

Since 2008, however, there has been a growing interest in corporate social responsibility. The government is beginning to legislate on the topic, and industry groups are also taking action. Liu said he hopes these efforts, along with more public awareness, will help "turn from greed to good, from evil to enjoyment, from hazard to happiness."

Liu answered questions from the audience on subjects ranging from the implementation of workplace standards to the role of benevolence in Chinese society.

On workplace standards, he said that issues that are visible and important to workers are effectively enforced. Workers know what their minimum salary should be, for example, and they make sure they receive it. Less visible issues, such as safety problems that aren't obvious at first glance or that are very technical in nature, are more of a problem.

He also noted that in the past several years, Chinese companies have become more open to following international standards. "They know that by following international standards, you get a license to penetrate into international markets," he said.

On the role of benevolence in modern Chinese society, Liu said Confucianism emphasizes not being removed from the culture. Therefore, companies will donate a percentage of their profits to local schools or other community interests.

Liu has degrees from Seton Hall University and the University of International Business and Economics. He has published extensively in the area of international business, ethics and law.

Margaret Steen is a freelance author.