How Green is China’s Path of Catching Up? An International Comparative Evaluation

Abstract

China’s rise as a global economic power in recent decades has been achieved with tremendous environmental costs. Has China been an abnormally heavier polluter in its development path? How has pollution accounted for China’s hyper economic growth? This study answers these questions by evaluating the environmental effects of China’s growth using a data set of 61 countries over a period of four decades. The analysis is focused on two pollutant emissions: CO2 emissions, which carry global externalities, and particulate emissions, of which the environmental cost is more domestic. A fractional polynomial (FP) regression model is estimated to project emissions levels per worker based on lagged values of per capita GDP and other variables. It reveals that China’s CO2 emissions have been higher than the projection for most years with an average margin of over 5.3% while its particulate emissions have exceeded projection by an average margin of more than 7.5%. The excessive emissions levels of both pollutants confirm the severity of China’s environmental challenges and indicate great potential for the economy to work for a greener growth pattern. On the other hand, contributions of emissions to multi-factor productivity (MFP) growth are estimated by FP regressions based on a human-capital augmented growth model. The results show opposing trends of CO2 and particulates in their “contributions” to GDP growth, which imply asymmetric incentives to abate the two types of pollution. These findings have important implications for China’s environmental policy making.

Keywords

economic growth / environmental damage / pollution

RIGHTS & PERMISSIONS

2014 Higher Education Press and Brill