Macroeconomic implications of China’s dual carbon goals

The ‘dual carbon’ goals are set to reshape China’s industrial landscape and impact the economy as a whole. This paper briefly discusses the channels through which climate polices may affect the economic growth, and then provides a quantitative analysis of the economic impacts of China’s climate polices using a global dynamic CGE model. The simulation results of different policy scenarios suggest that climate policies will have negative impacts on China’s investment and export by raising the costs of prodcution, but the aggregate impact on China’s output will generally be mild. Nonetheless, other countries’ climate policies may have meaningful spillover effects on China’s economy through the trade channels and China should lead or participate in the international coordination on climate policies to be better placed to achieve the ‘dual carbon’ goals.