Inclusive and sustainable industrial development in China: An efficiency-based analysis for current status and improving potentials

Inclusive and sustainable industrial development (ISID) is a call for action to promote industrialization by minimizing the environmental footprint and enhancing social inclusion. This study proposes a new framework of an evaluation system to assess the ISID for 30 provinces in China (2011–2016). As there does not exist a generally accepted evaluation system of ISID, this study proposes a dual-formulation of ISID to rationalize the trade-offs among externalities brought by industrialization: (i) ISID represents the aspiration of countries to promote industrialization and consequently sustain economic growth by reducing the adverse environmental and social effects which manifest in the overall economy (ii) ISIDsdg9 considers the same aspects of ISID but limits the externalities within the industrial sector. This study applied two newly developed efficiency evaluation approaches, Multi-Directional Efficiency Analysis (MEA) and Range-Adjusted Measure (RAM), to evaluate and analyze the ISID for China. This study finds that: Among the 30 provinces, (i) Beijing and Tianjin are the benchmark provinces for promoting ISID and ISIDsdg9 regimes, respectively. (ii) Throughout the 2011–2016, the overall performance of China on ISID and ISIDsdg9 regimes has improved modestly. (iii) Based on the analysis of the barrel effect, SO2 emission is the key binding constraint to achieving the frontier status of ISID and ISIDsd9 regimes (v) Under the evaluation of ISID and ISIDsdg9 regimes, the average annual growth potentials of industrial value added (IVA) is 280.52 billion CNY and 927.54 billion CNY, respectively. This present study recommends local government in China to advance their ISID performance by exploiting the policies targeting emission mitigation concerning fossil fuels while considering Beijing and Tianjin as the benchmark provinces.