How much CO2 emissions will be reduced through industrial structure change if China focuses on domestic rather than international welfare?

The current energy-intensive industrial structure is one of the reasons why China has emitted a large amount of CO2. This paper inherited the theory of Keynes and constructed a MIDO (Multi-sector Inter-temporal Dynamic Optimization) model with which we compared two distinct evolution trajectories of industrial structures that are oriented toward the conventional international preference and the domestic genuine preference. Furthermore, we estimated the CO2 emissions that can be reduced by industrial structure changes after the preference transition. Our simulation indicates that sectors such as Transport, Heavy Manufacturing, Oil Production, Light Manufacturing, Chemicals and Metals grow faster, and their share of the total output expands under the international preference pattern, while sectors such as Other Services, Transport, Agriculture, Construction, and Food & Clothes Manufacturing experience enlarged output shares in the domestic preference pattern. Consequently, China will conserve 21.7 Gtoe or 33.2 Gtoe of energy and save 9.89 GtC or 15.6 GtC of CO2 emissions (equivalently reducing them by 15% or 16.5%, respectively) through an industrial structure transition from an international pattern to a domestic pattern, corresponding to the “C15” and “C20” catch-up strategies, where the sectoral energy intensity of China reaches the currently most efficient level in 15 or 20 years.