Chinese Growth and Atmospheric Pollution: An Empirical Assessment of Challenges and Opportunities

This paper uses a dynamic CGE model, calibrated to new and detailed Chinese emissions data, to assess two important questions. What can we reasonably expect Chinese emissions trends to look like over the next two decades? Secondly, what would be the appropriate policy interventions to flatten Chinese emissions trajectories and reduce the risk of local, regional, and even global adversity? This research is original in its direct use of the new industrial sector-level emissions and energy using data from China to estimate the energy-specific emission effluent rate and its detailed treatment of policies taking account of the three main determinants of pollution intensity: growth, output composition, and technological change. Our results indicate that trade -offs between these three, under a facilitating policy environment, might allow sustained increases in Chinese living standards without significantly adverse environmental externalities, domestically or internationally. The results indicate that, without further effective emission control measures, China’s economic growth over the next two decades will contribute significantly to SO2 emission problems. However, detailed examination of the structural and technological components of pollution shows that efficient pollution mitigation can be realized by focused abatement activities, cleaner production, and advances in cleaner fuel products and their use technologies.