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Differential Impacts of US-China Trade War and Outbreak of COVID-19 on Chinese Air Quality

Author

Listed:
  • Muhammad, Shahbaz
  • Avik, Sinha
  • Muhammad Ibrahim, Shah

Abstract

Purpose: Over the last couple of years, Chinese manufacturing sector was affected by the onset of US-China trade war and the outbreak of COVID-19. In such a scenario, air quality in China has encountered a shock, and the impacts of these two incidents are unknown. In this study, we analyze the convergence of air quality in China in presence of multiple structural breaks, and how the impacts of these two events are different from each other. Design/methodology/approach: In order to assess the nature of shocks in the presence of multiple structural breaks, Clemente-Montañés-Reyes (1998) with two structural breaks and Bai and Carrion-i-Silvestre (2009) with five structural breaks are employed. Findings: Our results reveal that air quality in China is showing the sign of convergence, and it is consistent across 18 provinces, which are worst hit by the outbreak of COVID-19. In presence of transitory shocks, the impact of COVID-19 outbreak is found to be higher, whereas the impact of US-China trade war is found to be more persistent. Lastly, outbreak of COVID-19 has been found to have more impact on pollutants with higher severity of health hazard. Originality: To the best of our knowledge, this is the first study that contributes to the empirical literatures in terms of investigating the convergence of overall air pollution and individual air pollutants taking COVID-19 and trade war into account.

Suggested Citation

  • Muhammad, Shahbaz & Avik, Sinha & Muhammad Ibrahim, Shah, 2021. "Differential Impacts of US-China Trade War and Outbreak of COVID-19 on Chinese Air Quality," MPRA Paper 110040, University Library of Munich, Germany, revised 2021.
    • Handle: RePEc:pra:mprapa:110040
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    References listed on IDEAS

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    JEL classification:

    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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