Decoupling of Emissions and GDP: Evidence from Aggregate and Provincial Chinese Data
IMF Working Papers, April 11, 2018
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- Decoupling of Emissions and GDP: Evidence from Aggregate and Provincial Chinese Data
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Bibliographic details
- Authors: Gail Cohen, João Tovar Jalles, Prakash Loungani, Ricardo Marto, Gewei Wang
- Published: April 11, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484351000.001
Key findings
- The Kuznets elasticity is about 0.6 for China.
- The Kuznets elasticity for China is higher than that in advanced countries but below that of major emerging markets.
- The elasticity is somewhat lower for consumption-based emissions than for production-based emissions, providing mild evidence consistent with the “pollution haven” hypothesis.
- The Kuznets elasticity is much lower for the last three decades than for the three previous decades, suggesting a longer-term trend toward decoupling as China has become richer.
- Provincial evidence: richer provinces tend to have smaller Kuznets elasticities than poorer ones.
- In addition to the trend relationship, the Environmental Okun's Law holds in China.
Data, scope, and approach
- Analysis uses both aggregate and provincial Chinese data.
- Emissions examined include production-based and consumption-based greenhouse gas (GHG) emissions.
- Trend and cyclical relationships between emissions and real GDP are investigated.
Implications and interpretation
- Evidence indicates partial decoupling between GHG emissions and GDP in China, stronger over recent decades.
- Lower elasticity for consumption-based emissions relative to production-based emissions is consistent with some production being concentrated in regions with comparatively higher emissions intensities (pollution haven dynamics).
- Heterogeneity across provinces implies that income levels are associated with differing paths of emissions-GDP elasticity.