China’s economic growth will continue to be energy-intensive and highly polluting for the foreseeable future, says a grim forecast from the Chinese Academy of Sciences.
According to a study published in the International Journal of Global Energy Issues, economist Yanqing Xia of Dongbei University of Finance and Economics and the Northeast Branch of the Chinese Academy of Sciences in Liaoning predicts that emissions and efficiency will stay far below capital growth on the Chinese agenda.
Xia looked at almost a decade’s worth of data from 30 Chinese provinces from 2001 to 2008, to build a comprehensive model of pollution, energy consumption, and economic growth.
While the model gives a positive outlook for average gross domestic product (GDP), it also paints a bleak medium-term view regarding a lack of sustainability and environmental targets.
Xia’s data showed that energy consumption has a greater impact on output compared with conventional factors of production such as labor (human capital), while pollution has relatively little effect on output, which means that China’s economic growth will still head in the direction of substantial energy consumption and pollution.
As China is heavily invested in the development of manufacturing and heavy industries, export and fixed asset investment, energy consumption thus underlies economic growth.
Unfortunately, the concurrent increase in pollution and carbon emissions is also adding to environmental harm on a global scale.
In conclusion, Xia suggests that economic growth and environmental protection must now be bound together. While economic growth may continue unhindered for many years in China, the environmental payback may stymie future opportunities to reap its rewards.
"China must implement effective environmental regulations so that firms and consumers can be properly encouraged to reduce pollution and energy consumption,” she said.
The article will be published soon at: Xia et al. (2012) An empirical research on the interactions of China’s energy consumption, pollution emissions and economic growth.
(Source: Inderscience Publishers)