Statistical analysis of environmental protection and economic growth in China

China has maintained rapid growth for nearly 40 years, achieving significant economic development. However, it also caused many problems including resource shortages and environmental pollution. This is partly because China pursued a pattern of extensive growth by relying on primary resource inputs. China has now begun to adjust its development and environmental protection policies to handle these problems. The 18th National Congress of the Communist Party of China emphasized the construction of an ecological civilization given China’s energy constraints, serious environmental pollution, and degraded ecosystem.
This study aims to characterize the relationship between economic growth and environmental protection in China. Using data envelopment analysis, the generalized method of moments, and a coupled modelling method, we studied the mutual relationship between environment and growth, as well the effect environmental regulation has on economic activities. The following results were obtained:
(1) There are wide disparities in pollutant emissions across regions of China. The developed eastern provinces are facing the worst environmental issues, especially water pollution. The provinces with a lower level of economic development experience relatively fewer environmental problems. There are also significant pollution differences across industries. Environmentally degraded industries are mainly concentrated in the capital-intensive manufacturing sector.
(2) A significant linkage is found between energy input and environmental total factor productivity, which is the promotion of environmental efficiency that can facilitate energy saving. Therefore, it is necessary and useful to promote environmental efficiency.
(3) There is a coupling relationship between environmental protection and manufacturing industries, which is evolving from a moderate and low to moderate one. However, from a dynamic perspective, the degree of coupling is not as optimistic as expected. The coupling relationship is associated with disordered development.
(4) China’s environmental regulation would worsen employment conditions, which is consistent with results that do not consider open conditions. This finding may be attributed to the cleaner production environment brought about by socioeconomic development. Enhancing the intensity of environmental regulation may block the flow of foreign capital, which may ultimately reduce employment.
Based on these results, we provide the following policy suggestions. China’s central government should encourage the eastern provinces to adjust their technological structure and give priority to the development of environmental protection technology using incentives and regulatory mechanisms. In addition, the eastern provinces should transfer such technology westward to inland provinces as soon as possible. China should strengthen the coordination and sustainability in the central region, which will have a significant national impact. China should promote the rationalization of industrial infrastructure and appropriately boost the development of advanced and clean industries. The rationalization of industrial infrastructure is the first step towards smooth industrial development. The central regions should actively undertake industrial transfer from the east in this process. China should support small businesses and emerging industries to achieve the goal of employment growth. Industrial upgrading from labor-intensive industries to capital- and technology-intensive industries should not be too rapid in order to ensure the steady growth of employment.