A Study On Sustainable Economic Growth Of China Under Environmental Constrains

How to realize sustainable economic growth under environmental constrains is an important theoretical and practical concern confronted by China. The dissertation, takes the contradiction between the environment and economic growth as the dissertation clue, focuses on the primary ways to resolve such contradiction, i. e. technology progress, technology diffusion, industry structure change and international trade, and explores the laws of China's sustainable economic growth under environmental constrains. Meanwhile, relative policy proposals for future development are made, too.Firstly, threshold panel data was adopted in analyzing the relationship between China's economic growth and the environment, revealing that although an exact inverted U-shaped relationship does not exist, just as the environmental Kuznets curve hypothesis described, yet an obvious threshold effect does exist. When there is a low per capita income, economic growth exerts an obvious positive effect on pollution emission; while when per capita income exceeds a threshold value, such effect will decline and turn into a negative one. Besides, threshold effect exists in GDP growth rate, too:when it exceeds 10%, extraordinary increase takes place in pollution emission. Adopting a two-stage LMDI model, this dissertation makes further analysis on related elements that influence China's environment quality. Decomposing the factors that influence the carbon dioxide emission, it reveals that the main force helpful to both decreasing pollution and increasing output is technology progress; generally speaking, structural effects are not distinct, and pollution is obviously subject to periodic fluctuations in economic growth. The "high input, high emission and low efficiency" economic growth since 2000, directly results in the rapid growth of the carbon emission. Empirical studies suggest that China is in a critical period of industrialization in the current and future, and this will be an uphill stage where the economic scale and pollution emission will grow shoulder to shoulder. Thus it will be an extremely difficult task to achieve sustainable economic growth with improved environmental quality through technological progress, industrial structure adjustment and upgrading.Secondly, with environmental policies, environment friendly technological progress being introduced into the framework of neo-Schumpeterian endogenous economic growth theory, the significance of technology progress and diffusion on helping resolve contradiction between the environment and economic growth under the condition with monopolistic competition, innovation incentive, and creative destructions is investigated. To realize the goal of sustainable development, technology progress is the fundamental way and environment policies are the prerequisite. Without technological progress, the environmental policies alone can not achieve sustainable economic growth, while without environmental policy constraints, the consequence of economic growth will be disastrous. Although environment regulations can slow down economic growth rate in steady-state equilibrium, yet the cost is worthwhile when enormous environment benefits are considered. In Schumpeterian mechanism, Porter effect does exist, and environment regulations can accelerate creative destruction, thus facilitating economic development. Meanwhile, the slow diffusion of the environment-friendly technology is a major obstacle to achieving the objective of sustainable growth, and the enhanced environmental control can help narrow the gap between the frontier of technology and the backward areas, and it can speed up technology diffusion. The empirical studies tell us that there is a distinct technology gap between the Midwest and East of China, so accelerating technology diffusion from the east to the Midwest will help promote environmental efficiency of the country; the diffusion of the environmentally friendly technologies that can only increase costs but brings little direct economic benefits is much more difficult than that can bring direct benefit; the study also found that the more backward areas of China, local innovation capability the worse, which in turn restricts economic growth and environmental efficiency improvement.Thirdly, in addition to technical progress factors, this dissertation investigated the important effects of industrial structure adjustment and transfer on sustainable economic growth. The study reveals that under the long-term economic growth, the fundamental factor that shapes a country's environment quality lies in industrialization. Structural effect on environment takes a reverse U-shape, too. With the deepening of industrialization, the development of manufacturing industry will bring about a substantial increase of pollution, and then when the structure is basically stable, the impact of structural factors on the environment will reduce. Subject to environmental policies, industrial structure will adapt to and change into one that favors environment improvement. In the meantime, in an open economy, a country's environmental policies aimed at sustainable growth will exert influence on international trade and FDI flows, and such influence intensifies as the economy develops. China's history proves that industries with different factor intensities exert different impact on environment; the export share of labor intensive industry is decreasing while those of capital intensive and technology intensive are increasing, and such change is helping ease contradictions between the environment and economic growth.In the end, under the current special situation, this dissertation suggested that the sustainable development way for China to adopt under environmental constrains is low-carbon industrialization. China should not only follow the law of evolution of industrial structure, accelerate the industrialization process, but also to resolve the conflict between economic growth and the environment, realize its goal of peaceful rise with green development through policy instrument innovation, replacing high-carbon economy and high-carbon industries with low-carbon economy and low-carbon industries.