Energy Consumption, Environmental Pollution And Change Of China’s Industrial Growth Model

Environmental pollution has attracted great attention of Chinese and theirgovernment with industrial development. Energy and environment are increasinglybecoming important constraint factors of industrial growth. To implement thesustainable development, it is essential to increase the contribution ratio of green totalfactor productivity. In view of this, firstly, SBM directional distance function is appliedto measure the green inefficiency in this paper and then industrial TFP growth and itscomponents are calculated via Luenberger productivity index in China’s30provincesover the period1991to2011. A comparative analysis is made on the two situationswhether the environmental factor is considered or not. Secondly, the contribution ratiosof green TFP in each province are calculated and the growth stages of industry in allprovinces are discussed. Finally, the paper deduces and examines the effects of R&Dinvestment, foreign investment and environmental regulation on green TFP, technicalprogress and technical effciency. The theoretical tests of "Pollution heaven" and "Potterhypothesis" could be solved in this paper.The major conclusions are following: traditional evaluation methods which ignorethe constraints of environmental factors overestimate the productivity of the wholecountry. The first source of environmental inefficiency is the excess of pollutantsemission and the second is the overuse of energy. The efficiency of energy use in theeastern regions is the highest but basically lowest in the western regions.The green TFPwhich ignores the environmental constraint is higher than the traditonal one whichconsiders the environmental constraint, and so does the ratio of technical progress.Whether ignoring the environmental constraint or not, the TFP and technical level arethe highest in the eastern regions and lowest in the western regions. Energy saving andemission reduction make the ranks of industrial TFP of30provinces changed obviouslyand "Potter hypothesis" only appeared in the eastern region under environmentalregulation and is supported by the follow-up study. The task of coordinateddevelopment between industrial growth and environmental protection is very difficult inthe central and western regions. From1991~2003to2004~2011years, the effect ofenvironmental regulation is on the decline, which means the increasing difficultybetween the energy saving-emission reduction and industrial growth. The rank of contribution ratios of green TFP is basically in accord with the green TFP growth.Improving the TFP growth plays a key role in changing growth model.The self-innovative capacity of R&D investment and the competitive effect of foreigncapital promote the green TFP and technical enffciency in the eastern regions.Environmental regulation promotes the green TFP and technical progress by theself-innovative capacity of R&D investment, also prompts the green technical progressby the competitive effect of foreign capital. Generally, the theories of "Pollutionheaven" and "Potter hypothesis" are tested in the estern regions. In the central andwestern regions, the self-innovative capacity of R&D investment and the competitiveeffect of foreign capital promote the green technical enffciency but impede the greenTFP. The spillover effect of foreign capital is negative owing to the low absorptivecapacity the in both the eastern and central regions, but is not obvious in the westernregions. Generally, environmental regulation impedes the growth of green TFP in thewestern regions.