A Study On The Bidirectional Effect Between Economic Development And Environmental Pollution In China

We are pursuing economic development as our task for a long time, and the development of market economy has obtained great achievement, but at the same time, environmental problems are more and more serious. Water pollution, fog has seriously affected the People's Daily life, and need to be solved. After 18 th CPC National Congress, construction of Ecological Civilization became an important part of sustainable development of our country and construction of beautiful China. Comprehensive development of economic on the one hand, make the environmental protection is facing new challenges,but on the other hand also bring unprecedented opportunities for the environmental work. The environmental protection work promoted by comprehensive reform under the "New Normal" begin a new stage of "comprehensive management, establishing the mechanism, long-term development". Under the new stage, the state is increasing the investment in environmental protection work, and national consciousness of environmental protection is also on the increase, "The 13 th Five Year" will be the unprecedented golden age of energy saving and environmental protection industry. In this background,emphasizing the bidirectional effect between China's economic development and environmental pollution can help us realize the importance of environmental governance, and the possibility of improving the environment under the condition of keep the economic development, which has important theoretical and practical significance.Most research on the relationship between economic development and pollution is focused on one-way relationship. Studies on the impact of pollution on economic development are mainly theoretical studies, which are concentrated on the variation of economic growth path under the constraint of theresearch and environment, and are not effectively combined with empirical research. Compared with the foreign research, domestic research on the aspects of theory is relatively weak. Research on the effect of economic development on environment is majorly fitting the environmental kuznets curve found by Grossman and Krueger, adopting different pollution indicators and econometric methods. The data used is mainly provincial level or municipal level within individual provinces, so it also needs corresponding expansion in the data level.According to the deficiencies existing in the current research, this paper analyses the relationship between economic development and environmental pollution respectively from two aspects of theory and empirical analysis. In theoretical research, this article discusses the mutual effect mechanism between economic development and environmental pollution in reference on the basis of the existing theories and models. First starts from the pollution as a joint product of output, that enterprises can put production factors into production, or use them to control pollution, then demonstrates the increase of pollution will cause the increase of output, that is, the nature of the factors of production, thus incorporates pollution into the production function. Then establishes equilibrium model using the supply and demand analysis of the pollution, illustrating there is a trend that the pollution of the environment is increased in the presence and then decreased with income increasing. So as to lay a foundation for the following empirical analysis.In empirical analysis, this article uses the panel data of China's 284 prefecture level city in2005-2013. At first analyses the change of economic development and environmental pollution in China in recent years using the data of real GDP, and three industrial waste emissions sulfur dioxide dust and wastewater. Then uses the principal component analysis method to synthetize a comprehensive index using three environmental pollution index.After that, combined with the theoretical research,creates asimultaneous equations model including an output equation contains pollution as a production factor and a pollution equation contains output and the square of output. Carries out regression analysis using two stage least squares, at last uses of eastern and central data, to verify the interaction relationship between economic development and environmental pollution.Through the above analysis, this paper draws the following conclusions:(1) China's economic development and environmental pollution are imbalance obviously;(2) from 2005 to 2005, the city environment pollution levels, some are intensified, some have been significantly improved;(3) there exists a two-way influence mechanism between economic development and environmental pollution,environmental pollution can be used as a special production factor which can affect the output and promote economic development; on the other hand, economic development will affect people's preference towards the environment, so that environmental pollution with the improvement of economic level is inverted "U" type;(4) Although the pollution of the environment as a factor of production, can promote economic development, but the contribution to economic growth is much smaller relative to other factors(capital,labor, human capital);(5) Economic development is influenced majorly by the capital stock, and the contribution of labor and human capital to economic development is different in different areas.(6)Although the environment pollution is strongly influenced by economic growth, the fiscal decentralization and energy intensity will also a certain impact on the level of environmental pollution.Finally according to the relationship between economic development and environmental pollution in China, in order to improve quality of environment at the same time guarantee the development of economics,this article puts forward several policy suggestions: develop recycling economics, improve resource utilization efficiency; strengthen the government's environmental regulation, optimize the marketconfiguration of polluting enterprises; adjust the structure of fiscal decentralization, improve local government incentive mechanism; optimize the industrial structure, cultivate new economic growth point.