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Is China Growing Dirty? A Cointegration Analysis with Structural Breaks

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  • Mustafa Naimoglu

    (Bingöl Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, İktisat Bölümü, Bingöl, Türkiye)

  • Sefa Özbek

    (Tarsus Üniversitesi, Uygulamalı Bilimler Fakültesi, Gümrük İşletme Bölümü, Mersin, Türkiye)

Abstract

Economic growth and development are some of the most important macroeconomic targets for national economies. Many ways exist for achieving these goals, and ensuring sustainability has a very important place. How much economic growth and development need to contribute to increasing human welfare, the quality and characteristics of growth in a national economy become important. This study examines the relationships among energy consumption, trade liberalization, economic growth, and CO2 emissions over the sample period of 1971-2018 in the Chinese economy, which saw a 393.64% per capita increase in energy use, 3,180.01% increase in gross domestic product per capita, and 610.515% increase in CO2 emissions per capita in 2018 compared to 1971. The study first tests the stationarity of the variables using the Zivot and Andrews (1992) unit root tests with structural breaks. The presence of long-term relationships among the variables was investigated using the Gregory and Hansen (1996) cointegration test, which includes structural breaks in the model. The short- and long-term coefficient estimations were analyzed using the Full Modified Ordinary Least Squares (FMOLS) and canonical cointegration regression (CCR) methods. Estimates for the short- and long-term coefficients were analyzed using the FMOLS and CCR methods. The results show that economic growth and energy consumption increase CO2 emissions in the short and long term. Therefore, pollution growth is determined to have taken place in China. This result stands out as an important problem in China. The high level of CO2 emissions in China and the fact that this problem has a significant weight on a global scale removes the problem from being local. Therefore, politicians need to take concrete steps immediately to solve this problem.

Suggested Citation

  • Mustafa Naimoglu & Sefa Özbek, 2022. "Is China Growing Dirty? A Cointegration Analysis with Structural Breaks," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(2), pages 245-264, July.
    • Handle: RePEc:ist:iujepr:v:9:y:2022:i:2:p:245-264
    DOI: 10.26650/JEPR1055637
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    More about this item

    Keywords

    Energy consumption; trade liberalization; CO2 emissions; economic growth; China JEL Classification : C22 ; F41 ; Q43;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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