China's industrial SO2 emissions and its economic determinants: EKC's reduced vs. structural model and the role of international trade

Abstract

ABSTRACTThis paper discusses the validity of the Environmental Kuznets Curve (EKC) hypothesis for the case of China's industrial SO2 emissions: both its reduced form and structural model are considered. The EKC curve for China's per capita industrial SO2 emissions predicts the turning point at 10,000 yuan (3,085 US$, Purchasing Power Parity (PPP)). However, given China's fast population expansion, the decreasing trend in per capita emissions may well not be enough to bring about an immediate reduction in terms of total industrial SO2 emissions and emissions density. Using the structural EKC model makes it possible to reveal how various factors contribute to the industrial SO2 emissions density – namely, the three commonly known structural determinants and the marginal impact of international trade. International trade proves to have a two-fold impact: a significantly negative direct one and an indirect one that is dependent on the current capital–labour abundance ratio and on the income level of each province.