Economic Growth and Pollution Emission in China: Structural Path Analysis

Abstract

The relationship between economic growth and environmental pollution has long been a controversial topic. However, simply the detection of the existence of environmental Kuznets curve (EKC) is not enough to understand how economic growth induced environmental pollution. This study investigated the path and mechanism of the effect of economic growth on the emission of two types of environmental pollutants, that is, industrial smoke and dust and sulfur dioxide, by using a structural equation model and a sample of 283 prefecture-level cities in China in 2005 and 2015. The research results show that economic growth exerted both direct and indirect effects on the emission of the two environmental pollutants. In addition to a direct impact through the economic scale effect, economic growth also indirectly impacted the two environmental pollutants emissions through three mediators, that is, industrial structure, technological innovations and environmental regulations. For different pollutants, the effect paths of economic growth on their emission showed both similarities and differences. First, with regards to industrial smoke and dust emissions and sulfur dioxide emissions, the effects of economic growth on the amount of these two emissions through environmental regulations and the industrial structure were negative inhibitory effects and positive promoting effects, respectively. This means that in prefectural-level cities in China, environmental regulation factors have produced some effects in reducing the emissions of these two pollutants while the industrial structure (level of industrialization) can increase the emissions of these two pollutants. However, the effect strength of these two paths shows a gradual weakening. Second, these two paths differ in effect strength and its changes. The positive promoting effects of the industrial structure on pollutant emission are significantly higher than the inhibitory effects of environmental regulation. In addition, our study also found that the direct impact path of economic growth on environmental pollution also passed significance testing, particularly in 2015. This shows that other reasons affect pollutant emission, such as system factors, spatial migration of industries and so forth.