Revisiting the growth–environment nexus in China: The role of institutions, energy use, and ecological stress

Büşra Ağan Çelik ()

Economy, 2025, vol. 12, issue 2, 139-145

Abstract: This study investigates the dynamic relationship between income level and key environmental and institutional drivers in China, focusing on energy use, ecological footprint, trade openness, and rule of law over the period 1990–2023. The purpose is to assess how these factors jointly influence China’s growth trajectory under increasing sustainability challenges. The analysis employs the Autoregressive Distributed Lag (ARDL) model, which captures both short-run adjustments and long-run equilibrium dynamics while accommodating variables with mixed integration orders. The empirical results show that ecological footprint, trade openness, and institutional quality exert statistically significant short-run effects on GDP, whereas energy use is not significant in the short run. The highly significant error correction term confirms rapid adjustment toward equilibrium, reflecting the economy’s sensitivity to shocks. In contrast, the long-run effects of energy, environmental, and institutional variables are statistically insignificant, suggesting that China’s growth path cannot rely on current structures to achieve sustainable outcomes. These findings contribute to the debate on the compatibility of economic expansion with environmental sustainability by providing new evidence from the Chinese context. Practical implications emphasize the need for structural reforms, including reducing coal dependence, accelerating the transition to renewable energy, embedding environmental standards into trade policy, and strengthening institutional enforcement mechanisms. The results also offer policy guidance aligned with China’s carbon neutrality objectives and Sustainable Development Goals.

Keywords: Ecological footprint; Energy use; Institutional quality; SDGs; ARDL model; China. (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:aoj:econom:v:12:y:2025:i:2:p:139-145:id:7458

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