Economic growth targets and carbon emissions: Evidence from 278 cities in China

Liang Chang, Yi Shan, Na Tan and Zhenzhen Yang

Asian Economic Journal, 2024, vol. 38, issue 4, 477-506

Abstract: The existing literature tends to overlook the trade‐off between the local government's dual goals of achieving economic growth targets and protecting the environment. This study reveals the adverse effects that local governments may have on the environment under the pressure of economic growth, indicating that an increase in regional economic growth targets is associated with an increase in local carbon emissions. Using data from Chinese prefecture‐level cities from 2000 to 2021, we find a 1% increase in the GDP growth target is associated with an increase in carbon emissions per unit of GDP of 1.6%. The mechanism analysis indicates that a higher regional growth target results in the entry of highly polluting new enterprises and a reduction in environmental protection‐related inputs, which consequently leads to an increase in carbon emissions. The implementation of administrative and market‐based policies, including government policy planning and piloting of emission rights, can mitigate the driving effect of growth targets on carbon emissions. This study provides new evidence on the impact of regional economic growth pressures on carbon emissions and serves as an important reference for governments seeking to formulate effective carbon emission reduction policies.

Date: 2024
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