Assessing the target-availability of China’s investments for green growth using time series prediction

Abstract

China’s environmental protection investments are projected to increase from 1.28% of gross domestic product (GDP) in 2015 to the targeted 3.5% by 2020 during the 13th Five-Year Plan. The rationality of the target is better examined using an effective empirical approach that can predict the developmental trend of the environmental protection industry. In this study, we assess the target-availability of China’s investments in environmental protection from the perspective of the performance of listed environmental protection companies. We simplify the diverse performance indicators of the listed environmental protection companies using principal component analysis and select the most representative and competitive listed companies using the hierarchical clustering method. Using time series predictions, we estimate the sales performance of the selected top listed companies from the fourth quarter (Q4) of 2018 to the fourth quarter (Q4) of 2020. The experimental results indicate that China’s investment target beyond the listed companies’ capabilities. (1) It is nearly impossible for the top companies to reach the target by 2020 unless they at least triple their sales performance over the next 3 years. (2) The implementation quality of green growth is unpredictable if these companies are forced to achieve the target. The paper concludes with policy implications on how to better implement the development target.