Carbon intensity constraint, economic growth pressure and China's low-carbon development

Abstract

Within the context of promotion tournaments among local governments, the management of economic growth goals plays a crucial role in China's economic development. Despite China's rise as the second-largest economy globally, it has also emerged as the largest emitter of carbon emissions. Since the implementation of the 12th Five-Year Plan in 2011, the Chinese central government has made carbon intensity targets mandatory indicators for national economic development. This has prompted local governments to pursue low-carbon growth and adjust their economic growth targets (EGT) to comply with carbon intensity constraints. In this study, a sample of 282 prefecture-level cities in China is used to empirically examine the impact of carbon intensity constraints on total factor carbon emission efficiency (TCE) using the intensity difference-in-differences (DID) framework. The study also emphasizes the role of the transmission channel for economic growth pressure (EGP). The findings of the study reveal several key results. Firstly, the implementation of carbon intensity constraints leads to an average increase of 8.24% in total factor carbon emission efficiency (TCE), which is supported by robustness tests, parallel trend analysis, and placebo tests. Secondly, these constraints result in an average decrease of 0.1828 in local governments' economic growth targets (EGT) and a reduction of 0.1269 in economic growth pressure (EGP). Thirdly, cities with a higher proportion of secondary industry experience a more significant mitigation effect, although the promotion of provincial EGT hinders this effect. Fourthly, synergistic policies can effectively promote low-carbon development, and government expenditure on technology and marketization can facilitate a positive relationship between carbon intensity constraints and TCE. Lastly, the effects of carbon intensity constraints vary across the east, middle, and west regions, suggesting the presence of heterogeneity. The article proposes a shift in the assessment of lower governments by superior governments, from growth assessment to low-carbon growth assessment.