Evolution trends and structural decomposition of China's green value-added over 40 years of reform and opening-up

Abstract

China's 40-year history of reform and opening-up includes rapid economic development as well as pollution and environmental governance. Using a four-stage division, this study explores the evolution trend and structural decomposition of China's green value-added by constructing a non-competitive input-output table for environmental pollution from 1978 to 2017. The results indicate that pollution production coefficients increased continuously, and the green value-added index decreased. Additionally, the structural decomposition showed that investment and export were critical for economic growth during the period, though they were accompanied by serious pollution problems. The pollution generated by the raw material (represented by coal mining) and processing industries (represented by the textiles) were not controlled effectively. Pollution treatment for these industries should be strengthened in the future. The study has implications for government officials, policy makers, and academics. First, China should make green development a core concept for economic development, increase environmental pollution governance, develop a “green GDP,” incorporate the external costs of environmental pollution into the national economic accounting system. Second, it must change the investment and export structure as well as the traditional economic development pattern that exacerbates pollution. Specifically, the country should develop industries with low pollution and promote the export of industries producing high value-added products and increase green GDP per capita. Third, it should closely monitor the development of highly polluting industries. Upgrading technology to reduce pollution and strengthening pollution treatment will reduce the number of polluting industries and improve environmental governance efficiency.