The relationship of economic development and environmental problems in modern China

Abstract

Over the past forty years, China has shown rapid and significant economic growth, going from agrarian to industrial economy: its GDP has been increasing by an average of 9.8% per year, which represents dynamic economic growth thus making China the second largest economy in the world after the USA in terms of nominal GDP. Due to the specific history of its economic development, China faces the problem of serious destruction and pollution of life-supporting natural resources. Environmental degradation is already in conflict with the challenges of further economic growth necessary to meet the needs of the growing population and improve its standard of living. Based on this, the study of the influence of economic development on China’s environmental problems in the context of modern development seems to be particularly relevant in theoretical and practical terms. To test the hypothesis of the relationship of economic development and environmental problems in China, a correlation-regression analysis has been conducted: we have identified 22 pairs of indicators with moderate and strong relationships. Using the Engle-Granger criterion method, we checked the presence of true causal relationship between the indicators and we found that the studied pairs of indicators do not cointegrate, i.e. there is no true causal relationship between the indicators of economic development and environmental indicators. This result led us to the conclusion that there is a significant difference in the rates of economic development and environmental protection. The result of evaluating the effectiveness of investments in solving the problems of environmental pollution in the PRC has shown that insufficient attention is paid to investments in the control and control of water pollution and pollution by industrial wastes. Government investments in these areas for pollution control are ineffective.