Abstract
China aims to reduce carbon dioxide (CO2) intensity by 40–45% compared to its level in 2005 by 2020. The underground economy accounts for a significant proportion of China’s economy, but is not included in official statistics. Therefore, the nexus of CO2 and the underground economy in China is worthy of exploration. To this end, this paper identifies the extent to which the underground economy affects CO2 emissions through the panel data of 30 provinces in China from 1998 to 2016. Many studies have focused on the quantification of the relationship between CO2 emissions and economic development. However, the insights provided by those studies have generally ignored the underground economy. With full consideration of the scale of the underground economy, this research concludes that similar to previous studies, the inversely N-shaped environmental Kuznets curve (EKC) still holds for the income-CO2 nexus in China. Furthermore, a threshold regression analysis shows that the structural and technological effects are environment-beneficial and drive the EKC downward by their threshold effects. The empirical techniques in this paper can also be applied for similar research on other emerging economies that are confronted with the difficulties of achieving sustainable development.
Highlights
During the past few decades, climate change has been a challenging problem all over the world [1]
The following analysis of the GDPT-CO2 emissions nexus is based around the cubic specification result
The structural and technological effects become larger than before in magnitude once the income level reaches the thresholds. The analysis reveals such a nonlinear structure- and technology-CO2 nexus through the threshold regression technique that is more adequate to the environmental Kuznets curve (EKC) theory and the underlying mechanism
Summary
During the past few decades, climate change has been a challenging problem all over the world [1]. As the primary greenhouse gas, carbon dioxide (CO2) has been extensively recognized to be a common cause of global environmental issues [2]. China started to promote its industrialization and urbanization since 1978. The rapid industrialization and urbanization, have dramatically increased the CO2 emissions in China [3]. Multiple developed countries have put pressures on China in climate change conferences [4]. Under such circumstances, at the Copenhagen climate agreement, the Chinese government set an ambitious target of reducing carbon intensity by 40–45% by 2020 compared to the level at 2005
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