Economic Growth Is the Best Solution to China’s Environmental

Problems: An Analysis within the Framework of Environmental Kuznets

Curve

Qixuan Gao
University of Sheffield, UK
DOI: 10.32629/memf.v5i4.2539

Abstract: This paper uses the Environmental Kuznets Curve (EKC) theory to analyze the relationship between the Chi-
nese case and environmental quality, and explores whether the Chinese case provides the best solution to environmental
problems. In the early stages of China's economic development, heavy industry and pollution-intensive agriculture led to
environmental deterioration. However, with the increase in per capita income, the economic structure has shifted from heavy
industry to knowledge-intensive manufacturing and services, and the widespread application of clean energy technologies,
China's environmental quality has improved significantly. Economic growth provides financial support for clean technology
research and development, and also stimulates market investment in green technology. As people's environmental awareness
increases, the government has strengthened environmental supervision, which has helped to repair environmental pollution
caused by economic development. However, the EKC theory also has limitations. Economic growth may not be equally
converted into environmental improvements in all regions, and there are significant differences between regions. In addi-
tion, rapid economic development has also led to the loss of biodiversity, and these problems require long-term systematic
governance. Therefore, although I recognize the best solution for China to solve environmental problems, it still requires
a comprehensive approach of balanced development, effective environmental policies, technology, public awareness, and
cooperation to achieve sustainable development in China.
Keywords: Environmental Kuznets Curve (EKC), China’s sustainable development, environmental economics, China's en-
vironmental policies

1. Theory Application
In the early stages of China's development, its economy relied on heavily heavy industry and pollution-intensive
agriculture [1] (Aihui, 2024). Susmita [8] (2002) points out that the cost of pollution will increase with economic growth
along the Environmental Nietzsche Curve until per capita income approaches US$5,000. According to statistics from the
World Bank, China’s per capita GDP reached US$4,428 in 2010. It was during this period that China's pollution, exemplified
by severe smog, reached its peak. In 2013, severe and persistent haze weather occurred in many areas of China, and the air
quality reached the worst level in history. The PM2.5 concentration in Beijing, Tianjin, Hebei, Yangtze River Delta and other
regions is as high as over 300 micrograms/cubic meter. Zhaopeng [10] (2024) points out that the pollution cost of mortality
and morbidity caused by urban air pollution in China accounted for 2-3% of GDP per year from 2010 to 2015. However, as
China's economy continues to develop, changes in the industrial structure have begun to change environmental pollution. As
China's per capita income increases, the economy shifts toward knowledge-intensive manufacturing and services. By using
cleaner manufacturing technologies to help reduce pollution, China's large-scale application of new energy manufacturing
capacity and technology has helped China effectively reduce pollution. According to statistics released by China's State
Environmental Protection Administration (2023), the average concentration of PM2.5 in key economic development areas
such as Beijing-Tianjin-Hebei and the Yangtze River Delta dropped by more than 50% from 2013 to 2022, and AQI dropped
significantly by 30%. Taking China's air quality improvement as an example, the EKV theory's argument that when economic
growth exceeds a certain threshold, the degree of environmental degradation will first increase and then decrease has been
confirmed.

2. EKC Explanation
First of all if we look at China’s history of economic development, economic growth can fund research and development
of clean technologies such as renewable energy, pollution control systems and sustainable infrastructure. China was one of

Modern Economics & Management Forum 644 | Qixuan Gao

the major contributors to global pollution before 2010, but after 2013 it was also a major producer of electricity generated
from renewable energy sources (ELREC). (IBRD, 2023) However, as per capita income increases, the economy begins to
transform towards energy-intensive industries. These industries can help reduce pollution by utilizing cleaner manufacturing
technologies. At the same time, it can also provide green loans and financing for energy-saving projects to increase green
environmental storage capacity. Additionally, energy-intensive industries can fund R&D projects to develop environmentally
friendly technologies. Haider [4] (2023) demonstrates China has achieved better carbon productivity in recent years compared
with the past. China’s territorial emissions per unit of GDP are declining during 1960-2021. (Figure 1) This shows that China
has achieved higher levels of energy efficiency through economic growth in recent years.

Figure 1. China Average CO2 emissions per unit of GDP from various energy and sectoral sources. (Image source: Global Carbon Atlas)

Second from a market investment perspective, China's economic growth has accelerated the development of green
technologies. Taking renewable electricity as an example, driven by the success of the Chinese economy, China is already
one of the largest ELREC countries globally. According to the International Energy Agency (IEA) (2020), China generated
more than 1,800 TWh of ELRECs, accounting for nearly one-third of the global total. According to the China National
Energy Administration (CNEA), if China's annual economic growth continues to remain at around 4.5% by 2030, China will
be able to continue to increase the proportion of non-fossil fuels in its primary energy structure to around 20%. According to
the ELREC growth trends for hydropower published by the World Bank (2023), hydropower biomass in China will play a
key role in achieving a reduction in carbon footprint. (Figure 2) Wang [9] (2023) illustrates after China reached an inflection
point in per capita income, the increase in income greatly increased China's willingness to use and develop renewable energy
and consume more environmentally friendly products. Strong economic growth is driving China to implement multiple
policies and programs to encourage the use of renewable energy technologies and transition to a low-carbon energy system.

Figure 2. Progress of ELREC, excluding hydroelectric in China. (Data Source: World Bank)

Volume 5 Issue 4 | 2024 | 645 Modern Economics & Management Forum

 Third, as China's economy develops and matures, environmental quality has become a primary consideration for Chinese
residents. This often means growing public demand for cleaner air, water and a healthier environment. As environmental
awareness increases, consumers are likely to favor environmentally friendly products and services, thereby forcing companies
to adopt sustainable practices. Zheng [11] (2018) points out the association between environmental quality (EQ) and income
is U-shaped, but EQ begins to improve after the economy exceeds a growth threshold as individuals and society prioritize
ecological awareness and invest in green technologies.

3. Conclusion
This article uses the Environmental Kuznets Curve theory to prove that economic growth is the best solution to
China's environmental problems from four aspects: development history, investment wind direction, public awareness and
environmental supervision. China's economic development will lead to the upgrading of industrial-intensive industries to
resource-intensive industries, thus driving investment in environmental protection. At the same time, the public's increased
awareness of environmental protection and the government's upgraded environmental supervision under the changing
economic landscape will help repair some of the environmental pollution caused by economic development and increase
environmental storage capacity.
At the same time, EKV theory cannot fully explains the regional pollution imbalance caused by China's development
differences and the destruction of biodiversity caused by economic development and other ecological problems that require
long-term repair. This shows that although economic growth is the best solution to China's environmental problems,
economic growth alone is not enough to deal with China's future environmental challenges. Therefore, China needs to
adopt a balanced development approach combined with effective environmental policies, technological innovation, public
awareness campaigns, and international cooperation in the future to achieve environmentally sustainable development.

References

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