Causal relationships between carbon dioxide emissions and economic factors: Evidence from China

This study investigates the causal relationship between carbon dioxide (CO2) emissions and economic factors in Chinese provinces. Then, this study undertakes a comparative analysis of the eastern, central, and western provinces using a vector autoregressive model and panel data for 1997-2015. The results show there is unidirectional causality from per capita gross domestic product (GDP) to CO2 emissions in eastern and central provinces. Meanwhile, there is unidirectional causality from CO2 emissions to GDP per capita in western provinces. There is unidirectional causality between CO2 emissions to foreign direct investment in central and western provinces but no impact in eastern provinces. However, there is unidirectional causality between CO2 emissions to export volume only in eastern provinces. Based on the results, this study concludes that to reduce CO2 emissions, China should not only implement strict laws and regulations but should also advocate green investment, technological innovation, development of a circular economy, and sustainable development.