Macroeconomic implications of China’s dual carbon goals

ABSTRACT

The ‘dual carbon’ goals are set to reshape China’s industrial landscape and impact the economy as a whole. This paper briefly discusses the channels through which climate polices may affect the economic growth, and then provides a quantitative analysis of the economic impacts of China’s climate polices using a global dynamic CGE model. The simulation results of different policy scenarios suggest that climate policies will have negative impacts on China’s investment and export by raising the costs of prodcution, but the aggregate impact on China’s output will generally be mild. Nonetheless, other countries’ climate policies may have meaningful spillover effects on China’s economy through the trade channels and China should lead or participate in the international coordination on climate policies to be better placed to achieve the ‘dual carbon’ goals.

KEYWORDS:

• dual carbon goal
• CGE
• economic growth

JEL CLASSIFICATION:

• E30
• Q50

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Baseline scenario refers to the scenario where the EU adopts the EU 2016 baseline while other countries fail to meet their NDCs commited in 2015.

2. Environmental Impact and Sustainability Applied General Equilibrium model (ENVISAGE).

3. Forcasts in April 2022.

4. Carbon Pricing Dashboard.

5. The carbon emission data of these countries are collected from the NDC website.