How China is Going Green: Pollution Controls, Green Investment and Policy Implications

  • Lin Cui

Student thesis: Doctoral ThesisPhD


Rapid economic growth has historically been accompanied by a large amount of resources consumed and high environmental costs. Following rapid economic growth, China in recent years has made an increasing number of achievements in pollution treatment and environmental governance, and is likely to need to continue to promote high quality economic development with high-level protection of the environment in the next decades. This thesis explores the efforts on pollution controls and green economy development in China, as well as conducting policy evaluation to see the effects of the government actions.

Chapter 2 tests the existence of the Environmental Kuznets Curve Hypothesis in China - the relationship between environmental degradation and economic development - at the provincial level. This chapter therefore investigates whether economic development can bring a positive effect on environmental improvement, utilizing a greater range of pollutants at a higher degree of disaggregation than previous analysis. Also, green investment were introduced to analyze the effect to pollution reduction. The results indicate that an inverted U-shaped curve between SO2, NOx and income per capita exists, whilst such a relationship is less clear for other pollutants including COD and particulates.

Chapter 3 investigates the relationship between corporate environmental performance and financial performance. Specifically, it aims to provide evidence of the efforts of Chinese corporations on environmental improvement and the potential trade-off with profitability. The chapter captures the longer time period and includes multi-perspectives of environmental performance expression. The results illustrate that environmental performance is positively associated with the financial performance at the corporate level. It therefore indicates that private sector companies should not expect that improving their environmental management will have a detrimental effect on economic performance.

In Chapter 4, the objective of research is to analyze the current green investment development in China, and the green bond is chosen in this chapter as the representative financing method of green investment. This paper is to evaluate the determinants of green bond yields and conduct a comparison between green bond and ordinary bond. The influencing factors of green bond consider bond characteristics and issuer characteristics, and the comparison shows the lower yields of green bond. The results illustrate the rapid expansion of green bond market, and the government should improve the regulation and oversight of the market scheme.

Chapter 5 uses cost benefit analysis to assess the environmental policy at both national and provincial level. It finds that the health benefits – including declines in both morbidity and mortality risks - from actual emissions reduction are significantly greater than the air pollution mitigation costs over the period of 2011-2025, based on the actual emission reduction and estimated reduction using historical data. The scenario results are compared under the business-as-usual scenario and policy implemented scenario. In addition, the provincial results demonstrate the regional differences in China due to regional economic development, climate condition, primary industry and suggest that economic efficiency objectives should be pursued at a provincial rather than national level.

To summarise, this paper gives a landscape of progress on environmental improvement in China based on the results. The results of these chapters demonstrate the common results of that China has stepped into the sustainable development path, including the continuous pollutants reduction, green finance market expansion, and more effective policies launched. The considerable industrial pollutants reduction have been demonstrated with empirical studies, and environmental policy emphasizes environmental improvement and energy efficiency instead of the pollution controls. Combining with updated policies, this paper could be a reference of policy implementation and provide the suggestions to related policy advisors.
Date of Award27 Apr 2022
Original languageEnglish
Awarding Institution
  • University of Bath
SupervisorAlistair Hunt (Supervisor) & Bruce Morley (Supervisor)

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