An implication of the EKC is that environmental degradation may act as a constraint on future economic growth. Technological innovation, namely pollution-suppressing technology can push an economy onto the traditional EKC path and towards the stage of sustainable development. This model also illustrates that pollution can be reduced through technological transfer, technological progress and foreign direct investment.
The Chinese case illustrates that environmental pollution has been worsening seriously since the beginning of its period of high growth. China is both the production factory and pollutant exporter to the world. The per capita and unit data of carbon dioxide emissions indicates that it is possible to reduce pollution and improve the environment through policy changes, and technological transfer and progress. China has recently invested substantially in pollution control, but there is regional disparity in the extent of this investment, with provinces in eastern China investing more than counterparts in central and western China. These recent developments indicate that policy changes need to be made to expedite the market-based turning point for environmentally friendly growth.
It will be a long march for China to develop low carbon economic growth and a realisation of sustainable development. China created an economic miracle in the past 30 years and we expect that China can create another miracle in its environmental protection in the next 30 years.
See my full chapter here [pdf] from this year’s China Update: China’s New Place in a World in Crisis.