How do China's lockdown and post-COVID-19 stimuli impact carbon emissions and economic output? Retrospective estimates and prospective trajectories

Shuai Shao; Chang Wang; Kuo Feng; Yue Guo; Fan Feng; Yuli Shan; Jing Meng; Shiyi Chen

doi:10.1016/j.isci.2022.104328

How do China's lockdown and post-COVID-19 stimuli impact carbon emissions and economic output? Retrospective estimates and prospective trajectories

iScience. 2022 Apr 30;25(5):104328. doi: 10.1016/j.isci.2022.104328. eCollection 2022 May 20.

Authors

Shuai Shao¹, Chang Wang^{2

3}, Kuo Feng^{4

5}, Yue Guo^{6

7

8}, Fan Feng⁹, Yuli Shan^{10

11}, Jing Meng¹², Shiyi Chen^{2

13}

Affiliations

¹ School of Business, East China University of Science and Technology, Shanghai 200237, China.
² School of Economics, Fudan University, Shanghai 200433, China.
³ The Whitney and Betty MacMillan Center for International and Area Studies, Yale University, New Haven 06511, USA.
⁴ School of Economics, Zhejiang University of Finance & Economics, Hangzhou 310018, China.
⁵ Zhejiang Institute of "Eight-Eight" Strategies, Zhejiang University of Finance & Economics, Hangzhou 310018, China.
⁶ Key Laboratory of Regional Sustainable Development Modeling, Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing 100101, China.
⁷ College of Resources and Environment, University of Chinese Academy of Sciences, Beijing 100049, China.
⁸ Warwick Business School, University of Warwick, Coventry CV4 7AL, UK.
⁹ Renmin Business School, Renmin University of China, Beijing 100872, China.
¹⁰ Integrated Research on Energy, Environment and Society (IREES), Energy and Sustainability Research Institute Groningen, University of Groningen, Groningen 9747 AG, the Netherlands.
¹¹ School of Geography, Earth and Environmental Sciences, University of Birmingham, Birmingham B15 2TT, UK.
¹² The Bartlett School of Sustainable Construction, University College London, London WC1E 7HB, UK.
¹³ Anhui University, Hefei 230601, China.

Abstract

This paper develops a multi-sector and multi-factor structural gravity model that allows an analytical and quantitative decomposition of the emission and output changes into composition and technique effects. We find that the negative production shock of China's containment policy propagates globally via supply chains, with the carbon-intensive sectors experiencing the greatest carbon emission shocks. We further reveal that China's current stimulus package in 2021-2025 is consistent with China's emission intensity-reduction goals for 2025, but further efforts are required to meet China's carbon emissions-peaking target in 2030 and Cancun 2°C goal. Short-term changes in carbon emissions resulting from lockdowns and initial fiscal stimuli in "economic rescue" period have minor long-term effects, whereas the transitional direction of future fiscal stimulus exerts more predominant impact on long-term carbon emissions. The efficiency improvement effects are more important than the sectoral structure effects of the fiscal stimulus in achieving greener economic growth.

Keywords: economics; energy policy; energy sustainability.