Drag effect of carbon emissions on the urbanisation process : evidence from China's province panel data

Abstract

This study attempts to measure the drag effect of carbon emissions on China's economic growth by incorporating carbon emissions as an endogenous variable into an economic growth model and by relaxing the assumption that the size of the economy will remain unchanged. The drag effect of carbon emissions on the process of urbanisation is derived based on the intrinsic relationship between economic growth and urban development. Then, unit root and cointegration tests are performed using panel data from 30 provincial regions in Mainland China from 2003 to 2016 to prove and estimate the resistance caused by carbon emission in the process of urbanisation. Results show that the drag effect of carbon emission between 2003 and 2016 has a certain negative impact on the process of urbanisation in China. Due to the constraints of carbon emissions, the growth rate of China's economic growth and urbanization level is 0.74% and 4.96% lower than that without constraints, respectively. Therefore, in the process of rapid urbanisation, formulating a reasonable carbon emission reduction strategy by the provincial government is conducive to the healthy and sustainable development of urbanisation.