Regional industrial redistribution and carbon emissions: a dynamic analysis for China

ABSTRACT

To facilitate and balance regional economic development and to reduce carbon emissions, China has implemented a series of policies to promote the redistribution of industries and economic activities across regions since 2000. This paper employs a logarithmic mean Divisia index (LMDI) to analyse the dynamic net effect on carbon emissions of Chinese policies promoting economic redistribution across sub-national regions, using a panel data of five sectors in 30 provinces during 1995–2017. The results of our analysis show that the redistribution of industry in particular, but also business and construction activities, leads to an increase in CO₂ emissions, while the relocation of agriculture and transportation activities reduces emissions. We also find that the emission increase effect of the transfer of carbon intensive industries to new (host) regions is higher than the emission reduction effect induced by the agglomeration of clean industries in the original (home) regions. However, from 2014–2017, alongside the gradual industrial redistribution, China has also reduced aggregate CO₂ emissions by 58.6 MT. In addition, the results show that population migration, which is due to redistribution of industry and other economic activity, has caused higher emission increases than emission reductions due to redistribution policies. We further calculate the marginal effect of industrial redistribution on CO₂ emissions and draw out relevant policy implications.

Key policy insights

• Industrial (and other economic activity) redistribution within a county can be not only an economic policy, but also an important policy instrument to mitigate CO₂ emissions. This is the case in China.

• In the process of regional industrial redistribution, policymakers should aim to reduce the emission increase effect of transfer of carbon-intensive industries to host regions and to raise the emission reduction effect induced by an agglomeration of clean industries in home regions.

• Industrial redistribution is usually a long-term strategy for regional development within a county, and any reduction effects on CO₂ emissions are likely to need time to appear.

KEYWORDS:

• Industrial redistribution
• regional development and climate
• population migration
• CO₂ emissions

Acknowledgements

We are thankful to the editor, Jan Corfee-Morlot, and five anonymous referees for their very thoughtful comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the authors.

Data availability statement

The data that support the findings of this study is available from the authors upon request.

Notes

1 This paper uses the term ‘industrial redistribution’ broadly to refer to policies targeting the redistribution of industrial activities as well as the redistribution of other economic activities (specifically agriculture, business, construction, transportation).

2 This document can be retrieved from http://www.gov.cn/gzdt/att/att/site1/20120803/70f3950952e411857fe101.pdf.

3 This document can be retrieved from https://wap.miit.gov.cn/cms_files/filemanager/oldfile/miit/n1146285/n1146352/n3054355/n3057254/n7600006/c7600329/part/7600335.pdf.

4 We use the terms ‘industrial redistribution’ and ‘transfer of industries’ broadly to refer to redistribution or transfer of these five main sectors (agriculture, industry, construction, business and transportation). The category of our sectors is based on China Energy Statistical Yearbook. The agriculture sector includes agriculture, forestry, animal husbandry and fishery. The industry sector includes mining, manufacturing, production and supply of electricity, heat, gas and water. The construction sector refers to construction, installation and decoration for housing, all buildings and other built infrastructure. The business sector includes wholesale and retail trades, hotels and catering services, and other services. The transportation sector includes transportation, storage and postal and courier activities.

5 Given the data availability, this study includes 30 provinces, excluding Tibet, Hong Kong, Macau and Taiwan. Based on the National Bureau of Statistics in China, we divide these 30 provinces into four regions, namely, the East, the Central, the West and the Northeast region. The East region includes 10 provinces/municipalities, namely Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan. The Central region includes 6 provinces, namely Shanxi, Anhui, Jiangxi, Henan, Hubei and Hunan. The West region includes 11 provinces/municipalities, namely Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang. The Northeast region includes three provinces, namely Liaoning, Jilin and Heilongjiang.

6 We also calculate the average net effect of industrial redistribution on CO₂ emissions for provinces during 1995–2017, and the results are presented in the Table S2 and S3 in the Supplementary Materials.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [72073049, 71703052].