An Empirical Investigation on the Underlying Factors of Recently Declining Air Pollution in China

Abstract

This study analyses the underlying factors of recently declining air pollution in China, utilizing annual time series data spanning from 2000 to 2020 in the framework of the autoregressive distributed lag model approach. In the empirical setting, air pollution is represented by particulate matter 2.5 concentrations known as the most detrimental ambient pollutant, and the empirical model includes several socioeconomic potential determinants of air pollution. The main motivation behind the study is the downward tendency of air pollution in China as of the second decade of the 2000s. At this point, although it is commonly accepted that the Air Pollution Prevention and Control Action Plan implemented by the Chinese State Council has been effective, the underlying specific factors of declining air pollution are not clear. From this motivation, the study unveiled the positive impact of economic growth, industrialization, and foreign direct investment inflows on air pollution, while medium- and high-tech exports and coal rents are found negatively associated with air pollution. In this respect, overall results particularly emphasize the declining impact of an increase in medium- and high-tech exports on air pollution. In this context, to improve the air quality further, the study suggests that China should transform its industrialization structure toward specialization in medium- and high-tech products, and promote foreign direct investment inflows specialized in these types of products. The study provides additional policy recommendations for Chinese policymakers.