Relationship Between Chinese Economic Development and Environment Pollution During 1997-2016—An Empirical Analysis Based on VAR

Abstract

Based on the yearly datum of gross domestic product during 1997-2016 in China, as well as the amount of discharge for SO2, COD, and industrial solid wastes, based on VAR model, Johansen co-integration tests, Granger causality tests, impulse response and variance decomposition, with qualitative analysis, the thesis studies the relationship between the Chinese economic development and environment pollution. The results show that, among the GDP, and the COD, industrial solid wastes, there existing stable co-integration relationship in the long run. The influence on the economic development of the three environment pollution indexes, of which in period t-1, the COD discharge is the largest with the negative relationship; followed by SO2 in period t, with the positive relationship; and industrial solid wastes in period t-1 is the least with the positive relationship. SO2 and COD Granger Caused GDP, ISW and GDP are reciprocal causation. On one side, the economic development caused water environment repeated deterioration; on the other side, its positive impact on the management of industrial solid wastes is gradually strengthening. The COD discharge would restrict economic growth. The influence of the environment pollution on the economic development exist a certain lag.