The ultimate goals of economic growth are to expand human freedom and provide a better, safer and cleaner Earth for both present and future generations. We live in a moment of great opportunities and great challenges. The global economy has the potential to continue to grow 50% in the next 15 years. But the risk of environmental damage and climate change casts a shadow over the prospects for long-term growth.
Nov 2014
The ultimate goals of economic growth are to expand human freedom and provide a better, safer and cleaner Earth for both present and future generations. We live in a moment of great opportunities and great challenges. The global economy has the potential to continue to grow 50% in the next 15 years. But the risk of environmental damage and climate change casts a shadow over the prospects for long-term growth. In the next 15 years, China has the potential to become the world’s largest economy. As a result, more than any other country, it faces huge opportunities and challenges.
After 30 years of rapid economic growth, China’s growth rate has been slowing down. Capital and fixed asset investment have driven growth over the past 30 years. However, because of a decrease in the return of investment (ROI), such investment-driven rapid economic growth will not be sustainable. Meanwhile, resource constraints are now beginning to negatively impact economic growth. If these are not dealt with effectively, Chinese growth may stall and China will risk falling into the so-called “middle- income trap”. Technological innovation and improvements in resource productivity will therefore be critical for China’s economic growth prospects. Analysis for the report suggests that China’s economy could then still grow by 7-8% in the coming years, before falling to 5% in 2030 while hitting climate change targets.
The report recommends that China should set a medium/long term target for carbon dioxide emission reduction as soon as possible, and use the target as a guide and forcing mechanism to promote the transformation of economic and social development and to accelerate energy conservation and carbon reduction.
This report also examines a target whereby energy-related CO emissions stabilize and stop increasing around 2030 and then start to decrease as soon as possible, which would achieve a 58% reduction in CO2 emissions per unit of GDP at 2030 from 2010 level. It would require China to implement further policies on economy restructuring, energy conservation, energy efficiency improvement, renewable energy development and air pollutants reduction.
Working Papers