Factors influencing CO2 Emission in China: A Nonlinear Autoregressive Distributed Lags Investigation

This paper investigates the environmental impact of economic growth, energy consumption, financial development and globalization in China over the period 1970Q1-2015Q4. In particular we consider four dimensions of globalization namely economic, social, political and overall globalization. The Nonlinear Autoregressive Distributed Lags (NARDL) model has been employed to capture the potential asymmetric impact of the determinants of dioxide carbon emissions in China. Interestingly, findings show that: (1) In the short-run: economic growth and financial development have a significant symmetric impact on CO2 emissions. Energy consumption has a nonlinear and asymmetric influence on CO2 emissions. However, economic globalization does not impact CO2 emissions. (2) In the long-run: economic growth, financial development and economic globalization exhibit an asymmetric influence on carbon emissions in model including the economic dimension of globalization. Economic growth has a positive symmetric impact on CO2 emissions in model including social globalization, however, it does not influence CO2 emissions in case of political or overall globalization. In addition, energy consumption is positively linked to CO2 emissions. Moreover, financial development does not influence carbon emission in models including respectively social, political and overall globalization. Social and overall globalization have a significant influence on CO2 emissions. The results of this paper are important for policies that would promote sustainable development and environment protection.