What Can Be Learned from “Green Growth Diagnostics” for Greening the Growth Path of China? - Conceptional Issues and Industry Evidence

It is evident that China’s manufacturing‐based growth model increasingly contradicts local, regional and global environmental imperatives. It is therefore of high importance to identify cost‐efficient strategies for greening the growth path of China. On 25 May 2011 the OECD has launched a “Green Growth Strategy” and proposed a “Green Growth Diagnostics” approach to identify the binding constraints on green growth. This paper discusses the usefulness of this approach for identifying the binding constraints to green growth in general as well as for the special case of China. It is argued that the approach is best applied at the industry level after some adjustments to identify binding constraints to the ‘greening’ of certain industries. The workings of the approach are illustrated for the case of the Chinese energy sector.