[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v76y2022icp981-996.html
   My bibliography  Save this article

The macro-economic and CO2 emissions impacts of COVID-19 and recovery policies in China

Author

Listed:
  • Jiang, Shiqi
  • Lin, Xinyue
  • Qi, Lingli
  • Zhang, Yongqiang
  • Sharp, Basil
Abstract
The outbreak and ongoing evolution of the COVID-19 pandemic have dramatically impacted economic development and CO2 emissions. China is under simultaneous pressure to recover from the outbreak and meet its carbon reduction targets, and the government is endeavouring to stimulate economic recovery through fiscal and monetary policies. This paper uses a computable general equilibrium model to measure the impact on China’s economic recovery and carbon emissions by incorporating the pandemic shock and related economic recovery policies of loan prime rate (LPR) and value-added tax (VAT) reduction. The study found that COVID-19 led to a simultaneous shock on China’s supply and demand sides in which GDP dropped by 2.62% and carbon emissions fell by 2.53%, compared to the period prior to COVID-19. Although the LPR and VAT reduction effectively mitigated economic loss, the combined LPR and VAT reduction had a more substantial effect on boosting GDP than the single policies. The VAT cut expands production and was used to overcome supply-side shocks, while lowering LPR mitigates the damage of demand-side shocks. Compared to the VAT reduction policy, reduced LPR has smaller carbon emissions per unit of GDP output. Consequently, we recommend that the government concentrate on a combination of policies to navigate pandemic shocks, as the two economic stimulus policies are confirmed to complement one another in terms of strengths and shortcomings.

Suggested Citation

  • Jiang, Shiqi & Lin, Xinyue & Qi, Lingli & Zhang, Yongqiang & Sharp, Basil, 2022. "The macro-economic and CO2 emissions impacts of COVID-19 and recovery policies in China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 981-996.
    • Handle: RePEc:eee:ecanpo:v:76:y:2022:i:c:p:981-996
    DOI: 10.1016/j.eap.2022.10.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592622001734
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2022.10.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Liu, Li-Jing & Yao, Yun-Fei & Liang, Qiao-Mei & Qian, Xiang-Yan & Xu, Chun-Lei & Wei, Si-Yi & Creutzig, Felix & Wei, Yi-Ming, 2021. "Combining economic recovery with climate change mitigation: A global evaluation of financial instruments," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 438-453.
    2. Klemeš, Jiří Jaromír & Fan, Yee Van & Tan, Raymond R. & Jiang, Peng, 2020. "Minimising the present and future plastic waste, energy and environmental footprints related to COVID-19," Renewable and Sustainable Energy Reviews, Elsevier, vol. 127(C).
    3. Duan, Hongbo & Bao, Qin & Tian, Kailan & Wang, Shouyang & Yang, Cuihong & Cai, Zongwu, 2021. "The hit of the novel coronavirus outbreak to China's economy," China Economic Review, Elsevier, vol. 67(C).
    4. Hamdi-Cherif, Meriem & Malliet, Paul & Reynès, Frédéric & Landa, Gissela & Saussay, Aurélien, 2020. "Assessing short-term and long-term economic and environmental effects of the COVID crisis in France," Conference papers 330205, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Jia, Zhijie & Wen, Shiyan & Lin, Boqiang, 2021. "The effects and reacts of COVID-19 pandemic and international oil price on energy, economy, and environment in China," Applied Energy, Elsevier, vol. 302(C).
    6. Smith, L. Vanessa & Tarui, Nori & Yamagata, Takashi, 2021. "Assessing the impact of COVID-19 on global fossil fuel consumption and CO2 emissions," Energy Economics, Elsevier, vol. 97(C).
    7. Yuli Shan & Jiamin Ou & Daoping Wang & Zhao Zeng & Shaohui Zhang & Dabo Guan & Klaus Hubacek, 2021. "Impacts of COVID-19 and fiscal stimuli on global emissions and the Paris Agreement," Nature Climate Change, Nature, vol. 11(3), pages 200-206, March.
    8. Pradhan, Basanta K. & Ghosh, Joydeep, 2021. "COVID-19 and the Paris Agreement target: A CGE analysis of alternative economic recovery scenarios for India," Energy Economics, Elsevier, vol. 103(C).
    9. Ian Sue Wing, 2011. "Computable General Equilibrium Models for the Analysis of Economy–Environment Interactions," World Scientific Book Chapters, in: Amitrajeet A Batabyal & Peter Nijkamp (ed.), Research Tools In Natural Resource And Environmental Economics, chapter 9, pages 255-305, World Scientific Publishing Co. Pte. Ltd..
    10. Farhi, Emmanuel & Baqaee, David Rezza, 2020. "Nonlinear Production Networks with an Application to the Covid-19 Crisis," CEPR Discussion Papers 14742, C.E.P.R. Discussion Papers.
    11. Zhang, Lirong & Li, Yakun & Jia, Zhijie, 2018. "Impact of carbon allowance allocation on power industry in China’s carbon trading market: Computable general equilibrium based analysis," Applied Energy, Elsevier, vol. 229(C), pages 814-827.
    12. Paul Malliet & Frédéric Reynès & Gissela Landa & Meriem Hamdi-Cherif & Aurélien Saussay, 2020. "Assessing Short-Term and Long-Term Economic and Environmental Effects of the COVID-19 Crisis in France," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 867-883, August.
    13. Alexandre A. Porsse & Kênia B. de Souza & Terciane S. Carvalho & Vinícius A. Vale, 2020. "The economic impacts of COVID‐19 in Brazil based on an interregional CGE approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(6), pages 1105-1121, December.
    14. Antoine Mandel & Vipin Veetil, 2020. "The Economic Cost of COVID Lockdowns: An Out-of-Equilibrium Analysis," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 431-451, October.
    15. Warwick McKibbin & Roshen Fernando, 2021. "The Global Macroeconomic Impacts of COVID-19: Seven Scenarios," Asian Economic Papers, MIT Press, vol. 20(2), pages 1-30, Summer.
    16. Jin Xu & Weixian Wei, 2021. "The effects of tax and fee reduction policy on mitigating shock of the COVID-19 epidemic in China," Applied Economics, Taylor & Francis Journals, vol. 53(46), pages 5303-5318, October.
    17. Wei, Weixian & Zhao, Yurong & Wang, Jianlin & Song, Malin, 2019. "The environmental benefits and economic impacts of Fit-in-Tariff in China," Renewable Energy, Elsevier, vol. 133(C), pages 401-410.
    18. Guo, Yue Mei & Shi, Yun Rui, 2021. "Impact of the VAT reduction policy on local fiscal pressure in China in light of the COVID-19 pandemic: A measurement based on a computable general equilibrium model," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 253-264.
    19. Dai, Hancheng & Xie, Yang & Liu, Jingyu & Masui, Toshihiko, 2018. "Aligning renewable energy targets with carbon emissions trading to achieve China's INDCs: A general equilibrium assessment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 4121-4131.
    20. Liu, Yawen & Cui, Qi & Liu, Yu & Zhang, Jinzhu & Zhou, Meifang & Ali, Tariq & Yang, Lingyu & Feng, Kuishuang & Hubacek, Klaus & Li, Xinbei, 2021. "Countermeasures against economic crisis from COVID-19 pandemic in China: An analysis of effectiveness and trade-offs," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 482-495.
    21. Dietzenbacher, Erik & Kulionis, Viktoras & Capurro, Filippo, 2020. "Measuring the effects of energy transition: A structural decomposition analysis of the change in renewable energy use between 2000 and 2014," Applied Energy, Elsevier, vol. 258(C).
    22. Corinne Le Quéré & Robert B. Jackson & Matthew W. Jones & Adam J. P. Smith & Sam Abernethy & Robbie M. Andrew & Anthony J. De-Gol & David R. Willis & Yuli Shan & Josep G. Canadell & Pierre Friedlingst, 2020. "Temporary reduction in daily global CO2 emissions during the COVID-19 forced confinement," Nature Climate Change, Nature, vol. 10(7), pages 647-653, July.
    23. B. Lahcen & J. Brusselaers & K. Vrancken & Y. Dams & C. Silva Paes & J. Eyckmans & S. Rousseau, 2020. "Green Recovery Policies for the COVID-19 Crisis: Modelling the Impact on the Economy and Greenhouse Gas Emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 731-750, August.
    24. Haikun Wang & Xi Lu & Yu Deng & Yaoguang Sun & Chris P. Nielsen & Yifan Liu & Ge Zhu & Maoliang Bu & Jun Bi & Michael B. McElroy, 2019. "China’s CO2 peak before 2030 implied from characteristics and growth of cities," Nature Sustainability, Nature, vol. 2(8), pages 748-754, August.
    25. Jun, Wen & Mughal, Nafeesa & Zhao, Jin & Shabbir, Malik Shahzad & Niedbała, Gniewko & Jain, Vipin & Anwar, Ahsan, 2021. "Does globalization matter for environmental degradation? Nexus among energy consumption, economic growth, and carbon dioxide emission," Energy Policy, Elsevier, vol. 153(C).
    26. Shuang Liang & Xinyue Lin & Xiaoxue Liu & Haoran Pan, 2022. "The Pathway to China’s Carbon Neutrality Based on an Endogenous Technology CGE Model," IJERPH, MDPI, vol. 19(10), pages 1-22, May.
    27. repec:hal:spmain:info:hdl:2441/6neh4df2kq9orrjiscv6839f6n is not listed on IDEAS
    28. Wang, Qingqing & Lu, Mei & Bai, Zimeng & Wang, Ke, 2020. "Coronavirus pandemic reduced China’s CO2 emissions in short-term, while stimulus packages may lead to emissions growth in medium- and long-term," Applied Energy, Elsevier, vol. 278(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mao, Qian & Ma, Xinyuan & Sun, Yunpeng, 2023. "Study of impacts of blockchain technology on renewable energy resource findings," Renewable Energy, Elsevier, vol. 211(C), pages 802-808.
    2. Funashima, Yoshito & Hiraga, Kazuki, 2023. "Did the Japanese government’s travel subsidy increase the number of hotel guests and infection during the COVID-19 pandemic?," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 1005-1025.
    3. Raei, Hasan & Maleki, Abbas & Farajzadeh, Zakariya, 2024. "Analysis of energy policy reform in Iran: Energy and emission intensity changes," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 1535-1557.
    4. Deng, Youyi & Dong, Kangyin, 2024. "How does the coal-to-gas policy mitigate carbon emissions? The role of fintech development," Resources Policy, Elsevier, vol. 89(C).
    5. Gao, Zhibin & Li, Zengrong, 2024. "Role of free media and political openness in achieving resources efficiency and sustainability," Resources Policy, Elsevier, vol. 90(C).
    6. Wen Zhang & Rong Zhang & Yuntao Zou, 2024. "Urbanization and Cultural Industry Correlation: An Empirical Analysis from China," Sustainability, MDPI, vol. 16(16), pages 1-27, August.
    7. Rosell, Jordi, 2023. "Did governments neglect the environment during the COVID-19 pandemic? An empirical analysis of green public procurement," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 835-849.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jia, Zhijie & Wen, Shiyan & Lin, Boqiang, 2021. "The effects and reacts of COVID-19 pandemic and international oil price on energy, economy, and environment in China," Applied Energy, Elsevier, vol. 302(C).
    2. Feng, Chun-Chiang & Chang, Kuei-Feng & Lin, Jin-Xu & Lee, Tsung-Chen & Lin, Shih-Mo, 2022. "Toward green transition in the post Paris Agreement era: The case of Taiwan," Energy Policy, Elsevier, vol. 165(C).
    3. Cassetti, Gabriele & Boitier, Baptiste & Elia, Alessia & Le Mouël, Pierre & Gargiulo, Maurizio & Zagamé, Paul & Nikas, Alexandros & Koasidis, Konstantinos & Doukas, Haris & Chiodi, Alessandro, 2023. "The interplay among COVID-19 economic recovery, behavioural changes, and the European Green Deal: An energy-economic modelling perspective," Energy, Elsevier, vol. 263(PC).
    4. Feng Wang & Min Wu, 2021. "The Impacts of COVID-19 on China’s Economy and Energy in the Context of Trade Protectionism," IJERPH, MDPI, vol. 18(23), pages 1-23, December.
    5. Gagnon, Joseph E. & Kamin, Steven B. & Kearns, John, 2023. "The impact of the COVID-19 pandemic on global GDP growth," Journal of the Japanese and International Economies, Elsevier, vol. 68(C).
    6. Shah, Muhammad Ibrahim & Foglia, Matteo & Shahzad, Umer & Fareed, Zeeshan, 2022. "Green innovation, resource price and carbon emissions during the COVID-19 times: New findings from wavelet local multiple correlation analysis," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    7. Liu, Li-Jing & Yao, Yun-Fei & Liang, Qiao-Mei & Qian, Xiang-Yan & Xu, Chun-Lei & Wei, Si-Yi & Creutzig, Felix & Wei, Yi-Ming, 2021. "Combining economic recovery with climate change mitigation: A global evaluation of financial instruments," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 438-453.
    8. Shehabi, Manal, 2022. "Modeling long-term impacts of the COVID-19 pandemic and oil price declines on Gulf oil economies," Economic Modelling, Elsevier, vol. 112(C).
    9. Peng Jiang & Jiří Jaromír Klemeš & Yee Van Fan & Xiuju Fu & Yong Mong Bee, 2021. "More Is Not Enough: A Deeper Understanding of the COVID-19 Impacts on Healthcare, Energy and Environment Is Crucial," IJERPH, MDPI, vol. 18(2), pages 1-22, January.
    10. Can Wang & Xianming Meng & Mahinda Siriwardana & Tien Pham, 2022. "The impact of COVID-19 on the Chinese tourism industry," Tourism Economics, , vol. 28(1), pages 131-152, February.
    11. Xinyue Lin & Lingli Qi & Haoran Pan & Basil Sharp, 2022. "COVID-19 Pandemic, Technological Progress and Food Security Based on a Dynamic CGE Model," Sustainability, MDPI, vol. 14(3), pages 1-18, February.
    12. Koasidis, Konstantinos & Nikas, Alexandros & Van de Ven, Dirk-Jan & Xexakis, Georgios & Forouli, Aikaterini & Mittal, Shivika & Gambhir, Ajay & Koutsellis, Themistoklis & Doukas, Haris, 2022. "Towards a green recovery in the EU: Aligning further emissions reductions with short- and long-term energy-sector employment gains," Energy Policy, Elsevier, vol. 171(C).
    13. Zhenshan Yang & Jianan Wei & Quansheng Ge, 2023. "Friction or cooperation? Boosting the global economy and fighting climate change in the post-pandemic era," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
    14. Irena Lacka & Blazej Supron, 2021. "The Impact of COVID-19 on Road Freight Transport Evidence from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 3), pages 319-333.
    15. George, Ammu & Li, Changtai & Lim, Jing Zhi & Xie, Taojun, 2021. "From SARS to COVID-19: The evolving role of China-ASEAN production network," Economic Modelling, Elsevier, vol. 101(C).
    16. Yanguas Parra, Paola & Hauenstein, Christian & Oei, Pao-Yu, 2021. "The death valley of coal – Modelling COVID-19 recovery scenarios for steam coal markets," Applied Energy, Elsevier, vol. 288(C).
    17. Imen Khanchel & Naima Lassoued & Rym Gargoury, 2023. "CSR and firm value: is CSR valuable during the COVID 19 crisis in the French market?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(2), pages 575-601, June.
    18. Zhu Liu & Zhu Deng & Philippe Ciais & Jianguang Tan & Biqing Zhu & Steven J. Davis & Robbie Andrew & Olivier Boucher & Simon Ben Arous & Pep Canadel & Xinyu Dou & Pierre Friedlingstein & Pierre Gentin, 2021. "Global Daily CO$_2$ emissions for the year 2020," Papers 2103.02526, arXiv.org.
    19. Jin Fan & Hongshu Wang & Xiaolan Zhang, 2022. "A General Equilibrium Analysis of Achieving the Goal of Stable Growth by China’s Market Expectations in the Context of the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(22), pages 1-22, November.
    20. Fernando Castelló-Sirvent & Marta Peris-Ortiz & Malar Llopis-Amorós & Pablo Pinazo-Dallenbach, 2024. "How does the COVID-19 economic crisis impact resilience? A configurational analysis of the spinoffs," International Entrepreneurship and Management Journal, Springer, vol. 20(3), pages 1823-1848, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:76:y:2022:i:c:p:981-996. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.