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Challenging the Environmental Kuznets Curve in China: Evidence from a dynamic panel threshold model with
Yi Hu1, Kexin Guan2, Shouyang Wang3
1School of Economics and Management, University of Chinese Academy of Sciences, Beijing, 100190, China; MOE Social Science Laboratory of Digital Economic Forecasts and Policy Simulation at UCAS, Beijing, 100190, China.
Journal of Environmental Management
|December 28, 2025
Summary
The Environmental Kuznets Curve (EKC) hypothesis does not apply to China. Economic growth and carbon emissions show decoupling, allowing simultaneous development and pollution reduction.
Area of Science:
- Environmental Economics
- Sustainable Development
- Econometrics
Background:
- The Environmental Kuznets Curve (EKC) hypothesis posits an inverted U-shaped relationship between economic development and environmental pollution.
- Assessing the EKC's applicability is crucial for sustainable development strategies, particularly in rapidly developing economies like China.
Purpose of the Study:
- To re-evaluate the Environmental Kuznets Curve (EKC) hypothesis in China.
- To analyze the dynamic relationship between economic growth and carbon emissions using provincial panel data (1997-2021).
Main Methods:
- Development of a dependence-robust dynamic panel threshold model.
- Accounting for nonlinear regime shifts, cross-sectional dependence, and common shocks.
- Analysis of per capita, total, and growth-based specifications of carbon emissions.
Main Results:
- The EKC hypothesis is found to be inapplicable in China when cross-sectional dependence is adequately addressed.
- A clear decoupling pattern between carbon emissions and economic growth was observed.
- China's carbon emissions are primarily driven by structural and energy-use factors, not solely by economic development levels.
Conclusions:
- China possesses significant potential for simultaneous economic growth and carbon emission reduction.
- Findings support targeted energy-efficiency strategies and clean energy deployment.
- Results advocate for strengthened coordinated regional carbon governance to decouple growth from emissions.
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