The impact of socio-economic factors on air quality: The case of China

Abstract

In this research, we investigate the impact of socio-economic factors on air quality in China from 1994 to 2023 by employing Fully Modified Ordinary Least Squares (FMOLS) and Canonical Cointegrating Regression (CCR) techniques in estimations. The research centers on a composite air quality index that incorporates key pollutants, including household air pollution, NOx exposure, ozone exposure, PM2.5 exposure, and SO2 exposure. Specifically, the research's core goal is to explore how economic growth, energy consumption patterns, human capital development, factor income distribution, urbanization, and economic globalization have an impact on air quality in a rapidly developing nation like China. The empirical analysis reveals that economic growth, as measured by GDP per capita, and fossil fuel energy consumption are major contributors to air pollution. This underscores the environmental costs associated with China's rapid economic expansion. Conversely, better air quality is associated with a higher share of renewable energy consumption, improvements in human capital, and a more equitable distribution of labor income. The latter suggests that a fairer distribution of income from labor can contribute to environmental sustainability, possibly by reducing income disparities that drive excessive consumption patterns or encouraging greater investment in cleaner technologies. The study also reveals that urban population growth and economic globalization, including trade and financial globalization, put additional pressure on air quality. This demonstrates the difficulty of balancing economic growth and urban development with environmental protection, emphasizing the need for policies that promote sustainable energy use, improve education, ensure fair income distribution, and carefully manage urban growth and economic globalization in China to address air quality issues.