How do urban haze pollution and economic development affect each other? Empirical evidence from 287 Chinese cities during 2000-2016

Seeking the sustainable development of environment and economy has become the consensus of Chinese society. This paper uses the generalized three-stage least squares (GS3SLS) method to establish a spatial simultaneous equation model to explore the interaction mechanism between haze and economic development. Regarding the entire country, the relationship between PM2.5 and per capita GDP presents an inverted U-shaped curve, which verifies the existence of the environmental kuznets curve (EKC). The relationship curves for the eastern and western regions also show this feature, but the relationship in the central region increases monotonically. To further observe whether the interaction mechanism between haze and economy has changed before and after the 2008 financial crisis, this paper takes 2008 to examine the time heterogeneity. Under the stimulation of the economic policy of the four trillion rescue plan, the inflection point of the EKC shifts slightly to the right, and the economic stimulus policy delays the inflection point of haze pollution. Haze pollution also reacts to economic development and has an inhibitory effect on economic development. Under the influence of spatial factors, the inhibitory effect of haze pollution on economic development is amplified. Population size, FDI and the secondary industry all aggravate haze pollution, while urbanization and the tertiary industry can improve haze pollution under the influence of spatial factors. Market size, education level and convenient transportation promote economic development. This research can provide reference for haze control policies in China and has important practical significance for ecological environment protection, high-quality economic development and promoting good quality of life.

Automated summary

This paper explores the interaction mechanism between haze and economic development using the GS3SLS method and establishes a spatial simultaneous equation model, finding the existence of the environmental Kuznets curve and the different responses of different regions to this curve. By studying data before and after the 2008 financial crisis, it is also found that economic policies can affect the inflection point of the EKC, and spatial factors exacerbate the inhibitory effect of haze pollution on economic development.