Does political risk spur environmental issues in China?

Abstract

China is one of the largest emitters of carbon dioxide (CO₂) emissions in the world. Therefore, it is essential to explore the determinants of CO₂ emissions in China. But previous studies so far have not examined how the political risk of this country can affect its CO₂ emissions due to the lack of a long-term dataset. Hence, this study aims to capture the effect of political risk on China's CO₂ emissions while controlling renewable energy consumption, technological innovation, and the economy's economic growth. We employ Bayer and Hanck cointegration, FMOLS, DOLS, CCR, and frequency domain causality tests to establish the relationship among the variables mentioned above. The outcome of the study reveals that political stability is an important predictor of environmental degradation in China. Moreover, political stability is helpful to lower CO₂ emissions, while technological innovation and renewable energy consumption can reduce CO₂ emissions, economic growth further deteriorates environmental quality by increasing its carbon emissions. Therefore, the present study recommends that policymakers in China should control political tension in the country to control CO₂ emissions and, at the same time, promote technological innovation and renewable energy consumption.

Keywords: Carbon emissions; China; Political risk; Renewable energy; Technology.