Abstract for: Integrating Economic Growth and Environmental Sustainability: China's Policy Dynamics

The aim of this study is to enhance our understanding of the interplay between China's economic and climate protection policies in recent years, and their actual impacts on economic growth and emission reductions. A system dynamics model was developed to depict the interactions among various factors, including production capacity, innovation, distribution, purchasing power, debt, investment, and CO2 emissions. The model is fitted with actual data that largely spans from 1970 to 2022 to calibrate multiple parameters. The simulations accurately mirror the progression of China's key economic indicators and CO2 emissions. The findings indicate that administrative measures to reduce emissions have significantly decreased CO2 emissions per unit of GDP. Moreover, the policy of boosting investment to ensure GDP growth has sustained China's GDP growth since 2015. However, it has also led to challenges such as inadequate consumption, relative overcapacity, and a rising debt ratio. Looking forward, China could foster sustainable economic and environmental development by enhancing the income share of non-investors in GDP, increasing carbon pricing, and reallocating carbon pricing revenues to non-investors.