Abstract

This paper explores the relationship between CO2 emissions and economic growth for China. This relationship is of considerable interest in the literature. There is a major focus on the underlying causes of the improvement in energy efficiency for China post the market reforms and whether such improvements in energy efficiency are likely to be maintained. The results demonstrate the importance of allowing for structural breaks in the econometric modelling to capture the impacts of the economic reforms on energy efficiency. The reforms have produced large gains in energy efficiency and an analysis of their likely continuation is important in forecasting the impacts of future growth in the Chinese economy. The paper concludes by outlining some possible forecast scenarios.