Structural changes, energy consumption and carbon emissions in China: Empirical evidence from ARDL bound testing model

The preface of Chinese opens up reforms in 1978, posed a new era of progression that intensively sparked the industrial revolt in China, which momentously worsen its atmosphere by carbon emission. The current study examines the nexus among the variables; energy consumption, economic growth, agriculture value added, industrial value added, service value added, trade openness, financial development, urbanization, and environmental degradation (CO2 emission) in China, spanning from 1968 to 2016. Autoregressive Distributed Lag (ARDL) bound testing model, applied to capture the essence of estimation in short-run and the long-run. Estimations for the long run and short run portrayed that Industry, agriculture, services, energy consumption, and trade openness worsening the environment, however, the growth and urbanization ensure the clean and prudent environment quality. Furthermore, directional connectedness is noticed under Granger causality aligned results with ARDL. It is recommended that greenhouse gases (CO2) can be reduced by producing energy through renewable sources. Meanwhile, the government needs to make strong laws and policies to enforce carbon taxes on structural sectors of the economy and precisely should be focused on the green based economy.