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China’s Green Total Factor Productivity Has Remarkably Improved since the 18th CPC National Congress (No.238, 2020)

Nov 13,2020

By Li Weiming, Gao Shiji and Yang Yan, Research Institute of Resources and Environment Policies, DRC & Liao Hua and Ai Xianneng, Beijing Institute of Technology

Research Report, No.238, 2020 (Total 5982) 2020-9-30

Abstract: As resources and environment have increasingly become a restraint for economic growth, it is more scientific and appropriate to adopt GTFP (short for “green total factor productivity”) as a measurement for the growth quality of an economy compared with the traditional total factor productivity. Based on the OECD accounting framework, this paper incorporates the factors of natural capital input and environmental pollution into the research and elaborates the findings from the perspective of China’s national conditions, in a bid to make a systematic accounting for the country’s GTFP from 1978 to 2019. It is found through empirical analysis that China’s GTFP during this period grew at an annual average rate of 2.32 percent, much lower than the accounting result of traditional total factor productivity for that period. The GDP growth in light of environment factors since the 18th CPC National Congress has witnessed narrowed difference compared with that of actual growth rate, and this shows that GTFP has improved remarkably with much room for further improvement. For high-quality economic development during the 14th Five-Year Plan period (2021-2025), China needs to pay high attention to enhancing GTFP and establish a GTFP accounting and policy-making system with Chinese characteristics.

Keywords: high-quality development, green total factor productivity, natural capital input, environmental impact