Under the shadow of Asian Brown Clouds: Unbalanced regional productivities in China and environmental concerns

Abstract

China has seen rapid economic growth over the past two decades, but severe environmental problems have accompanied this, such as the looming danger of Asian Brown Clouds. This paper analyzes the regional development of China by examining economic performance and environmental factors. Technical efficiency and productivity changes in 31 regions of China are computed for the period 1997-2001. In the case of regional GDP, the fast-developing eastern (coastal) regions experience higher technical efficiency and productivity growth than the inland central and western regions. When environmental factors are incorporated, the eastern regions still perform better than inland regions, both from static and dynamic analysis. This phenomenon is termed the 'double deterioration' of the inland areas in China. Double deterioration is attributed to the lack of economic resources to replace highly-polluting production equipment and technology in those less developed regions.