Journal of Cleaner Production 17 (2009) 541–548

Contents lists available at ScienceDirect

Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

EKC analysis for studying economic growth and environmental

quality: a case study in China
X.D. Diao a, S.X. Zeng a, *, C.M. Tam b, Vivian W.Y. Tam c
a
Antai School of Management, Shanghai Jiaotong University, Shanghai 200052, PR China
b
Faculty of Science & Engineering, City University of Hong Kong, Kowloon, Hong Kong
c
Griffith School of Engineering, Griffith University, QLD 4222, Australia

a r t i c l e i n f o a b s t r a c t

Article history: Compared with the extensive research on the relationship between economic growth and environmental
Received 14 September 2007 quality in developed countries, there is a paucity of an empirical research on studying the relation for
Accepted 24 September 2008 developing countries. Based upon the Environmental Kuznets Curve (EKC) theory, this paper develops
Available online 22 November 2008
regression models for investigating the relationship between economic growth and environmental
quality in China. The EKC analysis based on six pollution indices is illustrated with a case study in Jiaxing
Keywords:
of Zhejiang, China.
Environmental Kuznets Curve
Ó 2008 Elsevier Ltd. All rights reserved.
Economic growth
Environmental quality
Cleaner production
China

1. Introduction major Chinese cities including municipalities and provincial capi-

Relationships between economic growth and environmental
quality have attracted much research interest from practitioners
and researchers since 1970s. The ‘Limits to Growth’ is argued for
a zero-growth or steady-state economy to avoid dramatic envi-
ronmental deterioration in the future [1,2]. In some developing
countries, the economy has been rapidly growing over the past
decade [3]. Meanwhile, they have paid a great cost as a result of
severe environmental deterioration, including overexploitation of
ground water, generation of massive solid and industrial waste,
destruction of ecosystem, and other problems related to land,
water, and air [4,5].
Being one of the largest developing countries, China has
undergone rapid changes since adoption of the reform and the
opening policy in 1978. During the past 20 years, the average
growth rate of China’s GDP reached 9.7%, providing China as one of
the 10 largest economies in the world [6]. However, the extensive
growth has depleted large amounts of resources and brought about
high emission of pollutants. The levels of major environmental
pollutants such as sulfur dioxide (SO2) emissions and total air-
suspended particulates (TSP) are far worse than those specified by
international standards [7]. It has been reported that 72% of the
* Corresponding author.
E-mail address: zengsaixing@sjtu.edu.cn (S.X. Zeng).
tals have TSP levels exceeding 200 mg/m3, compared to a standard
of 90 mg/m3 set by the World Health Organization [5,8].
In fact, there is a close relationship between economic devel-
opment and environmental quality. Much has been researched in
the past 10 years about the severe environmental deterioration and
the ways to deal with it in China. However, few empirical studies
have been recorded on the use of environmental Kuznets curve
(EKC) analysis to study the relationship between economic growth
and specific pollution indices in China. Based on a case study in
China, this paper examines the relationship between the rapid
economic growth and the main pollutants using decomposition
analysis of EKC, aiming for understanding the challenges involved
in the trade-offs of economic development and environmental
protection from a different perspective.
1.1. Previous studies
The empirical literature on the EKC purports to describe how
a nation’s environmental quality will evolve if it makes the tran-
sition from poverty to wealth. The EKC hypothesizes a relation
between the relative levels of environmental damage and the
values of Gross Domestic Products (GDP) per capita in a country
[3,9,10]. Shafik and Bandyopadhyay [11], Panayotou [12], Grossman
and Krueger [13] and Selden and Song [14] hypothesized that the
relationship between economic growth and environmental quality,
whether positive or negative, was not linear along the development

0959-6526/$ – see front matter Ó 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jclepro.2008.09.007
542 X.D. Diao et al. / Journal of Cleaner Production 17 (2009) 541–548

path of any individual country. In other words, each country has its Table 1
own EKC, which is determined by the resource endowment, the Indices of pollution and economy.

composition of economic activities within the whole economy, and Index Unit Abbreviation of index
social customs. Industrial wastewater discharged 10,000 tonnes IWWD
Some researchers [2,13–22] revealed an inverted U-shaped Industrial waste gas discharged 10,000 m3 IWGD
relationship between environmental degradation and income for Sulfur oxide discharged Tonne SOD
Soot discharged Tonne SD
supporting the EKC hypothesis with peaks at the primary stages of
Industrial dust discharged Tonne IDD
development followed by declines at the later stages. However, Industrial solid waste produced 10,000 tonnes ISWP
some researchers addressed that the inverted U-shaped relation- GDP Per capita RMB Yuan PCGDP
ship did not always exist. Kaufmann et al. [23] found a U-shaped
relation between income and atmospheric concentration of SO2. The multinomial curve model is used to analyze the relationship
Fried and Getzner [24] developed an N-shaped curve. Although between environmental quality and economic growth [11,13,14].
they initially exhibited the same pattern as an inverted U-shaped The reduced form model is shown in equation (1):
curve, the relationship between environmental pressure and
income was still positive when a certain income level was excee- yt ¼ b0 þ b1 xt þ b2 x2t þ b3 x3t þ b4 zt þ 3t (1)
ded. Spangenberg [25] argued that the EKC pattern might exist, but
not be resulted from the overall environmental pressure. He where y is a pollution index with a low value meaning a high
revealed that there was no indication of following the EKC from the environmental quality; x the GDP per capita (PCGDP) or GDP
relationship between economic growth and resource consumption. indicating the level of economic growth; z the other variables of
Perman and Stern [26] thought that the EKC did not exist when influence on the environmental quality including environmental
being tested by statistical methods. Vehmas et al. [27] analyzed the policies, investment strategies, contribution of industry to GDP; t
relationship among direct material input, domestic material the time index; b0 the constant; b1, b2, b3 and b4 the coefficients of
consumption and economic development from the aspect of explanatory variables; and 3 the normally distributed error term.
material flows using the EKC theory. Using equation (1), we can test the various forms of relationship
Shen [28] formulated a model based on simultaneous equations between environmental quality and economic growth as follows:
for studying the effects of the environment on the economy
inversely to test the relationship between the economy and the (1) b1 ¼ b2 ¼ b3 ¼ 0. A flat pattern or no relationship between x
environment using Chinese provincial data from 1993 to 2002. and y.
Chen and Chen [29] compared the EKC testing results of different (2) b1 > 0 and b2 ¼ b3 ¼ 0. A monotonically increasing linear
areas when considering whether to implement new policies or not. relationship between x and y.
Liu et al. [30] tested the EKC hypothesis using production-induced (3) b< 0 and b2 ¼ b3 ¼ 0. A monotonically decreasing linear
pollutant indices and consumption-induced pollution indices in relationship between x and y.
Shenzhen, China. (4) b1  0; b2 < 0 and b3 ¼ 0. A quadratic relationship with
opening downward direction, generally described as an inver-
ted U-shaped curve. This is a conventional EKC. We can obtain
1.2. Model development
the turning points at x* ¼ 2bb1 by setting derivatives of
2
equation (1) equal to zero.
From previous empirical studies on the relationship between
(5) b1  0; b2 > 0 and b3 ¼ 0. A quadratic relationship with
economic growth and environmental quality, it is revealed that the
opening upward direction, generally described as a U-shaped
pollution deterioration indices can be described by parameterized
curve. We can obtain the turning points at x* ¼ 2bb1 by setting
models, using the income index as an independent parameter or 2
derivatives of equation (1) equal to zero.
variable in the form of multinomial functions.
(6) b1  0; b2  0 and b3 > 0 (b1and b2 cannot be zero at the same
In this paper, a multinomial curve model is proposed with the
time). A cubic polynomial generally described as an N-shaped
variables not taking log in the following three modes:
figure. However, finding the key points is difficult. According to
the characteristics of a cubic equation, if an inflection point and
(1) A linear model in that environmental quality monotonically
turning points exist, we can obtain the turning points at
changes with economic growth; pffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi pffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
2 2
(2) A quadratic function model in the forms of U-shaped or b  b 3b1 b3 b þ b 3b1 b3
x*1 ¼ 2 3b2 and x*2 ¼ 2 3b2 by setting differ-
3 3
inverted U-shaped relationship between environmental
entials of equation (1) equal to zero and we can obtain the
quality and economic growth; and
inflection point at x*3 ¼ 3bb2 by setting quadratic differentials
(3) A cubic function model in the forms of N-shaped or the 3
of equation (1) equal to zero. However, the inflection point and/
inverted N-shaped relationship between environmental
or the turning points may not exist and a corresponding curve
quality and economic growth.
can show the trend of continuous increase.

1400 3
100 million yuan

IWWD IWGD SOD

1200 GDP VASI SD IDD ISWP
1000 VAPI VATI 2
800
600 1
Index

400
200 0
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-1
01

02
00

04
96

97

98

99

03
5

05
9

20

20
20

20
19

19

19

19

20
19

20

Year -2
Year
Fig. 1. Development trends of GDP, value added by primary industry (VAPI), value
added by secondary industry (VASI) and value added by tertiary industry (VATI) in Fig. 2. Change of pollution indices from 1995 to 2005 in Jiaxing. Note: The normalized
Jiaxing. Note: The figures calculated in current price are compiled from the Jiaxing data is compiled from data published by the Jiaxing Environmental Protection Agency
statistical yearbook in 1995–2005. (1995–2005).
 X.D. Diao et al. / Journal of Cleaner Production 17 (2009) 541–548 543

Table 2
Descriptive statistics of variables (units are based on that shown in Table 1).

Variables Samples Sample mean Sample median Standard deviation Sample minimum Sample maximum
IWWD 11 12,34,401 11,786.00 3230 7241 17,630.4
IWGD 11 9,782,889 8,192,700 5,685,487 1,440,635 17,892,106
SOD 11 49,970.67 52,500.00 26,961 4664 91,021.7
SD 11 33,802.62 30,647.00 17,793 8441.0 69,624.0
IDD 11 26,995.77 15,541.76 26,797 9273.0 95,112
ISWP 11 116.4927 109.4000 59.91281 35.47 242.17
PCGDP 11 20,998.24 18,054.84 9342 9564.0 39,390.5

Note: PCGDP is adjusted on the basis of CPI, setting CPI in 1995 equal to 100.
Source: Jiaxing Statistical Yearbook (1995–2005) and Jiaxing Environmental Protection Agency (1995–2005).

(7) b1  0; b2  0andb3 < 0 (b1and b2 cannot be zero at the same
time). A cubic polynomial generally described as an inverted N-
shaped figure. Same as (6), if the inflection point and the
turning points exist, we can obtain the turning points at
pffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi pffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
2
b  b 3b1 b3
2
b þ b 3b1 b3
x*1 ¼ 2 3b2 and x*2 ¼ 2 3b2 by setting differ-
3 3
entials of equation (1) equal to zero; and we can obtain the
inflection point at x*3 ¼ 3bb2 by setting quadratic differentials
3
of equation (1) equal to zero. However, the inflection point and/
or the turning points may not exist and a corresponding curve
can show the trend of continuous decrease.
1.3. Data collection
In this paper, a case study in Jiaxing City, one of the developed
regions in Zhejiang, China, is used to study the relationship
between environmental quality and economic growth. In Jiaxing
City, the economy development has grown significantly and its GDP
has increased with an average annual rate of about 13.43% since
1995. By the end of 2005, the total nominal GDP in Jiaxing reached
1159.66 hundred million RMB Yuan (see Fig. 1).
Average growth rates of the value added by primary industry
(VAPI), the value added by secondary industry (VASI) and the value
added by tertiary industry (VATI) are about 3.94%, 14.61% and
15.34% respectively. As seen, VASI accounts for more than 50% of
GDP in Jiaxing.
In this paper, GDP per capita (PCGDP) is used as the index
indicating the economic growth. Because PCGDP reported in Jiaxing
Statistical Yearbook are calculated at current prices, adjustments on
the basis of consumer price index (CPI) by setting CPI in 1995 equal
to 100.
Six indices are employed to gauge the levels of environment
pollution in Jiaxing, including industrial wastewater discharged
(IWWD), industrial waste gas discharged (IWGD), sulfur oxide
discharged (SOD), soot discharged (SD), industrial dust discharged
(IDD), and industrial solid waste produced (ISWP) (see Table 1). In
this paper, the index of sulfur oxide is chosen to consistently keep
data source in the Jiaxing Statistical Yearbook, which indicated that
SOD was seen important in measuring air quality around the world.
Additionally, IDD is independently calculated in the Jiaxing
Statistical Yearbook. Thus, in the Section 2, the regression result of
IDD is independently analyzed without being included in industrial
waste gas discharged.
To examine changes of these pollution indices in the same
reference frame, the relative data are normalized as shown in Fig. 2.
From Fig. 2, it is shown that IWGD, IDD and ISWP have the
lowest values in 1995, IWWD and SD in 1996, and SOD in 2001. An
obvious trend for all the pollution indices is noted between the
period of 1995 and 2005. Table 2 lists the descriptive statistics of
variables.
2. Results and analysis
Based on equation (1), six pollution indices for Jiaxing City are
calculated. SAS version 9.1 for Windows is used for statistical
analyses. To develop a regression curve, it is necessary to get: 1)
statistically significant F-values; 2) significant T-values for all pre-
dicted variables; 3) high R-values; and 4) residual passing tests. The
analysis process consists of the following major steps:
Step 1: Stepwise Regression (statistically significant level at 15%)
is selected and analyzed in the process using a variable screening
method. Variables reserved after the stepwise regression are used
for full regression analyses.
Step 2: If Step 1 is not feasible for a preferable regression model,
delete the intercept form and implement regression analyses again
by following the same ways as described in Step 1.

Table 3
Regression results of the pollution indices on PCGDP.

Dependent variable IWWD IWGD SOD SD IDD ISWP

Intercept 11,150,480 185.6506
(2.05) (3.73)
[0.0746] [0.0074]
x 0.88617 1477.463 2.32912 3.48267 3.32902 0.03172
(16.86) (2.95) (9.17) (4.68) (2.85) (4.41)
[<0.0001] [0.0184] [<0.0001] [0.0012] [0.0191] [0.0031]
x2 0.000012 0.01940 0.000075 0.000084 1.14E6
(6.83) (1.91) (3.02) (2.14) (3.57)
[<0.0001] [0.0925] [0.0144] [0.0611] [0.0091]
x3 1.55E11
(3.54)
[0.0095]
R2 0.9925 0.8429 0.8937 0.8286 0.5633 0.9838
Adj  R2 0.9908 0.8037 0.8831 0.7905 0.4663 0.9768
F 591.68 21.47 84.09 21.76 5.81 141.63
[<0.0001] [0.0006] [<0.0001] [0.0004] [0.0240] [<0.0001]
D 2.291 2.549 1.560 1.036 1.472 2.834

Note: Figures in parentheses are T-values. Figures in square brackets indicate the statistically significant levels of the estimated coefficients.
544 X.D. Diao et al. / Journal of Cleaner Production 17 (2009) 541–548

18000
17000
16000
15000
14000
IWWD 13000
12000
11000
10000
9000
8000
7000
10000 20000 30000 40000
PCGDP
Fig. 3. Relationship between industrial wastewater discharged (IWWD) and GDP per capita (PCGDP). Note: A solid line shows a fitted regression curve; a dotted line shows the
actual curve.

Step 3: Examining the residual for the final regression models,
that is, the regression diagnosis.
The results of the statistical analysis are shown in Table 3.
In Table 3, the dependent variable is obtained using the Durbin–
Watson test. Generally, positive autocorrelation exists in the
residuals when D / 0. Negative autocorrelation exists in the
residuals when D / 4. Residuals have the characteristics of inde-
pendence when D / 2. The fitted regression curve and the actual
curve reflecting environment–economy relationship in Jiaxing City
are shown in Figs. 3–8.
2.1. Regression analysis on industrial wastewater discharged
The dependent variable is the industrial wastewater discharged
(IWWD). A regression model shows that an inverted U-shaped
relation exists in IWWD and PCGDP (see Fig. 3). The coefficient
estimate is significantly different from zero with a level of signifi-
cance of less than 1% (see Table 3). All absolute values of student
residual are less than 2; the Cook’s values are not particularly high;
the D-value is about 2.291 (see Table 3). Thus, a fitted curve is
suitable. The regression model is shown in equation (2):
IWWD ¼ 0 þ 0:88617PCGDP  0:000012PCGDP2
From equation (2), we can obtain a turning point at
PCGDP* ¼ 36,924, indicating that the values of IWWD begin to
decrease when PCGDP exceeds 36,924 RMB Yuan (about US$4542).
On the contrary, when PCGDP is less than 36,924 RMB Yuan, the
values of IWWD increase with the rising PCGDP. The turning point
is less than the value (about US$5000–20,000) depicted by
previous researchers. Currently, Jiaxing City has passed the turning
point of the EKC for a short period, because a PCGDP of 36,924 RMB
Yuan occurred at the time interval between 2004 and 2005.
Accordingly, with any further development of the economy, water
pollution of Jiaxing is alleviated.
2.2. Regression analysis on waste gas discharged
Industrial waste gas discharged (IWGD), sulfur oxide discharged
(SOD) and soot discharged (SD) are chosen as the dependent vari-
ables in studying the relations with the PCGDP. It is noted that the
volume of SOD and SD consist in that of IWGD.
2.2.1. Industrial waste gas discharged
The regression model in Fig. 4 shows that an inverted U-shaped
relation exists between IWGD and PCGDP. The coefficient estimate
is significantly different from zero with a level of significance of
about 10% (from 1.84% to 9.25% as shown in Table 3). The D-value is
2.549 (see Table 3). Though the student residual value of the
seventh sample is greater than 2, the corresponding Cook’s value is
not high comparing to other points, meaning that the point is not
strongly influential. Thus, the fitted curve meets the requirements.
The regression model is given by equation (3):
(2)
IWGD ¼ 11150480 þ 1477:463PCGDP  0:01940PCGDP2
(3)
From equation (3), we can calculate the turning point at
PCGDP* ¼ 38,079. This reveals that the IWGD begins to decrease
when PCGDP exceeds 38,079 RMB Yuan (about US$4684). On the
contrary, when PCGDP is less than 38,079 RMB Yuan, the IWGD
increases with the rising PCGDP. Same as the situation of IWWD,

18000000
17000000
16000000
15000000
14000000
13000000
12000000
11000000
IWGD

10000000
9000000
8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0 10000 20000 30000 40000
PCGDP
Fig. 4. Relationship between industrial waste gas discharged (IWGD) and GDP per capita (PCGDP). Note: A solid line shows a fitted regression curve; a dotted line shows the actual
curve.
 X.D. Diao et al. / Journal of Cleaner Production 17 (2009) 541–548 545

100000
90000
80000
70000
60000

SOD
50000
40000
30000
20000
10000
0
0 10000 20000 30000 40000
PCGDP
Fig. 5. Relationship between sulfur oxide discharged (SOD) and GDP per capita (PCGDP). Note: A solid line shows a fitted regression curve; a dotted line shows the actual curve.

Table 4
Empirical studies on sulfur oxide discharged that can be described by EKC.
Author Sample
Panayotou [12] 55 developed and
developing countries
Grossman and Krueger [13] Cities in 42 countries
Selden and Song [14] 22 OECD and 8
developing countries
Shafik [15] 47 cities in 31 countries
Panayotou [31] 30 developed and
developing countries
List and Gallet [32] 50 USA states
Stern and Common [33] 73 developed and
developing countries
previous studies [31,32,33], in which they proclaim that the relation
of SOD and PCGDP is suitably portrayed by EKC (see Table 4). In our
Turning point study, it is revealed that the conventional EKC does not apply to this
US$3137 kind of pollutant, which is discussed in the Section 2.2.3.
US$4053
2.2.3. Soot discharged
US$10,391–10,620
The regression model shown in Fig. 6 indicates an inverted U-
US$4379 shaped relation between SD and PCGDP. A coefficient estimate is
US$5965 significantly different from zero with a level of significance of 5%
(see Table 3). The D-value is 1.036 (see Table 3). From the student
US$22,675
residual and Cook’s value, it can be noted that the fitted curve is
US$101,166
consistent with the actual data in Jiaxing. The regression model is
described in equation (5):

SD ¼ 0 þ 3:48267PCGDP  0:000075PCGDP2 (5)

the turning point on the regression model of IWGD is less than
those points reported by most researchers. At present, Jiaxing has
passed the turning point of the EKC for a short period of time as the
PCGDP of 38,079 RMB Yuan occurred at the time interval between
2004 and 2005. Hence, with any further development of the
economy, gas pollution of Jiaxing will also be alleviating.
2.2.2. Sulfur oxide discharged
The regression model shown in Fig. 5 indicates a linear relation
between SOD and PCGDP. The coefficient estimate is significantly
different from zero with a level of significance less than 1% (see
Table 3). The D-value is 1.56 (see Table 3). By analyzing the value of
student residual and Cook’ s value, the seventh sample point which
happened in 2001 is found to be strongly influential. The regression
model is given by equation (4):
SOD ¼ 0 þ 2:32912PCGDP
From equation (4), it is shown that the values of SOD will always
increase with the rising of PCGDP. The result is different from some
From equation (5), we can obtain the turning point at
PCGDP* ¼ 23,218. This reveals that the value of SD begins to
decrease when PCGDP exceeds 23,218 RMB Yuan (about US$2786)
which occurred at the time interval between 2001 and 2002. On the
contrary, the values of SD increase with the rising of PCGDP when
PCGDP is less than 23,218 RMB Yuan. The turning point is appar-
ently less than the results listed in Table 5. That is, the soot pollution
of the city of Jiaxing can arrive at the right side of EKC at low PCGDP
values. Thus, for developing countries, it is possible to exceed the
extreme point at the condition of the low PCGDP.
2.3. Regression analysis on industrial dust discharged
The regression model shown in Fig. 7 indicates an inverted U-
shaped relation between IDD and PCGDP. A coefficient estimate is
(4)
significantly different from zero with a level of significance of 7%
(see Table 3). The D-value is 1.472 (see Table 3). From the student
residual and Cook’s value, it is discovered that the third point is the

70000

60000

50000

40000
SD

30000

20000

10000

0
0 10000 20000 30000 40000
PCGDP

Fig. 6. Relationship between soot discharged (SD) and GDP per capita (PCGDP). Note: A solid line shows a fitted regression curve; a dotted line shows the actual curve.
546 X.D. Diao et al. / Journal of Cleaner Production 17 (2009) 541–548

Table 5 Table 6
Empirical studies on soot discharged that can be described by EKC. Empirical studies on industrial dust discharged that can be described by EKC.

Author(s) Data source Turning point Author(s) Data source Turning point
Shafik and Bandyopadhyay World Development US$3000–4000 Shafik and Bandyopadhyay World Development US$3000–4000
[11] Report (1992) [11] Report (1992)
Grossman and Krueger [13] GEMS US$6151 Grossman and Krueger [13] GEMS US$5000
Selden and Song [14] WRI-primarily US$7114–13,383 Selden and Song [14] WRI-primarily US$8000
OECD source OECD source
Soumyananda et al. [34] World Development US$9500–14,000
Report (1992)

strong influential point which happened in 1997. In that year, the

value of IDD was particularly high. For practical purposes, this point
should not be deleted. Thus, the regression model is described in
equation (6):
2 an inflection point which happened in 2002–2003. And the ISWP is
IDD ¼ 0 þ 3:32902PCGDP  0:000084PCGDP
From equation (6), we can obtain the turning point at
PCGDP* ¼ 19,816. This reveals that the value of IDD begins to
decrease when PCGDP exceeds 19,816 RMB Yuan (about US$2378)
which occurred at the time interval between 2000 and 2001. On the
contrary, when PCGDP is less than 19,816 RMB Yuan, the values of
IDD increase with the rising PCGDP. The turning point is apparently
less than the results reported by Shafik and Bandyopadhyay [11],
Grossman and Krueger [13], Selden and Song [14] and Soumya-
nanda et al. [34] (see Table 6). That is, the industrial dust pollution
of the city Jiaxing can fit the right side of EKC at low PCGDP. From
the trend of the curve, the industrial dust pollution will alleviate
with any further economic development in the future.
derivative at the two sides of the point, it is proved that the point is
(6) always increasing with the growth of economy. In general, the
regression model that perfectly fits to the cubic equation has two
positive turning points and one inflection point [35]. However, the
relationship between ISWP and PCGDP has shown to follow a weak
N-shaped curve in this study.
3. Discussions
The aforementioned analysis indicates that the relationship
between economic growth and environmental pollution in Jiaxing
is not totally identical to the traditional EKC. The results reveal
three types of relationship, including: 1) an inverted U-shaped
pattern; 2) an increasing linear pattern; and 3) a weak N-shaped
pattern.

2.4. Regression analysis on industrial solid waste produced 3.1. Inverted U-shaped pattern

The regression model shown in Fig. 8 indicates an N-shaped
relation between ISWP and PCGDP. A coefficient estimate is
significantly different from zero with a level of significance of 1%
(see Table 3). The D-value is 2.834 (see Table 3). Though the student
residual value of the third sample is greater than 2, the corre-
sponding Cook’s value is not high enough when compared to the
other sample points, meaning that the point is not strong influ-
ential. Thus, the fitted curve is just coincident with the actual data.
The regression model is described in equation (7):
 
ISWP ¼  185:6506 þ 0:03172PCGDP  1:14E  6 PCGDP2
 
þ 1:55E  11 PCGDP3 ð7Þ
From equation (7), we cannot obtain any turning point by
setting the differential of the equation equal to zero. However, by
setting the quadratic differential of equation (7) to zero, we can
obtain a point at PCGDP3 ¼ 24,516. From the symbols of the second
The inverted U-shaped pattern is observed in the study of
IWWD, IWGD, SD and IDD. The turning point of the inverted
U-shaped pattern is generally lower than that reported in the
previous studies (about US$5000–20,000). Comparing to most
developed countries, time span beyond a turning point is short in
Jiaxing. At the same time, the inverted U-shaped pattern accords
with the development of Jiaxing, from a clean agrarian economy to
a polluting industrial economy, then to a clean service economy
(see Fig. 1). In these three industries, the tertiary industry in Jiaxing
has the fastest growing GDP rate. The inverted U-shaped pattern
also shows that the country environment is on the left side of
a conventional EKC while the city environment is on the right side,
because PCGDP of countryside residents is less than the turning
point while that of the urban residents is larger than the turning
point. Thus, for the countryside residents, with further economic
growth, their environment will not further deteriorate until their
PCGDP reaches the turning point.

100000
90000
80000
70000
60000
IDD

50000
40000
30000
20000
10000
0
0 10000 20000 30000 40000
PCGDP
Fig. 7. Relationship between industrial dust discharged (IDD) and GDP per capita (PCGDP). Note: A solid line shows a fitted regression curve; a dotted line shows the actual curve.
 X.D. Diao et al. / Journal of Cleaner Production 17 (2009) 541–548 547

300

200

ISWP

100

0
0 10000 20000 30000 40000
PCGDP
Fig. 8. Relationship between industrial solid waste produced (ISWP) and GDP per capita (PCGDP). Note: A solid line shows a fitted regression curve; a dotted line shows the actual
curve.

The inverted U-shaped pattern and its characteristics in Jiaxing
could attribute to the environmental protection policies imple-
mented by the local government. With the issuance of Law on the
Promotion of Cleaner Production in 2003, Jiaxing environment
protection bureau has strictly enforced the policy. By the end of
2005, Framework of Promoting Cycle Economy in Industry (FPCEI)
has been promoted by the Jiaxing government [36]. According to
the FPCEI, manufacturing sectors are encouraged to promote clean
production, focusing on reconstructing cleaner techniques and
equipment, process control, cleaner products, re-utilization of
cleaner energy, recycled use of waste, and alternative use of
harmful materials. They anticipate that the proportion of enter-
prises implementing cleaner production would reach about 50%,
recycled use of industrial wastewater discharged about 70%, and re-
utilization of industrial solid waste produced about 95% by the end
of 2010.
3.2. Linear pattern
2) The economic activity has a close effect on sulfur oxide dis-
charged. Exports from iron and steel have shown an increasing
trend (see Table 7).
In the period from January to August 2006, export volumes of
installation kits from iron and steel have exceeded the total of the
year 2005. Though the iron and steel industry is a highly polluted
industry, the increasing exports from iron and steel resulting in
large coal consumption will produce high level of sulfur gas emis-
sion. In Jiaxing, about 90% of sulfur oxide is from burning coal of
which more than 50% is applied to the heat-engine plants. Coal
consumption has increased by about 206% from 2003 to 2006.
Electricity consumption increased by about 362% from 2002 to
2005. However, cleaner production, e.g. de-sulfurizing technology
in Jiaxing is much lagging behind. To decrease sulfur oxide
produced, some measures must be taken by the local government
[37,38]. A gas de-sulfurizing project has been implemented in 2007
in Jiaxing, which will be used in the first quarter of 2009.

The positive linear pattern is observed in the study of SOD. SOD

3.3. Weak N-shaped pattern
increases by 2.32% with 1% growth of PCGDP, indicating that the
economic development will always lead to deterioration of the
The weak N-shaped pattern is observed in the study of ISWP. For
environmental quality, which is contrary to the conventional EKC
the N-shaped pattern, it is normal to find turning points or extreme
concept and is different from the U-shaped model reported by
points, and the inflexion point along the time span between two
Kaufmann and Davidsdottir [23].
extremes. The observed weak N-shaped pattern is, to some extent,
The positive linear relation between sulfur oxide and PCGDP
homologous with the linear pattern. From the trend of the curve, it
could be attributed to the following reasons:
can be noted that the ISWP can increase with the growth of PCGDP.
The weak N-shaped pattern could be due to the fact that the
1) The upward pattern does not necessarily disprove the EKC – it
local industrial structure is composed of many small industrial
is only shown that the EKC does not apply to the observed
firms which produce massive solid waste [39,40]. Hence, the
range of GDP. Thus, in interpreting the empirical relationship
government of Jiaxing should pay more attention to these small
between economic growth and environmental quality, it is
industrial businesses and take effective measures to control solid
important to note that the time frame of observations may have
waste production [41,42].
decisive effects: we may miss either the rising or decreasing leg
of the curve [30].
4. Conclusion
Table 7
Exports from iron and steel in Jiaxing (from January 2004 to September 2005). This paper examined the relationship between economic
growth and environmental pollution in Jiaxing City of China. The
Variety Batch Weigh (tonnes)
study revealed the following characteristics of Jiaxing:
2004 2005 2004 2005
Wire stock 101 141 4475 7562 1) The EKC hypothesis is only one of models describing the rela-
Structural section 1 13 20 2956 tionship between economic growth and environmental quality.
Steel tube 42 106 1306 2013
In fact, the relation is more complex than that depicted by the
Billet steel 0 1 0 2784
EKC model. Environmental scenarios are dynamic and subject
Total 144 261 5801 15,405 to changing conditions resulted from pollution impacts [41]. In
Source: Jiaxing Inport–Export Inspection and Quarantine Bureau (2006). addition, some factors, e.g. sampling techniques, observed time
548 X.D. Diao et al. / Journal of Cleaner Production 17 (2009) 541–548
span, government policies and industrial setting, may result in
different patterns of relationship.
2) Optimal turning points of the EKC are different in many regions
and countries. The time scale can also be different. These could
be attributed to the difference of economic structures,
consumer pressure and environmental policies. The environ-
mental policies of the local government in particular play
a crucial role. In recent years, the local government has been
exerting efforts to encourage cleaner production. The pollution
due to industrial wastewater discharged, industrial waste gas
discharged, soot discharged and industrial dust discharged
have been put under stringent control. That can be reflected
from the fact that all the indices described in Jiaxing have
passed through the turning points and are situated in the right
side of the EKC. It was showed that these pollutants will
gradually decrease with further economy development.
3) Although the quality of environment in Jiaxing is improving,
pressure for implementing environmental management still
persists. It was found that pollutions resulted from sulfur oxide
discharged and industrial solid waste discharged had kept
annoying the city. Thus, the government should further
strengthen managing and encouraging recycling of waste dis-
charged, and develops an invigorative mechanism for
achieving a win–win combination of environmental improve-
ment and economic growth.
Acknowledgments
The authors gratefully acknowledge the very helpful comments
and suggestions given by Professor Ashford and two anonymous
referees. This study is supported by the National Natural Science
Foundation of China (No. 70772067), the Program for New Century
Excellent Talents in University of Ministry of Education of China
(NCET-06-410), the Shuguang Planning of Shanghai Education
Development Foundation (06SJ17) and Research Center on Metro-
politan Regions of China.
References
[1] Cialani C. Economic growth and environmental quality: an econometric and
a decomposition analysis. Management of Environmental Quality: an Inter-
national Journal 2007;18(5):568–77.
[2] Jaekyu L. Economic growth and environment: some empirical evidences from
South Korea. School of Economics, University of New South Wales; 1997.
[3] Arrow K, Bolin B, Costanza R, Dasgupta P, Folke C, Holling CS, et al. Economic
growth, carrying capacity, and the environment. Ecological Economics
1995;15(2):91–5.
[4] Greyson J. An economic instrument for zero waste, economic growth and
sustainability. Journal of Cleaner Production 2007;15(13/14):1382–90.
[5] World Bank. World development indicators. Oxford University Press; 1998.
p.163.
[6] Zhang KM, Wen ZG. Review and challenges of policies of environmental
protection and sustainable development in China. Journal of Environmental
Management 2008;88(4):1249–61.
[7] Zhang ZH, Shen LY, Love P, Treloar G. A framework for implementing ISO 1400
in construction. Environmental Management and Health 2000;11(2):139–48.
[8] Zeng SX, Tam CM, Tam Vivian WY, Deng ZM. Towards implementation of ISO
14001 environmental management systems in selected industries in China.
Journal of Cleaner Production 2005;13(7):645–56.
[9] David IS. The rise and fall of the environmental Kuznets Curve. World
Development 2004;32(8):1419–39.
[10] Soumyananda D. Environmental Kuznets curve hypothesis: a survey. Ecolog-
ical Economics 2004;49(4):431–55.
[11] Shafik N, Bandyopadhyay S. Economic growth and environmental quality:
time-series and cross-country evidence, World Bank Working Papers, WPS
904, Washington; 1992, p. 52.
[12] Panayotou T. Empirical tests and policy analysis of environmental degradation
at different stages of economic development. World Employment Research
Programme, Working Paper, International Labour Office, Geneva; 1993. p. 42.
[13] Grossman GM, Krueger AB. Economic growth and the environment. Quarterly
Journal of Economics 1995;110(2):353–78.
[14] Selden TM, Song D. Environmental quality and development: is there a Kuz-
nets curve for air pollution emissions? Journal of Environmental Economics
and Management 1994;27(2):147–62.
[15] Shafik N. Economic development and environmental quality: an econometric
analysis, vol. 46. Oxford; 1994. Economics Paperp. 757–73.
[16] Holtz-Eakin D, Selden TM. Stocking the fires? CO2 emission and economic
growth. Journal of Public Economics 1995;57(1):85–101.
[17] Carson RT, Jeon Y, McCubbin DR. The relationship between air pollution
emissions and income: US data. Environment Development Economics
1997;2:433–50.
[18] McConnell KE. Income and the demand for environmental quality. Environ-
ment Development Economics 1997;2:383–99.
[19] Moomaw WR, Unruh GC. Are environmental Kuznets curves misleading us?
The case of CO2 emissions. Environment Development Economics 1997;2:451–
63.
[20] De Bruyn SM, van den Bergh JM, Opschoor JB. Economic growth and emis-
sions: reconsidering the empirical basis of environmental Kuznets curves.
Ecological Economics 1998;25(2):161–75.
[21] Rothman DS. Environmental Kuznets curve – real progress or passing the
buck? a case for consumption-based approaches. Ecological Economics
1998;25(2):177–94.
[22] Suri V, Chapman D. Economic growth, trade and energy implications for the
environmental Kuznets curve. Ecological Economics 1998;25(2):195–208.
[23] Kaufmann RK, Davidsdottir B, Garnham S, Pauly P. The determinants of
atmospheric SO2 concentrations: reconsidering the environmental Kuznets
curve. Ecological Economics 1998;25(2):209–20.
[24] Fried B, Getzner M. Determinants of CO2 emissions in a small open economy.
Ecological Economics 2003;45(1):133–48.
[25] Spangenberg JH. The environmental Kuznets curve: a methodological arte-
fact? Population and Environment 2001;23(2):175–91.
[26] Perman R, David IS. Evidence from panel unit root and cointegration tests that
the environmental Kuznets Curve does not exist. The Australian Journal of
Agriculture and Resource Economics 2003;47(3):325–47.
[27] Vehmas J, Luukkanen J, Kaivo-oja J. Linking analyses and environmental
Kuznets curves for aggregated material flows in the EU. Journal of Cleaner
Production 2007;15(17):1662–73.
[28] Shen JY. A simultaneous estimation of environmental Kuznets curve: evidence
from China. China Economic Review 2006;17(4):383–94.
[29] Chen CC, Chen YT. Income effect or policy results: a test of the environmental
Kuznets curve. Journal of Cleaner Production 2008;16(1):59–65.
[30] Liu XZ, Heilig GK, Chen JM, Heino M. Interactions between economic growth
and environmental quality in Shenzhen, China’s first special economic zone.
Ecological Economics 2007;62(3–4):559–70.
[31] Panayotou T. Demystifying the environmental Kuznets curve: turning a black
box into a policy tool. Environment and Development Economics
1997;2(4):465–84.
[32] List J, Gallet C. The environmental Kuznets curve; does one size fit all.
Ecological Economics 1999;31(3):409–23.
[33] Stern DI, Michael SC. Is there an environmental Kuznets curve for sulfur?
Journal of Environmental Economics and Management 2001;41(2):162–78.
[34] Soumyananda D, Dipankor C, Manoranjan P. Air quality and economic growth:
an empirical study. Ecological Economics 2000;34(3):409–23.
[35] Peng SJ, Bao Q. Economic growth and environmental pollution; an empirical
test for the environmental Kuznets curve hypothesis in China. Research on
Financial and Economic Issues 2006;8:3–17.
[36] Office of Jiaxing Government. Framework of promoting cycle economy in
industry (FPCEI), http://www.jiaxing.gov.cn/art/2005/12/21/art_362_301.
html; 2006. Available from:.
[37] Zeng SX, Liu HC, Tam CM, Shao YK. Cluster analysis for studying industrial
sustainability: an empirical study in China. Journal of Cleaner Production
2008;16(10):1090–7.
[38] Hicks C, Dietmar R. Improving cleaner production through the application of
environmental management tools in China. Journal of Cleaner Production
2007;15(5):395–408.
[39] Zhang B, Bi J, Yuan ZW, Ge JJ, Liu BB, Bu ML. Why do firms engage in envi-
ronmental management? an empirical study in China. Journal of Cleaner
Production 2008;16(10):1036–45.
[40] Cao X. The wind rises abruptly, disturbing a pond of ‘‘Clear Water’’: reflections
on the pollution blacklisting of 33 Chinese multinationals. Journal of Cleaner
Production 2008;16(4):510–6.
[41] Ranjan R, Shortle J. The environmental Kuznets curve when the environment
exhibits hysteresis. Ecological Economics 2007;64(1):204–15.
[42] Shi H, Peng SZ, Liu Y, Zhong P. Barriers to the implementation of cleaner
production in Chinese SMEs: government, industry and expert stakeholders’
perspectives. Journal of Cleaner Production 2008;16(7):842–52.