Research on Carbon Dioxide Emissions Performance of the Chinese Industry Sector

We examined traditional and environmentally sensitive total factor productivity (TFP) in 21Chinese industries in the period of 1992-2007. The Luenberger productivity index (LPI) was used to examine the causes of productivity changes while accounting for carbon emissions. The index enables us to divide the change in productivity into efficiency and technical changes. The results showed that11 of 21 Chinese industries have a higher environmentally sensitive TFP during 1985-2000 compared to TFP when carbon emissions are not taken in account. The TFP growth that was found mainly results from technological innovation than efficiency improvement. We found that almost all energy-intensive and material-intensive industries were more efficient and showed higher LPI when bad outputs are considered than with LPI without undesirables.