Tests on causal relationships between CO2 emissions and economic growth in China based on VECM model

A vector error correction model (VECM) model was developed based on data from 1990 to 2010 to inspect the short and long run causal relationships between CO₂ emissions and economic growth in China. The causal relation results show that CO₂ emissions does not affect economic growth in the short or long run, but that economic growth excites CO₂ emissions in the short run. The results show that low-carbon industries will not impede economic growth in the long run, and the government of China should encourage the development of low-carbon industries.