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.