TOWARD A NEW SUSTAINABLE DEVELOPMENT FOR CHINA: AN ENVIRONMENTAL MULTISECTORAL MODEL USING A SOCIAL ACCOUNTING MATRIX

In recent years, sustainable development has been representing an important economic policy objective for World Countries as a consequence of the strong awareness for climate changes and the ensuing environmental damage. Environmental policies generally consist on a set of measures oriented to improve efficiency on energy consumption and reduce inefficient behaviours. The use of such instruments, aimed to reduce the amount of emissions and promote environmental conservation according to international agreements, in some cases is still discouraged by politicians and governments which interpret this measures as burdens to economies. After years of difficult dialogue and strong debate with the Western Countries on issues related to environmental protection and reduction of CO2 emissions, the environmental emergency has officially entered in the China’s Government agenda. This is certainly a major step towards the achievement of a unique action against the climate change concern, however, the environmental issue in China must be faced and debated like a “cultural revolution” that engages all the actors of the economic system from production activities to Institutional Sectors. The incredible economic growth of China, over the past three decades, is mainly attributed to its impressive industrial growth; in fact China is rated as one of the largest contributors of carbondioxide (CO2) (IEA, 2008). However, China is making significant progress in the fight against climate change, including a commitment to peak its carbon emissions around 2030. From ramping up its carbon intensity target to limiting coal use to implementing an emissions trading scheme, recent signs show that the country is already beginning to shift toward a more environmentally and economically sustainable model of development. The Thirtheen Five-Year Plan (2016-2021) contains many proposed programs bear directly or indirectly on poverty reduction, environmental stewardship or both. They include rural land reform, cleaner industrial development, promotion of new energy vehicles, protection of forests, efficient water management, and an improved social insurance system aimed at lifting people out of poverty. Although the Chinese political goal of building a socialist harmonious society is not new, this still has not been achieved. Therefore, how can China rebalancing its economy to better address the related challenges of eradicating poverty, reducing inequality and protecting the environment? Considering the following research question, the aim of this work is study the impact of environmental policy for the reduction of CO2 emission taking in account the Chinese distributional income analyses. The framework chosen in order to following this research’s objective is the Social Accounting Matrix (SAM). SAM is widely used for the analysis of income distribution in a socio-economic system. It is related to the National Accounts, but typically incorporates whatever degree of detail is required for special interests. The principal goal in constructing a SAM is to integrate elements of the income distribution into a single coherent accounting framework. For these reasons, a big effort has been made for building a Chinese Social Accounting Matrix (SAM) for 2011, that offers an analysis leading to a better understanding of the way the various agents in the real Chinese economy interact. Subsequently, the SAM for China has been integrated with environmental accounts for CO2 emissions, with the purpose to include the link from the economy to the environment, exploring the relationship between production activities, pollution and income distribution. The analysis applied will be an extended income–output loop (derived from a SAM), that can be quantitatively tested by sending a shock on a given macro variable and observing the effects on another macro variable within the loop. Consequently, there will be an identification of the traditional multipliers and the related impact components of a multisectoral model based on SAM integrated with the environmental accounting. Following the objectives of 13th Five Year Plan, the International Agreement of climate action and in accordance with the principles of sustainable development, the interventions designed by policy makers are required to aim at restructuring the final demand’s composition so that it achieves a reduction of the CO2 emissions.). In this work, it has been important to assess a new structure for the final demand which would be able to achieve a composite task: the economic sustainability and the environmental improvement. The final purpose of the research is demonstrate that it is possible to combine a policy oriented to the environmental protection with a policy that could sustain corporation activities and households.