Optimal Industrial Structure with Carbon Emission, GDP Growth and Employment Targets

This study employs an input-output model to ascertain the optimal changes necessary in different industrial sectors of the Chinese economy required to achieve the carbon emission target,where constraints on GDP growth and employment rate are met as well. Industries which require the greatest reduction and increase in final demand are identified. Wholesale and Retail Trade,Health and Community Services,Machinery and Equipment Manufacturing,and Accommodation and Restaurants are required to achieve the largest increase in final demand; while the largest required annual rate of reduction in final demand is for Electricity and Gas Generation and Supply,Structural,Sheet and Fabricated Metal Product Manufacturing,and Petroleum Refinery. Those industries mentioned above are essential to China's low-carbon economy with sustainable growth. As the constraints change,it is found that strengthening constraints requires greater adjustment in final demand,and achieving higher emissions target calls for greater adjustment in industrial structure than that required to achieve higher growth rates. As a result,cutting carbon emissions will be much more challenging and costly for China than simply seeking for high GDP growth in the future. When compared with annual actual sectoral growth in China in the past 10 to 20 years,the required alterations derived in the model are not large and thus attainable in reality. Therefore,the plan proposed by this study to achieve emission reduction as well as decent growth through adjusting industrial structure is feasible. Especially,the first industries and mining have already been growing at rates close to those solved by the model in this study,however,most other sectors are still experiencing far higher growth than the optimal ones proposed here. In this sense,slowing down a little bit would effectively reduce the country's energy consumption and emission intensity in the meantime maintaining growth and employment rates at acceptable levels.