A Comprehensive Package of Macroeconomic Policy Measures for Implementing China’s Climate Mitigation Strategy

By Jean Chateau, Wenjie Chen, Florence Jaumotte, Karlygash Zhunussova

July 15, 2022

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Jean Chateau, Wenjie Chen, Florence Jaumotte, and Karlygash Zhunussova. A Comprehensive Package of Macroeconomic Policy Measures for Implementing China’s Climate Mitigation Strategy, (USA: International Monetary Fund, 2022) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper presents ways for China to achieve its climate goals while also attain high-quality growth—growth that is balanced, inclusive, and green. Using a dynamic computable general equilibrium model that is calibrated to China, multiple scenarios are considered that incorporate a sequence of layered policies: (i) frontloading mitigation with an earlier emissions peak, (ii) power market reforms, and (iii) economic rebalancing. The results highlight that these policies can significantly contribute to the success of the climate strategy overall, including by lowering the shadow price of carbon as well as the associated mitigation costs. Distribution analysis offers proposals to lessen the impact on vulnerable households.

Subject: Climate policy, Consumption, Environment, Greenhouse gas emissions, National accounts, Non-renewable resources

Keywords: Carbon neutrality, Carbon pricing scheme, Chinese economy, Climate mitigation initiative, Climate policy, Climate strategy, Computable General Equilibrium model, Consumption, E. Policy simulation, ETS trading price, Global, Greenhouse gas emissions, Mitigation strategy, Non-renewable resources, Power market, Rebalancing

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/142
Stock No:

WPIEA2022142
ISBN:

9798400215711
ISSN:

1018-5941

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