Are population and international trade the main factors for environmental damage in China?

This paper investigates whether population and international trade, along with energy consumption, are the main factors for environmental damage in China during the period 1971-2011. The stationary analysis is examined by the Zivot–Andrews unit root test and the ARDL bounds testing approach is used for a long run relationship between the series in the presence of structural breaks. The causality between CO2 emissions, energy consumption, economic growth, population and international trade is examined by the VECM Granger causality technique. Our results show that the selected variables are cointegrated; it means that the long run relationship exists in the presence of structural breaks. The empirical findings indicate that in long run, energy consumption and population increase CO2 emissions, while in short run, energy consumption and international trade decrease CO2 emissions. The VECM causality analysis shows that CO2 emissions Granger cause energy consumption, while energy consumption and population Granger cause trade. The VECM analysis also indicates the feedback hypothesis between trade and CO2 emissions. Policy recommendations are made following the obtained results