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

44 Pages Posted: 27 Jul 2022

See all articles by Wenjie Chen

Wenjie Chen

International Monetary Fund (IMF)

Jean Chateau

International Monetary Fund (IMF)

Florence Jaumotte

International Monetary Fund (IMF)

Karlygash Zhunussova

International Monetary Fund (IMF)

Date Written: July 1, 2022

Abstract

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.

Keywords: Chinese economy, climate policy, carbon neutrality, rebalancing, Computable General Equilibrium model

JEL Classification: O53, Q54, O14, D58

Suggested Citation

Chen, Wenjie and Chateau, Jean and Jaumotte, Florence and Zhunussova, Karlygash, A Comprehensive Package of Macroeconomic Policy Measures for Implementing China's Climate Mitigation Strategy (July 1, 2022). IMF Working Paper No. 2022/142, Available at SSRN: https://ssrn.com/abstract=4171848

Wenjie Chen (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jean Chateau

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Florence Jaumotte

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States
202-623-6191 (Phone)

Karlygash Zhunussova

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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