Consequences of Covid-19 on the Social Isolation of the Chinese Economy: Accounting for the Role of Reduction in Carbon Emissions.

Abstract

The main contribution of the present study to the energy literature is linked to the interaction between economic growth and pollution emission amidst globalization. Unlike other studies, this research explores the effect of economic and social isolation as a dimension of globalization. This allows underpinning the effects on the Chinese economic development of the isolation phenomenon as a consequence of coronavirus (COVID-19). To this end, annual time frequency data is used to achieve the hypothesized claims. The study resolutions include (i) The existence of a long-run equilibrium bond between the outlined variables (ii) The long-run estimates suggest that the Chinese economy over the investigated period, is inelastic to pollutant–driven economic growth as reported by the dynamic ordinary least squares, fully modified ordinary least squares and canonical regressions with a magnitude of 0.09%. (iii) The Chinese isolation is less responsive to its economic growth while the country political willpower is elastic as demonstrated by current government commitment to dampen the effect of the COVID-19 pandemic. This is marked by the aggressive response on the government officials resolute by flattening the exponential impact of the pandemic. Based on these robust results some far-reaching policy implication(s) are underlined in the concluding remark section.