Growth preference and air pollution in China

Abstract We estimate the causal effects of local officials’ growth preferences on air pollution. Leveraging the unprecedented and uneven economic shocks caused by COVID-19, which resulted in substantial changes in gross domestic product growth rankings, we analyse variations in growth preferences. Our findings reveal that a 10-unit change in growth rankings leads to significant increases in Air Quality Index and ambient pollutant concentrations. Key predictors of this increased pollution include factors sensitive to governmental influence, such as fixed investments, industrial activities and registration requirements for polluting companies. Finally, we characterize the cautious behaviours of local officials in balancing economic and environmental objectives within China's context of multiple, yet unequally weighted, tasks. Our study illuminates how growth preferences contribute to environmental consequences and underscores the strategic responses with political motivations to meet dual conflicting targets set by higher authorities.