So Goes China's Economy, So Goes Atmospheric Carbon Dioxide

January 2024 saw the pace at which carbon dioxide accumulates in the Earth’s atmosphere increase for the fourth month in a row. The change is consistent with positive economic growth on the planet and China’s ongoing efforts to stimulate it’s faltering economy in particular.

As the world’s large producer of carbon dioxide emissions, largely produced by its growing fleet of coal-fired electricity generation plants, and also the world’s largest exporter of consumer goods, the CO₂ emissions produced as China powers its economy tells us a lot about the state of the global economy.

Since the country lifted its zero-COVID restrictions in late December 2022, its economy has expanded, which has increased the rate of carbon dioxide accumulation in the atmosphere. But it has also faltered, pointing to uneven economic growth within the country.

The following chart illustrates that effect using the remote Mauna Loa Observatory’s measurements of the concentration of atmospheric carbon dioxide. We trace that impact as the trailing twelve month average of the year-over-year change in CO₂ accumulation presented against the background of major economic and environmental events.

China’s economy has increasingly struggled with deflationary pressures in recent months. Without intervention, these pressures would be expected to slow China’s economy, the effects of which would also slow the rate at which the carbon dioxide it produces enters into the atmosphere.

But China’s government has a history of staging interventions within the nation that have global impact. The implementation of new, larger economic stimulus efforts could soon be on tap.

Beijing responded to past bouts of deflation with forceful monetary easing and big fiscal stimulus measures. China is expected to boost fiscal stimulus again this year, but its plans won’t be clear until a national budget is released in March….

Economists generally see a need to boost demand for goods and services, with the government either directly channeling more money into the economy or encouraging banks to lend more to businesses and households. Calls are growing for the authorities to adopt more aggressive policies than rate cuts and trims to the amount of money banks must hold in reserve with the central bank — steps already taken in 2023, to modest effect. To durably boost consumer confidence and get people spending, the government will need to end the slump in the property market.

How it ultimately does that is something that will almost certainly be able to be measured by how fast the concentration of carbon dioxide in the Earth’s air is changing. So goes China’s economy, so goes atmospheric carbon dioxide.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Online Data]. Updated 5 January 2024.

Image credit: Stable Diffusion DreamStudio Beta. Prompt: “Digital art concept of carbon dioxide emissions being used to measure economic growth.”