Over the last couple of years, the Chinese manufacturing sector was affected by the onset of the US–China trade war and the outbreak of coronavirus disease 2019 (COVID-19). In such a scenario air quality in China has encountered a shock, and the impacts of these two incidents are unknown. In this study, the authors analyze the convergence of air quality in China in the presence of multiple structural breaks and how the impacts of these two events are different from each other.
In order to assess the nature of shocks in the presence of multiple structural breaks, unit root tests with multiple structural breaks are employed.
The results reveal that air quality in China is showing the sign of convergence, and it is consistent across 18 provinces which are worst hit by the outbreak of COVID-19. In the presence of transitory shocks, the impact of COVID-19 outbreak is found to be higher, whereas the impact of the US–China trade war is found to be more persistent. Lastly, the outbreak of COVID-19 has been found to have more impact on pollutants with higher severity of health hazard.
To the best of the authors’ knowledge, this is the first study that contributes to the empirical literature in terms of investigating the convergence of overall air pollution and individual air pollutants taking COVID-19 and the trade war into account.
