How do environmental regulations affect industrial dynamics? Evidence from China's pollution-intensive industries (original) (raw)

Going green or going away: Environmental regulation, economic geography and firms’ strategies in China’s pollution-intensive industries

Geoforum, 2014

The high-growth, resource-and pollution-intensive industrialization model that China has pursued has caused severe environmental pollution and deterioration, particularly in a number of clusters in the coastal regions of East and Southeast China, where the Reform and Opening-up policies first started. The lack of uptake of environmental norms/values, deficit of regulatory enforcement of environmental policies, and insufficient institutional capacity have been compounding factors. As environmental standards were raised by China's central government, the enforcement of environmental regulation has been compromised more in inland China than in coastal regions, due to China's ''decentralized governance structure'' and regional disparity in terms of both economic development and environmental pollution. This paper therefore argues that rising environmental regulations, as well as firm characteristics, regional hub effect and political environment, have all been particularly important in forcing China's pollution-intensive enterprises to restructure their production, through innovation, upgrading, geographical relocation, outsourcing and plant closure, especially in China's coastal regions. It contributes to recent studies by developing a heuristic analytical framework that aims to be sensitive to the impacts of environmental regulation, political environment and regional hub effect over firm restructuring, but which does so by stressing these impacts are simultaneously inflected by the nature and attributes of firms. The empirical analysis suggests a roughly inverted ''U''-shaped relationship between firm relocation tendency and firm size (or firm capability), resulting from complex interactions between political environment, regional hub effect and environmental regulation.

Environmental Regulation, Manufacturing Technological Progress and Pollution Emissions: Empirical Evidence from China

Sustainability

Based on the provincial panel data of China from 2004 to 2020, this paper uses the empirical model of mediating effect to theoretically analyze and empirically test the mechanism of environmental regulation affecting pollution emissions, and the mediating effect of manufacturing technology’s progress. The study of this paper found that the improvement of pollution treatment technology is not the only technical means to reduce the level of pollution emissions. The progress of manufacturing production technology has a crucial role in promoting the reduction of pollution emissions. The high-quality development of the manufacturing industry and the improvement of the production technology level means that pollution emissions can be effectively reduced from the source. At the same time, although environmental regulation can have a significant positive impact on reducing pollution emissions, the progress of manufacturing production technology is a crucial intermediary variable for environ...

Industrial activity and the environment in China: An industry-level analysis

China Economic Review, 2008

Given China's rapid industrial expansion a detailed understanding of the linkages through which industrial activity affects the environment is crucial if the resultant environmental impact is to be minimised. This paper utilises a dataset of Chinese industry specific emissions for a variety of pollutants between 1997 and 2003 to provide the first study of its kind for China. For instance, we find an industry's emissions to be a positive function of its energy use and human capital intensity and a negative function of its productivity and R&D expenditure. We also investigate the role played by environmental regulations, both formal and informal.

Environmental Regulation and Firm Innovation: Evidence from China

2015

This paper studies the impact of a unique environmental regulatory policy called mandatory participation in Cleaner Production Audit (CPA) programs on innovation of Chinese listed companies during the 2001‐2010 period. Using firm-level patent and CPA program enrollment data, I employ a dierencein-dierences approach to examine the eect of mandatory CPA participation. The analysis confirms that CPA participation enhanced firm innovation proxied by patent applications, since the program’s implementation in 2005. I also find that this positive impact is stronger after substantial improvements had been made to the evaluation framework of CPA programs in 2009, in economically more developed regions where stringent policy implementation was combined with financial incentives, and for larger companies with the resources needed to adapt to regulatory pressure. Hence, this paper provides empirical support for the Porter Hypothesis, which suggests a stimulative impact of environmental regulati...

Synergistic effects of environmental regulations on carbon productivity growth in China’s major industrial sectors

Natural Hazards, 2018

It is crucial that the implementation of environmental regulations have a positive synergistic effect on carbon productivity growth (i.e., environmentally adjusted productivity growth with the consideration of carbon emissions) for China to realize its sustainable development goals because the country is currently under tripartite pressures of economic growth, carbon emissions control, and environmental pollution reduction. This paper investigates the impact of changes in environmental regulation stringency on industrial-level carbon productivity growth in China. Through utilizing the information entropy method, a new index of environmental regulation stringency is established by taking into account the effects of both pollution reduction consequences and pollution reduction measures. In addition, based on the data envelopment analysis (DEA) method, a Malmquist carbon productivity index is proposed to estimate the industrial carbon productivity growth of 21 major industrial sectors in China's 30 provinces over 2004-2014. Finally, an econometric regression model is applied to test the synergistic effects of environmental regulations on carbon productivity in China's major industrial sectors. The results show that (i) a stringent environmental regulation is associated with an increase in overall industrial carbon productivity growth in China; (ii) there exist significant pass-through effects in China's major industrial sectors that technology can transmit effectively from leader to follower; (iii) there also exist obvious follow-up effects in China's major industrial sectors, i.e., the industrial sectors that have larger technological gaps with the leaders catch up faster than others; and (iv) the environmental regulations have different

Is the environment a victim of the economic downturn? Evidence from China's manufacturing firms

Environment and Development Economics

This paper investigates whether pollution-intensive industries develop faster in a time of economic downturn. Using firm-level panel data from 2005 to 2013, we find supporting empirical results in an analysis of China's manufacturing industries in the 2008 economic crisis. We find that pollution-intensive firms tended to produce more compared with non-pollution-intensive firms in the 2008 economic crisis, with the pre-crisis period as a baseline. We further find that this effect is more pronounced in areas with higher export dependence and a smaller proportion of production from pollution-intensive industries. The relatively faster production expansion in pollution-intensive industries is more evident for state-owned enterprises.

Environmental Regulation and Firm Innovation : Evidence from China Ruotao Tang

2015

This paper studies the impact of a unique environmental regulatory policy called mandatory participation in Cleaner Production Audit (CPA) programs on innovation of Chinese listed companies during the 2001–2010 period. Using firm-level patent and CPA program enrollment data, I employ a differencein-differences approach to examine the effect of mandatory CPA participation. The analysis confirms that CPA participation enhanced firm innovation proxied by patent applications, since the program’s implementation in 2005. I also find that this positive impact is stronger after substantial improvements had been made to the evaluation framework of CPA programs in 2009, in economically more developed regions where stringent policy implementation was combined with financial incentives, and for larger companies with the resources needed to adapt to regulatory pressure. Hence, this paper provides empirical support for the Porter Hypothesis, which suggests a stimulative impact of environmental re...

Effective pollution control policy for China

Journal of Productivity Analysis, 2010

China began enforcing a system of pollution levies in 1982. However, senior environmental officials expressed doubt that this system was improving the environment and, in 1996, they began to place greater reliance on mill closure as the penalty for poor environmental performance. Since then, managers have found means of subverting many of the intended mill closures, and this causes us to return to the question of the abatement efficiency and effectiveness of the levies. This paper uses production evidence from 34 papermills in two representative provinces to examine the abatement efficiency and effectiveness of the levies. The paper industry is an important industry for this question because it is the largest polluter of China's rural environment. We use a distance function to determine individual output-based and revenuebased shadow prices for each mill during the years that the levies were the main environmental incentive. The outputbased shadow prices for pollutants display no recognizable trends over time and they are very different for firms in different locations. The revenue-based shadow prices are widely variable between mills and locations as well. These findings indicate that the marginal opportunity costs of abatement were also widely divergent and that there was no trend toward improved abatement efficiency. The way to correct this is to improve the performance of the marketnot to reject the market altogether as the more recent reliance on mill closures does. This observation suggests that a system of tradable permits would be an improvement on relatively less successful administrative measures such as forced mill closures.

How Does Environmental Regulation Affect the Location of New Polluting Firms? Exploring the Agglomeration Threshold of Effective Environmental Regulation

International Journal of Environmental Research and Public Health, 2020

Some scholars have already proved the important role of agglomeration in studying how environmental regulation (ER) affects the location of polluting firms. However, further research is needed on both the mechanism and the empirical evidence. This paper reports the construction of a location database of new chemical plants in China’s Yangtze River Economic Belt (YREB), where a fixed-effects panel threshold regression model was used to explore the agglomeration threshold of effective ER. We found a single agglomeration threshold for the whole YREB region that represented the turning point of ER from excluding to attracting new chemical enterprises. Additionally, there were two agglomeration thresholds in the lower reaches. If agglomeration reached the lower threshold, the effect of ER changed from repulsion to nonsignificant attraction. Once above the upper threshold, the attraction effect became large and significant. The results for this region were consistent with the Porter hypot...

Transboundary pollution in China: a study of polluting firms' location choices in Hebei province

Environment and Development Economics, 2013

Transboundary pollution is a particularly serious problem as it leads people located at regional borders to disproportionately suffer from pollution. In China, where the environmental policy is decentralized and where environmental conflicts between provinces have occurred several times, transboundary pollution is likely to exist. However, until now, nearly all the studies have focused on developed countries. In this paper we study whether transboundary pollution problems exist in China. To do so, we estimate whether, within Hebei province, polluting firms are more likely to set up in border counties than in interior ones. The estimations of a count-data model allow us to conclude that border counties are more attractive destinations for polluting firms than counties located within the province. Moreover, it appears that this effect has strengthened over time.