Trade-linked pandemic, enforcement gap, and pollution

Huanhuan Wang, Zhiqiang Zhang and Xiaoxue Zhao

China Economic Review, 2025, vol. 91, issue C

Abstract: This paper theoretically and empirically investigates the economic and environmental impact of the global COVID-19 pandemic propagated through trade linkages. Exploiting variation in country-month-specific coronavirus infection rates and heterogeneity in Chinese counties' pre-existing trade networks, we estimate a significant negative effect of foreign trading partners' coronavirus infection rate on Chinese counties' trade volumes and economic output, especially among counties specializing in producing non-stay-at-home and non-medical goods. However, counter-intuitively, the negative output effect of trade contraction during the pandemic is not accompanied by a corresponding decline in pollutant emission or improvement in air quality among Chinese counties. We show evidence that the non-effect of trade contraction on the environment arises because local governments, especially those not well monitored by central government on environmental indicators or facing a less binding environmental target, have intentionally relaxed their environmental regulation enforcement on local firms to spur production and mitigate the negative economic shock of the global trade contraction on local GDP during the pandemic.

Keywords: COVID-19 pandemic; Enforcement gap; Trade linkage; Environment; Multi-tasking agents (search for similar items in EconPapers)
JEL-codes: F14 F18 H70 K23 O13 O44 Q52 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1043951X25000604
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:91:y:2025:i:c:s1043951x25000604

DOI: 10.1016/j.chieco.2025.102402

Access Statistics for this article

China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

More articles in China Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().