Defining the Optimal Implementation Space of Environmental Regulation in China’s Export Trade

Yongwang Zhang and Lin Song
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Yongwang Zhang: School of Economics and Management, Northwest Agriculture & Forestry University, Yangling 712100, China
Lin Song: School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710061, China

Sustainability, 2020, vol. 12, issue 20, 1-19

Abstract: Properly designed environmental regulation policy is an important basis for the high-quality development of trade. Based on the Chinese industry-level panel data in the period 2003 to 2016, and considering the adaptability of environmental regulation and industrial development, our study employs a threshold regression model to reveal the impact of environmental regulation on China’s trade competitiveness. The empirical research of our study finds that the impact of environmental regulation and trade competitiveness of the manufacturing industry presents a U-shaped trend that first increases and then decreases. At present, there is a trend of gradually crossing the inflection point, and only after crossing the inflection point can the full development stage be entered; that is, the implementation intensity of environmental regulation needs to be coordinated with industrial development. Furthermore, the impact of environmental regulation on trade competitiveness has a special threshold. Only when the level of technological development or cost-bearing capacity exceeds a certain threshold can environmental regulation effectively promote trade competitiveness. Our study has profound policy implications. The Chinese government needs to combine the technological development level and cost-bearing capacity of subdivided industries to implement environmental regulation policies by classification, cultivate a good innovation environment, make full use of the innovation-stimulating effect of environmental regulation, establish a more perfect cost-sharing and production transfer exit mechanism, and improve the resource reallocation effect of environmental regulation.

Keywords: environmental regulation; technological development level; cost-bearing capacity; trade competitiveness (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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