Green transformation and manufacturing value chain climbing: the moderating role of environmental regulations

Juan Yang, Cuiting Jiang, Liang Gao and Shiwei Yu

Applied Economics, 2025, vol. 57, issue 21, 2726-2741

Abstract: The promotion of environmental regulations and the realization of manufacturing value chain climbing while protecting the environment are crucial for China’s green transformation. This study analyzes how the green transformation of China’s manufacturing industry impacts the ascent of the value chain and bridges the gaps in the previous research. By analysing panel data from 30 Chinese provinces and employing the SBM-GML and fixed-effects models, this study reveals the combined mechanisms of environmental regulations on green transformation and manufacturing value chain climbing. We also consider various environmental regulations, technological development levels, and the policy environment to investigate the heterogeneity of green transformation in the manufacturing industry. The results show that: 1) Green transformation significantly promotes the climbing of China’s domestic and global manufacturing value chains; 2) Command-control and market-incentive environmental regulations negatively impact value chain climbing during green transformation, while the effects of public-participation environmental regulations are inconspicuous; 3) Challenges such as ‘low-end locking’ and technical ‘bottlenecks’ persist in China’s manufacturing value chain climbing. However, the strategic implementation of command-control environmental regulations presents a new opportunity for achieving value chain climbing.

Date: 2025
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DOI: 10.1080/00036846.2024.2331037

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