Cleaner production regulation and firms’ ratio of domestic value added in exports: evidence from China’s cleaner production standards

Yajun Zhu, Churen Sun, Hui Jiang and Qing Qin

The Journal of International Trade & Economic Development, 2023, vol. 32, issue 7, 1186-1213

Abstract: As a life-cycle environmental policy aiming at a more thorough control of pollution, what is the economic impact of cleaner production regulation on firms? We identify the impact of cleaner production regulation on firms’ ratio of domestic value added in exports in a difference-in-differences framework with the quasi-natural experiment created by China’s industry-level Cleaner Productions Standards based on the Chinese Customs Transaction-level Trade Statistics dataset and Chinese Annual Survey of Industrial Firms dataset between 2002 and 2013. It shows that cleaner production regulation helps to improve firms’ ratio of domestic value added in exports. Meanwhile, firms’ productivity, factor inputs market maturity and intermediate inputs market maturity positively promote while pollution intensity negatively moderates the impact of cleaner production regulation on firms’ ratio of domestic value added in exports. These results imply that the implementation of the cleaner production regulation policy and the international competitiveness of domestic firms do not conflict.

Date: 2023
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DOI: 10.1080/09638199.2022.2155690

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