Environmental policy and exports: Evidence from Chinese cities

We study environmental regulation and its role for trade in China. Specifically, we assess the effectiveness of an environmental policy in China that introduced stricter regulations on sulfur dioxide (SO2) emissions in targeted cities. To identify the causal effect of this policy on exports, we use...

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Bibliographic Details
Published in:Journal of environmental economics and management 2014-09, Vol.68 (2), p.296-318
Main Authors: Hering, Laura, Poncet, Sandra
Format: Article
Language:English
Subjects:
China
Cities
Economics and Finance
Emissions control
Environmental policy
Environmental regulations
Export performance
Exports
Humanities and Social Sciences
Public enterprise
Public enterprises
Studies
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Summary:We study environmental regulation and its role for trade in China. Specifically, we assess the effectiveness of an environmental policy in China that introduced stricter regulations on sulfur dioxide (SO2) emissions in targeted cities. To identify the causal effect of this policy on exports, we use sectoral export data for a panel of Chinese cities and exploit variations in exports between cities and sectors, over time, and, in a second step, between firm types. We find a relative fall in sectoral exports in targeted cities after the implementation of the policy, which is sharper the more polluting the industry. Further, we find that the observed effect is mainly driven by privately owned firms, whereas exports of state-owned firms seem to be unaffected by the new policy. This finding is consistent with the preferential political treatment of state-owned firms in China.
ISSN:0095-0696
1096-0449
DOI:10.1016/j.jeem.2014.06.005