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.
Highlights
With the leap forward in the development of China’s economic aggregate, the resources and environment are close to the bearing limit, and quality reform under the restriction of environmental policies is an important part of transforming the mode of economic development
Whether environmental regulation can become an important handle of enhanced trade competitiveness, whether it can simultaneously transform the mode of economic development and realize high-quality foreign trade, and how to determine the appropriate intensity of environmental regulation for export trade are major practical problems that need to be solved
Based on the theoretical and mechanism analysis, this study concludes that environmental regulation has a positive impact on the promotion of trade competitiveness, but this impact has threshold characteristics which are analyzed from the perspectives of the technology development degree and the cost-bearing capacity
Summary
With the leap forward in the development of China’s economic aggregate, the resources and environment are close to the bearing limit, and quality reform under the restriction of environmental policies is an important part of transforming the mode of economic development. China has encountered trade protectionism initiated by developed countries in recent years In this context, the report of the 19th National Congress of the Communist Party of China put forward the strategic thinking that economic development needs a quality change and power change to promote China’s industry to move towards the middle and high end of the global value chain. The impact of environmental regulation on trade competitiveness is related to the level of technological development and pollution degree, and this impact has certain threshold characteristics. When the cost-bearing capacity exceeds a certain threshold value, environmental regulation helps to promote trade competitiveness. When the level of technological development or cost-bearing capacity exceeds a certain threshold can environmental regulation effectively promote trade competitiveness.
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