Do cleaner production standards upgrade the global value chain position of manufacturing enterprises? Empirical evidence from China

Abstract

The harmonious development of trade and environment is extremely crucial for developing countries that face challenges posed by extensive economic models and environmental pollution as they strive to engage more deeply in the global economy. This article utilizes micro-level data from the Chinese Industrial Enterprises Database (CIED) and the Chinese Customs Trade Database (CCTD) from 2000 to 2012. It takes China's implementation of cleaner production standards (CPS) since 2003 as a quasi-natural experiment and applies staggered DID to investigate the impact and mechanisms of exogenous shocks from environmental policies on upgrading and transformation of enterprise value chains. The aim is to provide comprehensive empirical evidence regarding the availability of environmental regulations and the GVC position of Chinese enterprises. Thus, we also offer valuable insights for similar developing countries seeking a path toward high-quality advancement. The research findings are as follows. First, CPS exerts a significant upgrading effect on enterprise value chains, and this conclusion is highly robust. Second, heterogeneity analysis reveals that the upgrading effect of CPS on value chains is predominantly influenced by factors including the enterprise's asset scale, ownership structure, geographical location, trade pattern, as well as the technological level and pollution intensity within its specific industry. Third, further tests through mechanism analysis reveal that CPS expedited the integration of Chinese manufacturing enterprises in GVC by promoting innovation and R&D capabilities, enhancing total factor productivity, and improving labor wages.