Does Environmental Regulation Affect Export Quality? Theory and Evidence from China.

Jing Xie,Shaohong Wang,Qi Sun,Fei Fan,Xiaoping Li

doi:10.3390/ijerph17218237

Abstract

Most studies focus on the empirical investigation of the relationship between environment and trade, but they lack a systematic theoretical framework. To fill this gap, this study constructs an analytical framework of export competitiveness from the perspective of product quality, and reveals the theoretical mechanism of environmental regulation affecting export quality. We empirically examine the impact of environmental regulation on the export quality of China’s manufacturing industry, as well as its possible mechanism. Our findings show that environmental regulation can significantly promote the export quality upgrading of the manufacturing industry and that process and product productivity are two possible channels through which such regulation affects export quality, although their mediating effects are in opposite directions. The mediating effect of product productivity is greater than that of process productivity, indicating that environmental regulation mainly has an innovation offset effect on China’s manufacturing industry. For pollution-intensive industries, environmental regulation plays a significant promoting role through the channel of product productivity, but, for clean industries, environmental regulation has an inhibitory effect through the channel of process productivity. These findings provide important enlightenment for the coordinated development of China’s ecological civilization and trade power.

Highlights

Since its accession to the World Trade Organization (WTO), China’s export trade has expanded rapidly, making it the world’s largest exporter in 2009
The impact of environmental regulation on export quality and its mechanism show the significant heterogeneity of regulated industries
In the preceding analysis and discussion, we focus on the impact and its mechanism of environmental regulation on export quality, finding that environmental regulation significantly promotes the export quality upgrading of China’s manufacturing industry, and that process and product productivity mediate the relationship between environmental regulation and export quality

Summary

Introduction

Since its accession to the World Trade Organization (WTO), China’s export trade has expanded rapidly, making it the world’s largest exporter in 2009. Even though “Made in China” has achieved considerable market share in international competition, it has not yet been “winning by quality.”. There is still a significant gap between China’s product quality and that of developed countries [1]. Low-quality and low-price exports cause persistent deterioration in China’s terms of trade. With international competition undergoing a profound change, countries ought to seize the opportunity to rapidly improve export competitiveness, thereby moving closer to the center of the world stage and increasing the possibility of leading international trade regulation. The transformation and upgrading of China’s export trade need to improve product quality through technological innovation, cultivating new advantages in export competition

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Discussion

Conclusion