Does the Green Development of Cities Need High-Level Opening Up? A Quasi-Natural Experiment Based on China’s Pilot Free Trade Zone

Abstract

The contradiction between urban open development and the environmental pollution of cities becomes increasingly serious. People begin to pay attention to the green development effect of Free Trade Zones. Based on 278 prefecture-level cities in China from 2009 to 2019, we use the time-varying DID method with the implementation of PFTZ establishment policy as a quasi-natural experiment to explore whether the green development of Chinese cities needs high-level opening up. The main findings of this paper are as follows: (i) Compared with cities without PFTZs, the environmental pollution composite index (EPI) of cities with PFTZs decreases significantly by 5.278% on average; that is, the establishment of PFTZs significantly improves the green development level of those cities. (ii) After the establishment of PFTZs, the green development level of Chinese coastal cities will be enhanced to a greater extent than that of inland cities. In addition, the higher Chinese cities are in the urban hierarchy, the more they can grasp the development opportunities from the establishment of PFTZs. (iii) The establishment of PFTZs effectively reduces the EPI and significantly improves the green development level of cities through three paths: the scale effect, the structure effect and the technology effect. This paper provides micro-empirical evidence for literature related to the environmental benefits and green development of PFTZ construction and provides a reference for most developing countries to learn from China’s experience.