Does Trade Liberalization Improve the Environment in China? Evidence Form the Dynamic Panel Data of Chinese Prefecture City

Abstract

This paper employ GMM method introduced in [1] to reevaluate the environment effect of trade liberalization based on the dynamic panel data from Chinese Prefecture City during 1995-2010. We found that trade openness improve the environment quality measured by So2 emissions per capita, emission intensity of so2 and soot while no evidence in Soot emissions per capita. Specifically, even though the effect of import on environment is short-term and unsustainable, the export improve the environment more and more over time. Therefore the environment in China benefit from the trade liberalization regime and export-oriented strategy. In addition, this paper found the evidence of environmental Kuznets Curve and pollution haven hypothesis in some environment index.