Effect of Environmental Regulation on High-quality Economic Development in China—An Empirical Analysis Based on Dynamic Spatial Durbin Model

Abstract

In 2017, the 19th National Congress of the Communist Party of China put forward the concept of high-quality economic development, indicating that the Chinese economy has shifted from rapid growth to high-quality development. High-quality economic development is the growth mode of an innovation-driven economy, an innovative, high-efficiency, energy-saving, environmentally friendly, and high-value-added growth mode. Environmental regulation is an important means to solve economic development and environmental pollution and plays an important role in high-quality economic development. In order to explore the impact of China's environmental regulations on the high-quality economic development, this paper based on the panel data of 30 provinces (cities) in China from 2004 to 2015 uses the dynamic spatial Dubin model (DSDM) to analyze the direct and indirect effects of China's environmental regulations on high-quality economic development and regional heterogeneity. It also incorporates R&D (Research and Development) investment, government investment in environmental governance, and fiscal decentralization into the model and analyzes the direct and indirect effects of the above three factors in the process of environmental regulation affecting high-quality economic development. We found that China's high-quality economic development is spatially related between different provinces. And environmental regulations have obvious direct and indirect effects in the impact of high-quality economic development in the central and eastern regions, and this effect phenomenon is not significant in the western region. R&D investment, environmental protection investment, and fiscal decentralization have different adjustment effects on environmental regulation and high-quality economic development, and the same kind of adjustment variable also shows obvious heterogeneity among different regions. Finally, we put forward relevant policy recommendations based on the conclusions, with a view to improving China's high-quality economic development.