Establishment of Free Trade Zones Does Not Suppress Urban Carbon Emissions

Abstract

Constructing free trade pilot zones is an important strategic move for promoting reform and opening up in China in the new era. However, pollution control and emission reduction are obstacles that must be overcome in this process. This study takes cities implementing free trade pilot zone policies in China as the experimental group and other cities as the control group, establishing a "quasi-natural experiment." Based on panel data from 287 cities from 2010 to 2021, the study uses the Difference-in-Differences (DID) method to empirically test the impact of free trade zone construction on carbon emissions in the cities and further analyse its influencing mechanisms. The research findings indicate: (1) the construction of free trade zones has a significant inhibitory effect on carbon emissions in the cities; (2) the establishment of free trade pilot zones can suppress carbon emissions in cities through levels of openness to the outside world, technological innovation, and upgrading of industrial structure; (3) different regions and batches of free trade zones have varying impacts on carbon emissions. In light of these findings, it is suggested to systematically expand the implementation scope of free trade pilot zone policies in China during the development of free trade pilot zones, stimulate the potential for urban carbon reduction, implement tailored low-carbon policies, and promote the coordinated development of economic and environmental benefits in free trade pilot zones.