Resource curse, environmental regulation and transformation of coal-mining cities in China

Abstract

Since the Chinese economy has entered the new normal stage, the transformation of China's coal-mining cities has drawn considerable attention at all levels of government in China. In this paper, environmental regulation, resource curse, and economic growth are incorporated into one novel research framework. Based on panel data for 30 typical coal-mining cities, from 2005–2015, we mainly use the system generalized method of moments (SYS-GMM)to analyze the existence of a resource curse and attempt to analyze whether its crowding-out effects can be weakened by environmental regulations. The results show that in the whole sample period, there is a resource curse effect in China's coal-mining cities, and the direct effect of environmental regulation on economic growth presents an “N” curve relationship. In the sub-sample period, although all coal-mining cities have a resource curse effect in the first period (2005–2010), in the second period (2011–2015), the resource curse effect is no longer significant, especially in cities with a high economic development level, and the resource curse has been transformed into resource blessing. Additionally, according to indirect conduction effect analysis, excessive reliance on resources limits the development of human capital, technological innovation, and manufacturing. However, environmental regulations can weaken the transmission of resource dependence by promoting human capital and technological innovation, of which the promotion of technological innovation is the most significant. Therefore, environmental regulation may be a new and notable perspective that can help coal-mining cities turn the “curse” into “blessing” and promote the transformation of their green sustainable development.